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Thursday, September 8, 2016

Politics over Finance at the Vatican: The Status Quo Vanquishes a Reformer

Late in 2015, Cardinal Pell hired PricewaterhouseCoupers to conduct a comprehensive audit of the Vatican’s finances. Beforehand, he had hired McKinsey to do a review of assets; that company found a total of €1.4 billion (about $1.6 billion) “tucked away” off the books.[1] Other church officials, led by Cardinal Pietro Parolin, the Secretary of State, let Pell know that the audit wouldn’t happen. This was a setback for the financial overhaul that Pope Francis had charged Pell with wide authority to do a thorough job. That pope had been given the mandate to clean up the Curia, as the last pope had resigned amid allegations of “cronyism, inefficiency and corruption.”[2] So why did Pope Francis take Parolin’s side in scrapping any audit even though that pope had given Pell the o.k. to have it done?

The full essay is at "Politics over Finance at the Vatican."

[1] Francis Rocca, “Vatican Finance Chief Runs into Resistance,” The Wall Street Journal, September 8, 2016.
[2] Ibid.

Going to Extremes for Economic Growth: Low Interest-Rates as Unfair and Unwise

Is moderate monetary policy better than going to the extremes? The same can be asked of fiscal policy. Moreover, is a hypertrophic urge to prompt economic growth as if it were an end in itself better than seeking an economic equilibrium? Generally speaking, systems in equilibrium are more stable than those that include a schizogenic, or limitlessly maximizing, variable. An example of the latter is the population growth of our species relative to the equilibria otherwise established by the ecosystems in which we live. A desire for economic growth is a maximizing variable in a political economy. So too is the related practice of taking monetary (and fiscal) policy to an extreme. If the desire is great enough and the related policies extreme enough, the equilibrium of a political economy can be punctured with systemic risk increasing as does the instability of the system. I contend, therefore, that moderate government and central bank policies are preferable to going to the extremes. Here, I address monetary policy.

The full essay is at "Going to Extremes."

Tuesday, September 6, 2016

Brazil’s Rousseff Impeached and Removed from Office: A Case of Partisan Politics?

Dilma Rousseff was impeached and removed from office at the end of August, 2016. The state’s senate voted 61-20 to convict her on charges that she used illegal bookkeeping maneuvers to hid a growing budget deficit.[1] Her defense that she did not enrich herself through public office—that she did not steal public money for her own account—can be regarded as an attempt to deflect the legislators from the existing charges.[2] Only 56 legislators were necessary for a two-thirds majority. Given the problems of hyperinflation and fiscal mismanagement, including a growing public debt, her offenses were “deemed an impeachable crime.”[3] Although Brazil was hardly the only country where the chief executive has sought under political pressure to make a budget deficit look smaller than it actually was, enforcing deterring consequences even just in this case is laudable—while other, partisan motives, detracted from the vote’s legitimacy.

The complete essay is at "Partisan Impeachment in Brazil?"

1. Paulo Trevisani and Reed Johnson, “Brazilian President Rousseff Ousted,” The Wall Street Journal, September 1, 2016.
2. Ibid.
3. Ibid.