Public Funding of the Election Dance? Try the ‘Rao Twist’ !
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
We may be between elections, but corruption is a perennial river - a river with many sources, one dirtier than the other, each seeking the rainbow, and, both the setting sun on the horizon and the rising moon as the serpentine merges in to the confluence of the sky and the sea. Elections, doubtless, are one of the largest of these corruption sources; the reason being that a change in government brings about changes in policy that affect large domestic business houses, VHNIs, and foreign industries, beyond impacting, in a fundamental way, the multitudes invested in stock markets and fixed assets. The consequent large shadow values attached to electoral results is the motivation behind many-a-backroom pre-election moves. Practically, every one of these moves is an underhand deal with payoffs arranged in one of the many discrete and not-so-discrete ways. So, what can we, as Anna Hazare faithfuls, do, to correct this corruption curse, a monstrosity that visits upon us every few years (and sometimes is the reason for the premature change in government?) Yes, we could adopt PR at the ballot box, but that does not get to corruption. Are we then to turn, either meek witnesses to the rape of our constitution and the loot of public wealth, or, God forbid, storm the Parliament, to impose our will? Thankfully, No.
Let us, instead, consider an ‘overground system’ for the funding of elections. Political parties are aware of and exploit voting blocs among the masses – Employees-HomeOwners-Investors, Businesses-Producers-Capitalists, Voters-Subsidy Recipients-Consumers, Retirees-Pensioners, Farmers, Environmentalists, Religious Groups (if constitutionally permitted), to name a few. Presume that a mechanism can be created to channel a small percent, say 0.1 %, from the financial transactions of each citizen/business entity/organization in to one or more of the public Voting Bloc funds. These Voting Bloc Funds would be overseen by the CEC (perhaps a triumvirate of officers for each voting bloc deputed by the CVC to the CEC). Upon the announcement of elections, these Voting Blocs announce auction-based funding rounds. Funds are offered on a per-contested-seat basis, albeit with a lien. The lien is removed post election results when a certain fraction (‘take back’) is held back depending on the party’s electoral performance. This ‘take back’ fraction is bidded upon in online auctions in successive funding rounds across all voting blocs. Thus, a 90% take-back round is announced for all voting blocs simultaneously, and parties willing to ‘give back’ 90% for every loss may approach one or more of the voting blocs for funds. This is followed by a 80% take-back round, then 70%, and so on, until the officers declare the funding rounds closed. The CEC would, at the conclusion of the elections, publish consolidated accounts that reconcile liens and ‘take backs’ from each party. This mechanism ensures, on one hand, that only the politically viable parties approach the voting blocs first, and on the other, guarantees propriety in party electoral expenses, which otherwise would tend to inflate with freely available public funds in a competitive election arena involving parties that must outspend each other to catch the voter’s attention.
Voters, who previously had little clout, now have an organized, legal, even a public channel to pursue their agenda. Each voter would have indicated, online, his choice of voting bloc for the channeling of his contributions. Conceivably, each voter could opt to channel his contributions, cumulated and apportioned annually, to one or more of the (overlapping) voting blocs (a consumer is also a ‘green’, an investor and a retiree). At the ballot box, voters evaluate each party’s manifesto, its funding sources, and the compatibility of their manifesto with that of funding sources, and with one’s own preferences and opinions on various issues of national importance, and societal/personal interest.
Parties, which previously resorted to large scale corruption to fund their campaign, or that approached large business houses and those unnamed foreign sources for electoral funding, now turn to public funding sources. They cast their manifesto and choose candidates to maximize some joint function of electoral success and (retained/net) electoral funding from public sources. Clearly, the availability of legal and public source of electoral funding reduces the incentive to seek out ‘high-risk’ and illegal electoral funding sources whose patrons exact their pound of flesh upon the nation, its citizens, and its future. The overt nature of funding and transparency of the electoral process also contributes to a less-corrupt electoral process, and in turn, to a more upright Parliament and Government.
