Commitment or Equivocation

This chapter distinguishes between commitment and equivocation in the design of governance strategies. For the last thirty years, “credible commitment” has been a stock phrase in scholarly writing about government. Governments are said to have a credibility problem, because citizens and businesses do not trust them to keep promises about how they will behave in the future. The task for leaders is to find techniques for demonstrating that they will keep their word, by designing institutions that make it hard to break promises. These institutional arrangements are called commitment devices. It can then be concluded that leaders are mainly concerned with finding clever ways to solve commitment problems. Commitment, it seems, is the key to prosperity, order, and legitimacy. Leaders want people and businesses to make choices that stimulate growth and deepen their own attachment to the existing order. However, the situation confronting leaders is actually more difficult than this. Sometimes equivocation rather than commitment is the sound choice. Leaders know that there will inevitably be emergencies where everyday rules have to be put aside, and they do not want to make it impossible to do this. For example, property might need to be seized in the name of national defense.

Hans Sicat and the Transformation at the Philippine Stock Exchange

The Philippine Stock Exchange, Inc. (PSE) was suffering a credibility problem in 2011. Just like the Philippine economy, the PSE was not performing well and the integrity of its leadership and decisions they made was being questioned by the public at large and the business community in particular. Hans Sicat, a retired investment banker, was invited to join the Board of Directors with a tacit agreement that he would be elected Chairman. Events thereafter led to Mr. Sicat's appointment as President and Chief Executive Officer of the bourse. Hans Sicat turns around the stock exchange successfully. How he makes it look seemingly simple is the subject of this case. Hans places all transformative efforts into two “bucket lists”. All of his efforts to increase the volume of trade in the exchange are classified under Liquidity, while all efforts to restore the integrity within the bourse and its listed firms, he refers to as Governance issues. The Philippine Stock Exchange, Inc. transformation does not go unnoticed by domestic and foreign investors, and other stakeholders as well. It breaks the 5,000 point barrier.

Central Banks at War

War is expensive—troops must be equipped and weapons must be procured. When the enormous borrowing requirements of war make the sovereigns' credibility problem more difficult, central banks enhance a government's ability to borrow. By being the sole direct purchaser of government debt, the central bank increases the effective punishment that can be imposed on the government for defaulting on the marginal lender. This increases lenders' confidence that the government will be punished in case of default, making lenders willing to purchase the debt at a lower rate of interest. The sovereign, dependent on the low borrowing costs offered by the central bank, has an incentive to retain the bank. Data covering the nineteenth and early twentieth centuries reveal that possessing a central bank lowers the sovereign's borrowing costs, particularly during times of war.

Dignity and the Ownership and Use of Body Parts

Property-based models of the ownership of body parts are common. They are inadequate. They fail to deal satisfactorily with many important problems, and even when they do work, they rely on ideas that have to be derived from deeper, usually unacknowledged principles. This article proposes that the parent principle is always human dignity, and that one will get more satisfactory answers if one interrogates the older, wiser parent instead of the younger, callow offspring. But human dignity has a credibility problem. It is often seen as hopelessly amorphous or incurably theological. These accusations are often just. But a more thorough exegesis exculpates dignity and gives it its proper place at the fountainhead of bioethics. Dignity is objective human thriving. Thriving considerations can and should be applied to dead people as well as live ones. To use dignity properly, the unit of bioethical analysis needs to be the whole transaction rather than (for instance) the doctor-patient relationship. The dignity interests of all the stakeholders are assessed in a sort of utilitarianism. Its use in relation to body part ownership is demonstrated. Article 8(1) of the European Convention of Human Rights endorses and mandates this approach.