26
Friday
February 2021
Friday
February 2021
JOHANNESBURG - South Africa has been acknowledged for years for its sound, advanced banking system. However, at the onset of the fourth industrial revolution, with humans and technology interacting like never before, we face an interesting balancing act. Disruptive financial services innovation is afoot worldwide. Against this background, this country's policymakers must find ways to preserve our sound financial system, while enabling disruptive innovation. To understand what policy and regulatory approaches would best suit the South African financial sector, it is helpful to know where we stand relative to our global peers. This is the goal of a recent research report by the Centre of Excellence in Financial Services. Titled “The impact of the 4th industrial revolution on the South African financial services market”, it benchmarks our technological innovation against international trends. The centre is a non-profit organisation that encourages public dialogue around policy and regulation in the financial services industry. The report was compiled with Genesis Analytics, and the findings are fascinating. South Africa has a small but healthy fintech industry and a regulatory environment that is more reactive than proactive. Reactive regulators do not take an active role in supporting the fintech industry. This approach can prove limiting, as start-ups are subject to the same rules as big banks, but lack the resources and compliance experience to negotiate the stringent regulatory requirements. This contrasts with countries like the UK, which have taken a proactive regulatory approach. In this model, tools such as regulatory sandboxes are created, where innovators are provided with less restrictive regulatory obligations for a period to test their products. It is only after testing that regulators decide whether to either adapt the regulation used or to specify the need to comply with full regulations. Recently, the SA Reserve Bank has indicated that it will introduce regulatory sandboxes in South Africa. It shows the regulator understands the importance of a growing role for fintechs in financial services. Necessary regulations Despite perceptions of an onerous regulatory burden, regulations applying to big, deposit-taking banks are indeed necessary. They are there to protect the savings of all South Africans. However, that said, there is certainly scope to enable disruption by smaller fintech start-ups through regulatory accommodation. The growth of innovation requires more complex solutions than just better regulation. Besides a good idea, successful fintechs need entrepreneurial skills, technical skills and funding. South Africa ranks a middling 57 on the Global Innovation Index. Our entrepreneurs lack the business savvy required to convince local investors to take a risk. South African investors also generally have a low risk appetite when it comes to potential new business. Given the size and hegemony of the established banks in South Africa, the most common innovation scenario in its financial services market is bank-fintech collaboration. Banks must be able to trust third parties, as the bank is ultimately responsible and accountable to the regulator. Customers must also trust the banks with their data. Future innovation will likely occur in this space, where fintechs collaborate on solutions after being granted access to rich banking data. This type of collaboration is not likely to be disruptive innovation. The South African banking sector is efficient and increasingly competitive, which makes disruption by the fintech industry exceptionally difficult. Established banks have such deep pockets, they are able to buy up any start-up with a good idea.
French foreign minister Jean-Yves Le Drian will pay a two-day visit during 17-18 November. The visit comes ahead of President Emmanuel Macron’s visit to India to attend the International Solar Alliance conference. Excerpts from the interview: Your visit comes ahead of a visit by President Emmanuel Macron to India when he will attend the International Solar Alliance conference. What areas of bilateral cooperation will be the focus for your visit? I am delighted to be in India and lay the groundwork for the upcoming visit of President Emmanuel Macron. The relationship between India and France is especially strong. It dates long back to History. Since Independence, our friendship has grown ceaselessly. Prime Minister Narendra Modi referred to our partnership as an “all-weather partnership”. It could not be better expressed. India is our foremost strategic partner in Asia and our only strategic partner in South