Bottom line, a less-corrupt, more efficient, and a more equitable society. Not a bad way to fight corruption, huh?
Wanna vote on my proposal?
(Comments and Suggestions? Direct them to the CEC and the CVC !)
Monday, August 29, 2011
Wednesday, August 17, 2011
A 2-Part Vehicle Insurance Proposal that Enhances Road Safety and Saves You a Buck (or two)!
A 2-Part Vehicle Insurance Proposal that Enhances Road Safety and saves you a Buck (or two)!
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Man (or, was it the ape?) invented the wheel eons ago. 4-wheeled powered transport is all of 2 centuries old. Road networks came in to existence a hundred years ago. Car insurance some 50 years back, GPS and interactive maps yesterday…..and yet, accidents continue to recur on our roads at a frequency that would shame those who conceived transport as a panacea - a means to foster equity across a large, spread out population. Every nation, whether advanced or developing, loses a not insignificant fraction of its well-heeled, even well-educated population in accidents; in fact, accidents have claimed some of our better known social personalities. No one seeks an accident so why does it happen? True, the improvement in automobile safety features and better road infrastructure have tended to cut down on fatalities if not on accident frequency, but the many-fold increase in average and peak speed has increased the severity of accidents. The increase in traffic density and lack of traffic discipline has tended to exacerbate both the frequency and severity of accidents. Human error, both immediate and in planning trips has always been an overwhelming influence.
Talking of human error, the question to ponder about is: Could we not force drivers to plan their trip, anticipate risks and reduce the risk of accidents to self and other drivers on road? What would aid such planning? Isn’t there a market mechanism to induce safe behavior on road, and dissuade the less-than-prudent drivers to stay off road? If not, why, and what can we do about it? Unlike planes and trains where your fate is decided by the operator (or the drunken bus driver who claimed his right to cross what seemed like a horizontal ladder on the road ! The passengers did not live to verify the truth), automobile safety is largely in the hands of the driver/owner. Human error then manifests from lack of planning and anticipation, either from carelessness or from lack of priority relative to other ‘pressing engagements’. Insufficient information about static (section of poor road) and dynamic road risks (trucks riding the fast lane in tandem or buses competing to get to the next town for passengers) is an important contributing factor behind road accidents. In the days of yore, there wasn’t much that one could do about it. But with advances in information technology and automobile sophistication, one now has potential access to information critical to ensure superior safety on roads.
Human nature being what it is, any action that attenuates a risk or the damage from risk results immediately in further ‘use’ of the risky activity. Insurance is a well known moral hazard. The fact that motor insurance is collected largely invariant to the extent of driving is an important source of excessive vehicular use. So are transactions cost, free ridership and the ‘commons externality’. If it were not for damage to self and one’s own or rented vehicle, a driver would carry minimal if at all any insurance regardless of the fact that his vehicle and his driving contributes to the background, or sometimes the incremental risk of on-road vehicular accident. This lack of regard for the safety of fellow drivers on road is an important cause of accidents, especially those accidents in which human error is indicated. The bottom line is a lack of willingness to pay for public risk-alleviation and risk-alleviating strategies. This lack of willingness to pay for enhancing group safety results in lower than optimal investment in safety – whether safety features in vehicles, training in defensive driving, pre-emptive automobile maintenance and repair, or, as proposed here, a commercially feasible trip-planning-cum-insurance service. Consequently, technologies and services that would have provided services that enhanced road safety are pre-empted from existence. After all, who would invest sizable resources to inform the millions of car drivers of risks on a real-time basis? And that, fellow citizens, is the crux of the matter. There must be an incentive for the dissemination and use of safety information.
