1 Italy vote rattles Europe (Alessandra Galloni & Giada Zampano in The Wall Street Journal) In a national election meant to push Italy further down a path of economic reform, voters delivered political gridlock that could once again rattle Europe’s financial stability. Markets in Europe and the US gyrated even in response to early returns. The Dow Jones Industrial Average swung nearly 300 points, ending with its worst day in almost four months, as the prospects of a stable government appeared to drop.
A majority of voters endorsed parties that had promised to tone down or even reverse the financial sacrifices Italy has promised its European partners, giving surprise lifts to both the center-right coalition of former premier Silvio Berlusconi and a party of protest led by a former comedian. Late Monday, the left-wing coalition led by the Democratic Party’s Pier Luigi Bersani appeared to have gained a razor-thin victory in the lower house of parliament over the center-right coalition headed by Mr. Berlusconi—29.6% to 29.2% with 99.9% of the ballots counted.
The election surprise poses a challenge for euro-zone creditor nations such as Germany, which have demanded that financially stressed euro-zone countries overhaul their economies in exchange for supporting the European Central Bank’s pledge to save the currency union if necessary. A public rejection of austerity policies could rapidly spread to Spain and beyond, forcing European authorities to accelerate their response to the regional crisis or risk another round of the kind of contagion that effectively closed a host of euro-zone credit markets.
Italy’s unclear election results are in large part due to the country’s electoral law, which was introduced in 2005 and has been dubbed “porker” law because of all its critics. The law awards the majority of seats in the lower house of parliament to the party that wins the most votes at a national level, even if the victory is by one vote.
2 In India, missing school to work in mines (Gardiner Harrris in The New York Times) Just two months before full implementation of a landmark 2010 law mandating that all Indian children between the ages of 6 and 14 be in school, some 28 million are working instead, according to Unicef. Child workers can be found everywhere — in shops, in kitchens, on farms, in factories and on construction sites. In the coming days Parliament may consider yet another law to ban child labour, but even activists say more laws, while welcome, may do little to solve one of India’s most intractable problems.
“We have very good laws in this country,” said Vandhana Kandhari, a child protection specialist at Unicef. “It’s our implementation that’s the problem.” Poverty, corruption, decrepit schools and absentee teachers are among the causes. India’s Mines Act of 1952 prohibits anyone under the age of 18 from working in coal mines, but enforcing that law would hurt families.
While the Indian government has laws banning child labor and unsafe working conditions, states are mostly charged with enforcing those laws. The country’s police are highly politicized, so crackdowns on industries sanctioned by the politically powerful are rare. Police officers routinely extract bribes from coal truckers, making the industry a source of income for officers.
3 Will new technology mean end of cash? (David Wolman on BBC) Like forecasts of flying cars, predictions of a cashless future have a history of failure. This is in part because progress is incremental, and in part because physical money is a time-tested technology. Yet powerful forces are aligning against cash. Together, they provide a glimpse of what a cashless or mostly cashless future might look like, and illuminate the promise of digital money, irrespective of whether cash is ever kaput or just increasingly marginalised.
The battery against cash is coming from three fronts – new technologies, scepticism about the stewardship of sovereign currencies and increased enthusiasm for alternative currencies, and greater scrutiny about cash’s myriad costs. Digital money innovations, particularly tools anchored to mobile phones, offer faster and cheaper ways to pay bills, buy and sell goods, send and receive money and make bank transactions.
Angst about government currencies has traditionally sent people flocking to gold, and for many devotees of the shiny stuff, gold remains the one and forever answer. But gold is not value incarnate. It’s just another commodity, albeit a historically pivotal and impressively hefty one.
Digital tools are already providing millions of people worldwide with the opportunity to avoid cash. And avoid it they do. They are storing value and transacting by way of electronic accounts “on” their mobile phones.For the first time, people who were trapped in the informal economy can steer clear of usurious local moneylenders, save precious time and money, and benefit from the basic financial services that you and I take for granted.
And no, looping people into the formal economy isn’t a clandestine Valentine to banks and bankers. The fact is that a bank account, online bill, person-to-person payment, access to credit, insurance – all of these tools for building economic stability depend on money in electronic form. If you don’t have that, it’s far more difficult to climb permanently out of poverty. The truth is that it doesn’t matter all that much whether cash’s further marginalisation ever leads to extinction. What matters far more is the potential for digital money innovations to improve the welfare of so many.