Asia. We have key cooperation in very sensitive areas, such as counter-terrorism, defence, civil nuclear energy, space. In the Indian Ocean, where India occupies a central position and France has major interests linked to its overseas territories, we are in the process of forging a real defence and security partnership. Our economic relations are developing, with an increasing number of French companies investing massively in India, particularly in the promising sector of sustainable urban development and renewable energy. One of the aims of my visit is also to strengthen people-to-people ties between our two countries, and it is with great pleasure that I will inaugurate Bonjour India, which through more than 300 events spread across India, from November 2017 to February 2018, will help highlight an innovative and creative France, as well as the vitality of the Indo-French partnership. Recently, a bid by US, Britain and France to designate Pakistani terrorist Masood Azhar at the UN Security Council was blocked by China, a move India has pursued as well. How do you respond to this and will France try again for the designation? Along with the US and the UK, France had presented a resolution to list Masood Azhar as a terrorist under the 1267 Committee of the UN Security Council, which rules on sanctions against terrorists. We had done so because it is clear to us that the head of a terrorist organization should be listed just as the organization itself is. It is deeply regrettable that we could not reach a consensus on such an obvious request for designation. In combating the terrorist threat, regardless of place, there should not be any split in the international community. As for India and France, they are in full solidarity in the face of terrorism and know that they can count on each other. On Climate Change, given US decision to pull out of the Paris deal, how do India and France propose to cooperate on fighting global warming? Also, is there any attempt to hold the US to account for its decision, penalize the US, etc.? The Paris Agreement remains the pillar for combatting climate change. It is irreversible and non-renegotiable. After America announced its decision, President Macron, Prime Minister Modi and the entire international community reaffirmed the relevance of the commitments made in Paris and their resolve to fulfil them. We closely cooperate with India on climate change issues. India has been a key partner for COP21: I would like to recall that it particularly helped enshrine important concepts, such as “climate justice”, in the Paris Agreement. Today we share the same priorities: consolidating the Paris Agreement, and making progress in defining the modalities of its implementation, which is the aim of COP23. We are rallying partners for building the International Solar Alliance, which now has 44 countries under its umbrella and will enable them to gain facilitated access to solar energy. We wish to continue forging ahead. It’s a more constructive approach than trying to penalise the United States.
Italian football has hit its lowest point in decades and needs a thorough overhaul A month ago, when Holland failed to make it to the 2018 FIFA World Cupin Russia, there was none of the shocked despair that hangs over Italy’s non-qualification following its defeat to Sweden in the two-legged play-off. Football in the Netherlands is facing its worst crisis and its fans have perhaps become used to under-performance. Since 1982, the team has failed to make it to the quadrennial extravaganza on four different occasions. Dutch footballers were always expected to thrill but not necessarily to win. Even the legendary Johan Cruyff didn’t bag football’s most coveted prize. But Italy is different. The Azzurri have always found a way, regardless of the circumstances. Italy went into the 2006 World Cup with a match-fixing scandal raging back home; it ended up lifting the trophy. Another scandal erupted ahead of the 2012 European Championship, but Italy emerged a worthy runner-up to Spain. Four years later, Italy went in with arguably its weakest squad ever but still outwitted reigning champion Spain and lost to Germany in the quarter-finals only on penalties. This is what makes the four-time champion missing out on the World Cup, for the first time since 1958, astounding. It is true that the qualification process left very little margin for error, with only the group topper earning a direct entry. Clubbed alongside Spain, Italy was always expected to come second and be in the playoff. Once there, it was unlucky to draw Sweden, the toughest of opponents. But even so, its performances have been truly worrying.
