Typography

 We are more than thirty days into Narendra Modi's demonetization campaign, and while many of the commentators I follow say that it is admirable of Modi to try to reduce the role of  black money (wealth held by tax-evaders and criminals) and increase digital money adoption, most say that demonetization is not the way to go about it. In short, the idea behind Modi's demonetization is to require everyone who owns old 1000 and 500 rupee notes to bring them to a bank before year-end for conversion into new banknotes or to be deposited into an account. By forcing Indians to re-familiarize themselves with dormant accounts, or open new ones, the architects of the plan hope that India's reliance on cash as a medium of exchange will be reduced. Any amounts above the ceiling require proper documentation. Those who own large amounts of cash for undocumented reasons, either because they are evading taxes or engaging in criminal behaviour, will therefore be unable to make the switch, t...

From the website IPaidaBribe.com A few months ago  I stumbled on Kaushik Basu's fascinating and readable  2011 paper Why, for a Class of Bribes, the Act of Giving a Bribe should be Treated as Legal . In the context of Narendra Modi's massive demonetization campaign, which has as one of its goals a reduction in corruption, I thought it was a timely moment to shine the spotlight on Basu's idea. To reduce bribery, the act of giving a bribe should be legalized, suggests World Bank Chief Economist @kaushikcbasu https://t.co/xORxMAjcNq pic.twitter.com/bqOI0uOI36 — JP Koning (@jp_koning) September 25, 2016 One reason that bribery often goes undetected by authorities is that the bribe giver and the bribe taker are incentivized to cooperate with each other in order to keep a bribe secret. After all, the law typically treats both parties as equally guilty—work together and no one gets in trouble. Basu's idea is to upend this symmetry by having the bribe giver face a differen...

"America's only unwanted, unhonoured coin."  - John Willem on the silver trade dollar. The inspiration for this post comes from the old trade dollar , a U.S. silver coin that was minted in the 1870s and 1880s for the sole purpose of circulating in China. Taking the trade dollar as a model, I'm going to discuss the idea of converting the U.S. $100 bill into a trade bill ; i.e. to limit it to foreign and not domestic usage. Why bother modifying the $100 in this way? While not entirely convinced, I do lean towards Ken Rogoff's idea of getting rid of high denomination banknotes like the Canadian $100, the Swiss 1000 franc, and the Europe's €500. These bills are used primarily by criminals and tax evaders; their removal will make these activities more costly. The public's licit demand for a private means of payment  can be met by low denomination notes, as can the necessity for a convenient physical payments medium on the part of the unbanked. But as I wrote ...