Economist 7/27/15

  1. The Behavioural Insights Team (BIT), based in London and previously known as the ‘Nudge Unit’, published a summary of its findings over the past two years. Five years after it started, the buzz surrounding the unit has not faded. So far the BIT has trialled over 100 policy tweaks around the world, and boasts an impressive array of results.In the field of tax collection, the BIT has helped boost revenues for cash-strapped governments. For instance, in Singapore, the BIT found that printing tax bills on the pink paper typically used for debt collection led to an improvement in the prompt payment rate of between three to five percentage points.ts trials also show what does not work. In Singapore cartoons are often used to communicate public policies. But the BIT’s experiments revealed that these cartoons reduced the effectiveness of public messages.So far, the sums the BIT talks about consist of hundreds of millions.
  2. The world may be getting warmer, but it is not getting much wetter. It quaffed 249 billion litres of alcoholic drinks in 2014, a modest increase of 1 billion over the preceding year. When measured by intake per head of the drinking-age population, consumption is down a little from a peak of 56.6 litres in 2012 to 55.4 litres in 2014. People in rich countries are the ones imbibing less—a moderation that has not (yet) been matched by a corresponding binge in emerging markets. India, for instance, is the ninth-largest alcohol market, yet consumption per head is low.
  3. On July 24th, the price of a barrel of oil in America reached a low of $48. In spite of this, governments are still splurging on subsidies to prop up production. Fossil fuels are reaping support of $550 billion annually, according the International Energy Agency (IEA).The International Monetary Fund’s estimates are substantially higher. It said in May that countries will spend $5.3 trillion subsiding oil, gas and coal in 2015, versus $2 trillion in 2011. That is equivalent to 6.5% of global GDP.Rich countries subsidise too—the IMF says America is the world’s second biggest culprit, spending $669 billion this year—but mostly by “post-tax” systems which fail to factor the costs of environmental damage into prices.The IEA believes that only 8% of subsidies accrue to the poorest fifth of the population. That money would better spent on roads, hospitals and schools instead.
  4. UST a day after Turkey at last went on the attack against Islamic State (IS) jihadists in Syria, it turned its guns on its longstanding foes the Kurdistan Workers Party (PKK). The PKK has fought intermittently for decades to establish Kurdish autonomy in Turkey, but had observed a tentative cease-fire for the past two years while its imprisoned leader, Abdullah Ocalan, negotiated a peace deal with the government. The PKK was the first to break the ceasefire when it killed four Turkish policemen last week. On July 25th Turkish jets retaliated, bombing PKK camps in Iraq.Meawhile, the Turkish attacks clearly have domestic political motivations. The ruling Justice and Development (AK) party lost its governing majority in elections on June 7thwhen, for the first time, the pro-Kurdish People’s Democracy Party (HDP) cleared the 10% threshhold for representation in parliament.Kurdistan Workers Party (PKK)
  5. The inspectors have come to villages like Gaucin to tackle the Spanish government’s difficulties in collecting revenue, in the face of economic problems that have driven much of the country’s business activity into the shadows. Spain’s economy has been growing lately, creating 411,000 net jobs in the second quarter according to figures released on July 23rd by the national statistics agency. But while unemployment fell 1.4 percentage points, it is still an agonising 22.4%, having remained above 20% for five years.While northern European countries now promote electronic transactions, shopkeepers and housecleaners in Spain are happy to accept cash in order to dodge value-added tax of 21%. The grey economy is estimated to make up between a fifth and a quarter of Spain’s GDP.The government’s tax crackdown has netted almost €35 billion ($38.5 billion) extra for the state’s coffers in the past three years. But the tax agency (or Agencia Tributaria) sees scope to improve that take.Meanwhile, among 16- to 24-year-olds, the unemployment rate is nearly 50%. Members of this generation are referred to as ni-ni (“neither-nor”), because they neither work nor study.
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