An official with the South Korean Joint Chiefs of Staff said the North’s border guards fired at least 40 rounds. A North Korean soldier, who made an extremely rare and dramatic defection to the South, was shot six times by his own side as he drove to the heavily guarded border and ran across under a hail of bullets. The United States-led United Nations Command (UNC), which monitors the Panmunjom border truce village where the defection occurred on Monday, said the soldier had driven close to the heavily guarded, military demarcation line separating the two Koreas. “He then exited the vehicle and continued fleeing south across the line as he was fired upon by soldiers from North Korea,” the UNC said in a statement. An official with the South Korean Joint Chiefs of Staff said the North’s border guards fired at least 40 rounds. A doctor treating the soldier — who was airlifted to a hospital for emergency surgery — said he was shot half-a-dozen times and sustained a serious stomach injury. “He has at least six gunshot wounds on his body and the penetrating wound in the abdomen is the most serious,” Dr. Lee Cook-Jong told reporters. “His organs are extremely damaged... we do not know how long he can hold up,” Dr. Lee said. It is very rare for the North’s troops to defect at the truce village, a major tourist attraction bisected by the demarcation line and the only part of the frontier where forces from the two sides come face-to-face. The 1953 ceasefire, ending the Korean War, was signed at Panmunjom, and it has since hosted numerous rounds of inter-Korean talks — sometimes held in huts that straddle both sides of the border line. Previous defections at Panmunjom The fact that the defector drove to the frontier suggests he may not have been a member of the elite corps of North Korean troops posted to Panmunjom, who are carefully vetted and selected for their loyalty. No tourists were present at the time, because tours do not run on Mondays. According to the South Korean military, there was no exchange of fire across the border, and the UNC statement stressed that no South Korean or U.S. forces were harmed. The incident, which happened in broad daylight around 4 p.m., comes at a time of heightened tensions on the Korean peninsula over the North’s nuclear weapons programme. Unlike the rest of the frontier, Panmunjom is not fortified with minefields and barbed wire and the border is marked only by a low concrete divider. After racing across the frontier, the soldier took cover near a building on the South side. The Joint Chiefs of Staff official said he was found collapsed in a pile of fallen leaves and recovered by three South Korean soldiers crawling on their stomachs to his position. There have been previous defections at Panmunjom, most notably in 1984 when Vasily Yakovlevich Matuzok — an elite student from Moscow who was being groomed to become a Soviet diplomat — sprinted across the border and triggered a 30-minute gunfight that left four dead. Visiting the border village with a delegation, Matuzok asked a colleague to take his picture, backed closer to the demarcation line and then suddenly turned and made a run for it. North Korean guards immediately drew their weapons and set off in pursuit. The moment they crossed the line, a shooting match erupted and Matuzok was forgotten as the rival troops engaged on the South side of the border. It was the greatest loss of life to occur in what is technically called the Joint Security Area. Another gunfight was recorded in 1967 when a senior journalist from the North’s state-run KCNA news agency crossed the border while covering military talks underway in Panmunjom.
If we oppose every solution to the problem of air pollution, how will we ever breathe clean air, asks the environmentalist Environmentalist Sunita Narain has been fighting for clean air for decades. The Delhi-based Centre for Science and Environment, with which she has been associated and now serves as director general, led the shift to compressed natural gas in Delhi, to reduce air pollution. Ms. Narain is on the statutory body set up under the Environment Protection Act as well as the Environment Pollution (Prevention and Control) Authority (EPCA), a Supreme Court-appointed panel to monitor pollution in the Delhi-National Capital Region (NCR). Excerpts from an interview on the magnitude of the problem and the way forward: Every breath we are inhaling at the moment is toxic. How have we reached this point? Nobody is really serious about pollution is all I can say. It’s not sudden. In fact, pollution last year was worse than it is this year. What we don’t realise is that we aren’t taking adequate steps to bring down pollution. Whatever we are doing is too little, too late. The kind of pollution that we are seeing now is in the entire region — it’s not just Delhi; Patna is more polluted. Anywhere you start placing pollution monitoring equipment, you realise that the air you breathe is toxic. And please don’t underestimate the health impact of this. This is really serious. It’s time we realised that if we don’t get serious about tackling air pollution, we will have such episodes throughout winter. Also be clear that this is not just about Punjab and Haryana and the burning of crops. What we saw this time was a weather pattern which basically, they are saying, brought winds from Iraq, Saudi Arabia and Kuwait. This brought a lot of dust, huge wind storms which collided with the wind system coming from the east which was bringing moisture. And that is deadly because the moisture locks in the dust and becomes a cloud. At the same time there was no wind at the ground level. So when you and I felt that we were suffocating, that is what it was. Delhi is equally to blame. The cars in Delhi today are choking us. Are Punjab and Haryana to be blamed? This time, Punjab and Haryana also contributed because of crop burning. But remember, in the months to come, when winter is severe, even when this factor (crop burning) goes, we will still have pollution. Last year, the peak came in December and January. I don’t want to get into this great game of the Delhi government — every time there is this chaos they say, ‘What about Punjab? Punjab did it!’ I think it’s time we grew up and I would really urge our politicians to grow up because otherwise they are taking away our lives and the lives of our children. Are the governments doing too little, too late? With every episode of severe air pollution, there is a mad rush to enforce urgent but temporary measures. Absolutely! Please understand that the odd-even (car scheme) and the shutting of schools are all emergency actions. Last year, when we had a crisis like this in November, we had gone to court and said that there are two ways in which governments all over the world deal with this. One is that they have an emergency response, which is that when things are so bad they ask, ‘what do we do?’ Last year, nobody knew what to do; there was a sort of helplessness. And two, what we said (to the court) was that emergency plans are not substitutes for long-term measures. We need both because till you have your long-term measures kicking in, we must have a response. So the court asked the Environment Ministry to come up with what is now called the Graded Response Action Plan (GRAP). It’s now in force and we gave a report to the court on Monday on the implementation of the GRAP: what happened and what we learnt. One of the big things we learnt was that yes, it was important to have the GRAP because at least the emergency plans could kick in other than the odd and even scheme which became a political football between the AAP (Aam Aadmi Party) and the NGT (National Green Tribunal). The other measures are being enforced across the NCR, not just Delhi. So yes, there has been a response to the emergency. And according to IIT-M (Indian Institute of Tropical Meteorology), Pune, this response plan has reduced pollution levels by about 15% (compared) to what it would have been over the weekend. So please realise that the kind of critical pollution levels that we see today would have been 20% higher if we hadn’t taken this emergency response. What we said to the court on Monday is that we need to improve this. There are four problems that we have noticed. One, the forecasting data were very poor. On November 6, we had no indication of the kind of cloud and the weather pattern that would change. It was on 7th, when pollution spiked, that we were told that pollution levels are high. We immediately directed action. But then it takes time for governments to gear up and take action, which, to their credit, they did. By 8th, orders had been passed and by the next day everything was enforced. But the fact is that we needed data earlier, so we are now talking to the Indian Meteorological Department to say that we have to integrate weather forecast with pollution monitoring. The second thing that we have told the court is that we need a better system and protocol in place to inform people about spiked pollution levels. Third, we are saying this plan is weak because a comprehensive plan hasn’t been put in place. For instance, one of the big issues of GRAP is that when pollution spikes — say, in Paris — a protocol is put in place and you ramp up public transport. Paris makes public transport free. Or you intensify public transport, increase car parking costs, and take the pressure off cars. And if it doesn’t sort out, the next stage is the odd and even scheme. Do we have the infrastructure to bring in long-term and emergency measures to ensure that we don’t find ourselves in this state again? In our case we have no public transport. Because for four years you have done nothing about it besides blaming and passing the buck. Today what we have is a governance crisis. You remain in an emergency mode if you don’t deal with this crisis. The facts of this crisis today are scary. We are in severe-plus (air quality) today, but we are in severe plus when every action in the book has been directed — construction is banned, industries are banned, thermal plants have been shut down, brick kilns have been banned, generator sets have been banned, the so-called public transport system has been intensified... The only thing we haven’t been able to do is to take the cars off the road. And despite all this, we are in severe-plus mode. It just tells you the scale of the problem and the scale of the intervention that is needed. My problem today is that everyone is outraged but nobody backs a solution. Every time you propose a solution, somebody contests it and then getting that solution implemented takes the wind out of you. My question is, if clean air is everybody’s business, then why such opposition? What about the health of the people? What about the health of our children? What does the EPCA propose as the way forward? The EPCA has been given the responsibility of directing action as far as GRAP is concerned. We have directed action this time. We are not going to lift the severe-plus level unless the air quality improves for at least 48 hours. We are also going to try to improve GRAP so that it becomes more responsive and