To an economist, the message is simple. Drivers must be induced to perceive a monetary gain or loss related to their safety performance on road. And entrepreneurs must perceive sufficient profits to set shop and disseminate trip planning and safety information that enhance safety while on road. The first condition only obtains when motor insurance is tied to (incremental) accident risk, which derives from commuting/travel distance, driving performance and other on-road risks not explicitly considered in a traditional insurance policy. To realize the first condition, one could, in a guarded way, suggest motor insurance quotes be separated in to a ‘fixed annual’ part provided by traditional insurance firms covering for daily commute within a certain radius around one’s primary residence, and a ‘variable part’ that covers for discretionary long distance trips including business and pleasure trips. Commuting and local driving constitutes the 'inelastic' part of driving. Such driving is relatively less-risky, largely invariant to income and weather fluctuations and even anticipated. Inter-city driving, on the other hand, is less-frequent, subject to vagaries of weather if not income, is less-well anticipated, and hence carries a larger risk - thus motivating and justifying a separate insurance cover. Partitioning motor insurance thus could reduce premiums substantially, especially for local driving. If a large fraction of that driving is employment-related, it could even be subsidized by the employer or prevalent/amended tax laws.
Let us focus on road safety in discretionary driving. To maximize on-road safety performance, it is necessary to relate insurance premium to driving diligence in a perceptible and immediate manner. The trip planner’s insurance has a significant role to play in establishing such an incentive. The variable insurance assessed by the trip planning services is offered as a ‘Deposit Refund’ quote – a strategy in which drivers pay for each business/pleasure trip an amount quoted by the trip planning service, a part of which is returned based on the post-journey driving assessment as provided by the on-vehicle driver evaluation software.
The second condition, that of innovation-driven feasibility of business, is realized when the cost of providing real time road safety information falls sufficiently, in real terms, to provide it competitively (sufficient insurance savings for vehicle owners to flock in and buy in to the service) and make a profit. Witness 3G, 4G and 5G bandwidth for sale! Heck, if Piramal can buy in to Vodafone to offer medical services over the airwaves (or, so I presume), so can I to save the lives and accidents on road! True, it might require sponsoring an ISRO satellite launch, but the gains are tangible and long-term, if not immediate. A dedicated ‘ISRO-TRANSAT’ would lower costs and enable the provision of real-time, online, raod-trip advisory services. The online service, aware of the driver’s credentials, his/her driving record, driving plans, vehicle age and condition, would evaluate risk and be in a position to offer individually tailored insurance quotes for each trip. With ‘IT-enabled’ vehicle, an owner registered with an online trip planning service would login, provide necessary information, answer a list of ‘diligence’ questions and obtain a quote. A ‘trip ticket’ would be generated after paying the quoted amount which would double both as trip insurance premium and a ‘diligence fee/deposit’. The fee/premium would entitle the driver to real-time Road Information System (RIS) while on road. Information on road condition, weather and other impending risks – even processions and protests - would be communicated wirelessly to the subscriber on his vehicle console. Even moving transient hazards, such as unsafe drivers and vehicles could be anticipated and informed with 'just-before-time' precision. If, as alluded above, the vehicle were fitted with a ‘driver rating software’, the trip-planning service would, at the conclusion of the journey, pull up the insured's driving evaluation for the trip and return the diligence deposit to the extent his driving passes the safety benchmarks. Easy money for safe driving! Howzzat?
Such a system would be a boon to drivers who are careful with their vehicle and their driving. In fact, it induces drivers to drive extra safe for larger refunds, and incentivizes this group with lower insurance premiums. Conversely, the system would require higher premiums from the less-informed, less-diligent, and less-trustworthy on the road, and perhaps even induce them to seek alternative means of transport. By providing divergent incentives to drivers at opposite ends of the safety spectrum, the proposed insurance system enhances road safety. On one hand, it increases the proportion of safe drivers and safe vehicles on inter-city roads, and reduces the number of unsafe drivers from undertaking long and risky journeys on the other. The 2-part insurance would, beside furthering competition, provide an opportunity for insurance firms to self-select their risk niche, and perhaps even contribute to lower insurance costs for those urban dwellers who limit their vehicle use to commuting to work, dropping off their children at school and weekend shopping. Discretionary driving is anticipated and priced for each instance, thus enabling the trip planning-cum-insurance firm to tailor its quote specifically for every driver, vehicle and trip.