effective. We are going to be taking this up and fighting for it. But beyond that, we need governments to step in, we need clean fuel — gas or electricity — not just for Delhi-NCR, but for the whole of India. And we have to have public transport on a scale that you can actually get rid of your car. Today we can’t enforce any car restriction measures because we have no public transport and everybody passes the buck around. And then we need governance so that you don’t burn garbage, you manage your dust on the road, you make sure construction activities are limited… I mean, it’s not rocket science. But the point is, do we even have a government which is serious enough to see this through in the coming years, not just the few days when pollution is critical? Is India displaying enough leadership at the state, national and international levels to ensure a better environment for its citizens? Why is the government not accountable? And why are we taking it? Because we don’t have the ability to ask hard questions, we don’t look at air pollution as a serious issue, we get up when the crisis is happening and we go to sleep when the crisis is over. That’s the problem. And that is what the politicians know… they can play with our lives. Everyone is complacent and people are suffering in every State. People in Haryana and Punjab are suffering as much as people in Delhi. What we have today is an assault. What we are not understanding is that this will not go away till we push back on a national scale. Not these wimpy actions... get a few buses, we will enforce a bit of a ban here and there... it will not work. Odd and even is an emergency action. In countries that brought this in, it was done as an emergency measure with no exceptions and for 24 hours. Governments have to understand that the aim is pollution control, not theatre. We are mute spectators to a theatre that is happening today in front of us. Does India have a strong voice when it comes to climate change and ensuring that it is able to become an environmentally safe nation? India must have a real voice. To me what was most embarrassing, and my head hangs in shame, is when United Airlines declared that they will stop flying to Delhi because of the smog. My head hangs in shame knowing that my government imports all the garbage that the U.S. is exporting to us today. They are exporting pet coke (a petroleum industry byproduct) to us because they have domestic restrictions to use pet coke, because they care about their pollution. We are importing it because, as the Ministry said in court, it is a cheap fuel and there are economic interests involved. So let’s be clear. If we want to fight the climate war, we have to set our own house in order. And we can’t allow our heads to hang in shame and for us to be told that you are so polluted that we don’t even want to come to your country. I feel defeated… we just don’t seem to understand the enormity of it. And we must have a strong voice internationally. Our fight on climate change is to argue for justice, equitable rights over the atmosphere. To strengthen this fight, we must make sure that we can hold our head up in front of the whole world.
Congress needs a cohesive agenda if it wants to push back the BJP in PM Modi’s home State It is in no small part due to Prime Minister Narendra Modi and Bharatiya Janata Party president Amit Shah that Gujarat wields a disproportionately high influence on national politics. The so-called Gujarat model of developmentwas an important part of the BJP’s campaign in the 2014 Lok Sabha election. To say that the Gujarat Assembly election of 2012 had a huge bearing on the parliamentary election that followed in less than two years will be no exaggeration. For the same reasons, Gujarat 2017 carries an additional layer of importance: whether for the Congress or the BJP, a win or a loss will cast a much longer shadow until the summer of 2019. The two-phase polls on December 9 and 14 will thus be keenly fought, with the BJP seeking a sixth straight win, and the Congress trying for a breakthrough against all odds. The timing of the announcement of the election schedule itself became a controversy, as Chief Election Commissioner A.K. Joti faced criticism for delaying it till after Mr. Modi had made two more visits to Gujarat to inaugurate projects and announce new schemes. The argument that flood relief work in the State would have been affected if the schedule had been announced along with that of the election in Himachal Pradesh, which is ruled by the Congress, was not very convincing. One, relief work had been mostly completed, and two, the Model Code of Conduct would not have stood in the way of such works.
There was speculation a few months ago that the Supreme Court collegium was considering his name as a judge of the court. Solicitor General Ranjit Kumar, the country’s second highest law officer, resigned on Friday for “personal reasons”. The office of Law Minister Ravi Shankar Prasad received his resignation letter on Friday. Mr. Kumar confirmed to PTI that he had resigned and sources close to him said it was for “personal reasons”. Mr. Kumar was appointed Solicitor General in June 2014 after the current government came to power. His second term in office was renewed recently. There was speculation a few months ago that the Supreme Court collegium was considering his name as a judge of the apex court. Recently, Mukul Rohatgi had written to the government that he was not interested in a second term as Attorney General. Senior lawyer K.K. Venugopal was appointed as new Attorney General.