Now, you wouldn’t mind paying a small incremental ‘surcharge’ toward abating global warming with your discretionary driving quotes, would you?
Welcome to Shangri La!
Ganga Prasad G. Rao
http://myprofile.cos.com/gangar
Man (or, was it the ape?) invented the wheel eons ago. 4-wheeled powered transport is all of 2 centuries old. Road networks came in to existence a hundred years ago. Car insurance some 50 years back, GPS and interactive maps yesterday…..and yet, accidents continue to recur on our roads at a frequency that would shame those who conceived transport as a panacea - a means to foster equity across a large, spread out population. Every nation, whether advanced or developing, loses a not insignificant fraction of its well-heeled, even well-educated population in accidents; in fact, accidents have claimed some of our better known social personalities. No one seeks an accident so why does it happen? True, the improvement in automobile safety features and better road infrastructure have tended to cut down on fatalities if not on accident frequency, but the many-fold increase in average and peak speed has increased the severity of accidents. The increase in traffic density and lack of traffic discipline has tended to exacerbate both the frequency and severity of accidents. Human error, both immediate and in planning trips has always been an overwhelming influence.
Talking of human error, the question to ponder about is: Could we not force drivers to plan their trip, anticipate risks and reduce the risk of accidents to self and other drivers on road? What would aid such planning? Isn’t there a market mechanism to induce safe behavior on road, and dissuade the less-than-prudent drivers to stay off road? If not, why, and what can we do about it? Unlike planes and trains where your fate is decided by the operator (or the drunken bus driver who claimed his right to cross what seemed like a horizontal ladder on the road ! The passengers did not live to verify the truth), automobile safety is largely in the hands of the driver/owner. Human error then manifests from lack of planning and anticipation, either from carelessness or from lack of priority relative to other ‘pressing engagements’. Insufficient information about static (section of poor road) and dynamic road risks (trucks riding the fast lane in tandem or buses competing to get to the next town for passengers) is an important contributing factor behind road accidents. In the days of yore, there wasn’t much that one could do about it. But with advances in information technology and automobile sophistication, one now has potential access to information critical to ensure superior safety on roads.
Human nature being what it is, any action that attenuates a risk or the damage from risk results immediately in further ‘use’ of the risky activity. Insurance is a well known moral hazard. The fact that motor insurance is collected largely invariant to the extent of driving is an important source of excessive vehicular use. So are transactions cost, free ridership and the ‘commons externality’. If it were not for damage to self and one’s own or rented vehicle, a driver would carry minimal if at all any insurance regardless of the fact that his vehicle and his driving contributes to the background, or sometimes the incremental risk of on-road vehicular accident. This lack of regard for the safety of fellow drivers on road is an important cause of accidents, especially those accidents in which human error is indicated. The bottom line is a lack of willingness to pay for public risk-alleviation and risk-alleviating strategies. This lack of willingness to pay for enhancing group safety results in lower than optimal investment in safety – whether safety features in vehicles, training in defensive driving, pre-emptive automobile maintenance and repair, or, as proposed here, a commercially feasible trip-planning-cum-insurance service. Consequently, technologies and services that would have provided services that enhanced road safety are pre-empted from existence. After all, who would invest sizable resources to inform the millions of car drivers of risks on a real-time basis? And that, fellow citizens, is the crux of the matter. There must be an incentive for the dissemination and use of safety information.
To an economist, the message is simple. Drivers must be induced to perceive a monetary gain or loss related to their safety performance on road. And entrepreneurs must perceive sufficient profits to set shop and disseminate trip planning and safety information that enhance safety while on road. The first condition only obtains when motor insurance is tied to (incremental) accident risk, which derives from commuting/travel distance, driving performance and other on-road risks not explicitly considered in a traditional insurance policy. To realize the first condition, one could, in a guarded way, suggest motor insurance quotes be separated in to a ‘fixed annual’ part provided by traditional insurance firms covering for daily commute within a certain radius around one’s primary residence, and a ‘variable part’ that covers for discretionary long distance trips including business and pleasure trips. Commuting and local driving constitutes the 'inelastic' part of driving. Such driving is relatively less-risky, largely invariant to income and weather fluctuations and even anticipated. Inter-city driving, on the other hand, is less-frequent, subject to vagaries of weather if not income, is less-well anticipated, and hence carries a larger risk - thus motivating and justifying a separate insurance cover. Partitioning motor insurance thus could reduce premiums substantially, especially for local driving. If a large fraction of that driving is employment-related, it could even be subsidized by the employer or prevalent/amended tax laws.
Let us focus on road safety in discretionary driving. To maximize on-road safety performance, it is necessary to relate insurance premium to driving diligence in a perceptible and immediate manner. The trip planner’s insurance has a significant role to play in establishing such an incentive. The variable insurance assessed by the trip planning services is offered as a ‘Deposit Refund’ quote – a strategy in which drivers pay for each business/pleasure trip an amount quoted by the trip planning service, a part of which is returned based on the post-journey driving assessment as provided by the on-vehicle driver evaluation software.
The second condition, that of innovation-driven feasibility of business, is realized when the cost of providing real time road safety information falls sufficiently, in real terms, to provide it competitively (sufficient insurance savings for vehicle owners to flock in and buy in to the service) and make a profit. Witness 3G, 4G and 5G bandwidth for sale! Heck, if Piramal can buy in to Vodafone to offer medical services over the airwaves (or, so I presume), so can I to save the lives and accidents on road! True, it might require sponsoring an ISRO satellite launch, but the gains are tangible and long-term, if not immediate. A dedicated ‘ISRO-TRANSAT’ would lower costs and enable the provision of real-time, online, raod-trip advisory services. The online service, aware of the driver’s credentials, his/her driving record, driving plans, vehicle age and condition, would evaluate risk and be in a position to offer individually tailored insurance quotes for each trip. With ‘IT-enabled’ vehicle, an owner registered with an online trip planning service would login, provide necessary information, answer a list of ‘diligence’ questions and obtain a quote. A ‘trip ticket’ would be generated after paying the quoted amount which would double both as trip insurance premium and a ‘diligence fee/deposit’. The fee/premium would entitle the driver to real-time Road Information System (RIS) while on road. Information on road condition, weather and other impending risks – even processions and protests - would be communicated wirelessly to the subscriber on his vehicle console. Even moving transient hazards, such as unsafe drivers and vehicles could be anticipated and informed with 'just-before-time' precision. If, as alluded above, the vehicle were fitted with a ‘driver rating software’, the trip-planning service would, at the conclusion of the journey, pull up the insured's driving evaluation for the trip and return the diligence deposit to the extent his driving passes the safety benchmarks. Easy money for safe driving! Howzzat?
Such a system would be a boon to drivers who are careful with their vehicle and their driving. In fact, it induces drivers to drive extra safe for larger refunds, and incentivizes this group with lower insurance premiums. Conversely, the system would require higher premiums from the less-informed, less-diligent, and less-trustworthy on the road, and perhaps even induce them to seek alternative means of transport. By providing divergent incentives to drivers at opposite ends of the safety spectrum, the proposed insurance system enhances road safety. On one hand, it increases the proportion of safe drivers and safe vehicles on inter-city roads, and reduces the number of unsafe drivers from undertaking long and risky journeys on the other. The 2-part insurance would, beside furthering competition, provide an opportunity for insurance firms to self-select their risk niche, and perhaps even contribute to lower insurance costs for those urban dwellers who limit their vehicle use to commuting to work, dropping off their children at school and weekend shopping. Discretionary driving is anticipated and priced for each instance, thus enabling the trip planning-cum-insurance firm to tailor its quote specifically for every driver, vehicle and trip.
Now, you wouldn’t mind paying a small incremental ‘surcharge’ toward abating global warming with your discretionary driving quotes, would you?
Welcome to Shangri La!
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