Separation of powers between the Editor and the Readers’ Editor ensures accountability and prevents conflict of interest A section of well-meaning readers hauled me over the coals for my last column, “When outrage precedes verification” (Oct. 9, 2017). Some felt the column was a slap on the wrist. Some were convinced that the false story of the Mumbai ‘molestation’ deserved savage treatment, but I pulled my punches. A couple of senior journalists felt that talking about a grave journalistic mistake as well as criticism on social media in the same column took the sting out of my criticism of the reporter and of editorial supervision. Another reader even deducted an “inherent reticence bordering on self-censorship.” Role of a news ombudsman I would like to place my work in context. Among the first documents I read when I was invited to become this newspaper’s Readers’ Editor were the UNESCO consultation papers on self-regulation, which had contributions from respected news ombudsmen. The key elements were: protecting the mediafrom political censorship, economic dependence, and expensive litigation; being an educational tool to both journalists and the public though vigilant media literacy; and, finally, being a tool for media accountability to ensure trust. Serving ombudsmen also stressed a two-way role: help readers know how the newspaper works and become the critical voice of the public internally. These papers explained that a news ombudsman neither washes dirty linen in public nor is an in-house apologist, but is the “conscience of news reporting.” In the first year of my job, I had to work out a method to deal with two important questions. One, how to write a weekly column that is not clouded by my own anger at various political, economic and social issues? I get mails written in intemperate language. To read them without getting angry at their unreasonable tone and tenor forced me to look for tools from other disciplines. Two, how to effect corrections and clarifications without impinging on the rights of the Editor? Where does the independence of the ombudsman end and where does it begin to encroach on the Editor’s prerogatives? The Terms of Reference is a document that is subject to interpretation, and an inadvertent overreach may spoil the delicate balance that is essential for self-regulation to work. One of our foremost contemporary philosophers, Martha C. Nussbaum, not only helped me contextualise anger, but also realise its flaws and limitations. In her John Locke Lectures at the University of Oxford, she saw the limited instrumental usefulness of anger: “Anger is necessary, when one is wronged, to the protection of dignity and self-respect; anger at wrongdoing is essential to taking the wrongdoer seriously rather than treating him or her like a child or a person of diminished responsibility, and it is an essential part of combating injustice.” But she argued that this limited usefulness does not remove its normative inappropriateness. She came up with an interesting term: “the road of payback.” In this road, the mistake “is the thinking that the suffering of the wrongdoer somehow restores, or contributes to restore, the important thing that was damaged.” It is rather difficult to grasp the full import of this idea, let alone practice it. I cannot say that I have overcome my easy proclivity to anger, but as a news ombudsman, I unfailingly try to focus on restoring something that was damaged rather than focus on the wrongdoer. A fine line I could arrive at this decision partly because I was also trying to ascertain the line that separates my responsibility from that of the Editor. For instance, I decide which mistakes need a correction and which ones also need a clarification. I carry corrections on the editorial page if the mistake appeared in print in more than three editions. If it appeared in a single edition or two editions, I ensure that the correction appears on the city page. However, I never arrogate the power to express regret or apologise on behalf of the newspaper. That is the sole discretion of the Editor. An explicit rule that I learnt from the UNESCO papers is: “Ombudsmen are not — and should not be — given powers to sanction.” The ombudsman’s accountability is towards the readers where mistakes are corrected in a visible manner. The in-house follow-up action, including the quantum of penalty, is the exclusive preserve of the Editor. This clear separation of powers not only ensures accountability but also prevents conflict of interest.
Richard Thaler has been crucial in putting the human at the heart of economics Economics as a discipline is not infrequently accused of being fairly removed from reality. The activities of societies, countries, corporations and the global macroeconomy itself are meant to fit certain models, at the heart of which are rational agents maximising their utility or welfare. However, economic models are, to varying degrees, abstractions of the real world in which economic agents are all too often not rational. For decades, American economist Richard H. Thaler has studied how decision-making deviates from rational behaviour in the real world and how this can actually be incorporated into economic modelling. His analysis married economics to human psychology and his work has formed the core of the field of behavioural economics. It is for his pioneering contributions to this field that Prof. Thaler was awarded the Economics Nobel on Monday. The Royal Swedish Academy of Sciences cited his analysis of how decision-makers deviate systematically from rational behaviour as conceived in traditional economic theory. For instance, individuals experience bounded rationality due to cognitive limitations. Two, they have social preferences such as caring for others. And three, they sometimes lack self-control. These are situations that every individual can relate to. In explaining the relevance of Prof. Thaler’s work and their decision to award him the prize, the committee highlighted its everyday relevance. Consider, for instance, the existence of social preferences. It would be rational for a shop to increase the price of umbrellas on a rainy day but customers would probably think of this as an unfair or exploitative policy if they were aware of the regular price. Their preference for fairness is thus a factor that keeps the shop from increasing the price of umbrellas according to the weather, when rational behaviour in traditional economic theory would warrant an increase. It is through such applications that behavioural economics has made economics as a whole more accessible and familiar. Richard Thaler had, as the Nobel committee put it, made economics more human. Behavioural economics, like any other, is not free of criticism — in this case, of being a patchwork of cognitive psychology and mathematics, with so many individual exceptions that it neither has the rigour of mathematics nor is free enough of modelling to be pure psychology. There are several psychologists and economists with whom Prof. Thaler has collaborated, including Amos Tversky and the 2002 Economics Nobel winner Daniel Kahneman. In a 2008 book Nudge, Prof. Thaler and Cass Sunstein show how behavioural economics can be used in policy-making to influence behaviours. It is here that they introduce the concept of libertarian paternalism, where “choice architects” influence the behaviour of individuals to make their lives “longer, healthier and better” but in a way that gives individuals the freedom to not participate in arrangements that are not to their taste. And with governments slowly incorporating it into policy, behavioural economics has not been restricted to campuses.
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atalan President Carles Puigdemont’s call for a dialogue with the federal government is the first sign in many months of an attempt to break the stalemate in Spain’s continuing crisis. Prime Minister Mariano Rajoy, who has remained steadfast in his defence of Spanish sovereignty and integrity, should seize the opening, slight though it is. In his address to the regional parliament in Barcelona on Tuesday, Mr. Puigdemont insisted that he would act on the popular mandate for a declaration of independence in the October 1 referendum. But he also expressed a willingness, not necessarily shared by allies in the ruling coalition, to defer such a proclamation so as to negotiate with the Spanish government and to explore international mediation. There are conflicting interpretations on the essence of that address. But Mr. Rajoy seems to be in no mood whatsoever to relent. He has said that he wants to ascertain whether Mr. Puigdemont’s speech amounts to a declaration of independence before Madrid triggers Article 155 to exercise direct control over Catalonia. While it is an option he has been weighing for some months, this obduracy is hard to understand in today’s altered circumstances. The centre-right government’s refusal to engage the Catalan leadership in any dialogue may have had a context prior to the referendum. There was sound legal basis to its insistence that the question of secession was outside the framework of the Spanish constitution, as vindicated by the country’s highest court. But the fact is that Madrid failed to convince Catalan leaders to abandon the vote; in fact, the vote held on October 1 brought the Spanish government widespread condemnation for the violent incidents of the day. This grim backdrop should trigger fresh thinking on Mr. Rajoy’s overall approach. A plain refusal to talk to the separatists is politically untenable when the other side seems inclined to push back on the declaration of independence. The attempt instead should be to impress upon his interlocutors in Catalonia that a sizeable proportion of the population was opposed to secession. In fact, Madrid should weigh the larger ramifications of rolling back Catalonia’s regional autonomy at a time when passions are running high. What is needed most of all currently is calmer rhetoric. Mr. Rajoy needs to steer the public debate more constructively to how regional aspirations could be met without precipitating a bigger crisis. Whether the European Union could influence the course of events is at best a matter for speculation. But a more interventionist posture cannot be ruled out, should there be an unfortunate relapse to the violence of recent days. Mr. Rajoy should draw upon his decades-long political experience, and the backing he enjoys of the opposition socialists, to fashion an appropriate response to Mr. Puigdemont’s overtures.
