Could a Participatory Tax Income Lessen the Social Anger?

A noticeable increase in social strains has recently been observed across the globe, and more specifically in several European countries; the most obvious phenomenon is definitely the "yellow vest" movement that emerged in France, but other movements also appeared in several countries like Belgium, Germany, The Netherlands, and even in Australia. If the list of claims from protesters is heterogeneous and often not very well defined, there is a clear call from activists for a more "egalitarian" tax income. If it is difficult to define what an equitable tax income is or should be, it seems people mostly worry about, (1) the amplitude of tax income, (2) the unfairness of the tax brackets applied, and (3) the misunderstanding of the usage of those revenues by the authorities.


If the amplitude of tax income will not be discussed in this post, one wants to open up the debate on a way to reconcile taxpayers with their fiscal duties; let’s explore two avenues that could contribute to this:

  • Greater Transparency About the Tax Income Allocation

The Government spending breakdown tends to be published by fiscal authorities on dedicated websites, this often takes the form of classifying the core missions financed by the different sources of revenue, including tax incomes. Summarizing that info right away into tax declarations - rather than obliging people browsing a website - offers the chance to taxpayers to better understand how their contribution is allocated, and potentially makes people more involved and concerned about government spending policies. Also, this could help fighting a few clichés regarding the cost of several missions; for instance, did you know that financing immigration is only 0.3% of the 2018 French budget? This effort to improve transparency can be interpreted as when a flat owner pays his service charges; on an annual basis he usually receives a detail statement with the charges breakdown, the same logic could be applied to tax incomes. This information should be clear and concise, easily understandable by everyone, and should not require any complementary browsing to figure out the meaning.


  • Ask the Taxpayers’ Opinion on the Contributions Breakdown

Once taxpayers are informed about the effective budget allocation (or at least a high-level approximation), it becomes very convenient for authorities to ask them what they find an optimal spending breakdown. Of course, people should only express their views on buckets susceptible to be changed, for instance, it is irrelevant to ask their views on reimbursing the interest burden since this is a necessity, not a choice. This kind of “direct democracy” is a powerful tool allowing politics to understand the desiderata from taxpayers and electors while keeping the flexibility to apply them or not. Let’s be honest, the output obtain from this exercise cannot be applied stricto sensu since a budget is a constant trade-off between (1) the real financial needs to make the state work, (2) the government inclination to invest more into specific buckets, sustain economic growth, and (3) the willingness of governments to please the population regarding specific topics; but authorities can nevertheless extract key signals from this survey, for instance, are taxpayers interested to invest more in renewable energy, or less in any other bucket?


We don’t expect the above thoughts to provide the ultimate solution to quiet the social rumbling; because through this exercise, it is obvious that many people will attribute allocations based on a sentiment rather than on a rational thinking. In addition, the budget breakdown is a tough exercise for politics, and people definitely are not as well informed as politicians, hence can only make biased decisions. Nevertheless, if this exercise if taken for what it is, authorities should be able to extract interesting signals susceptible to be analysed.



Keep asking yourself those questions to stay efficient in your job!


 Whatever the Company you are working for, whatever if you have a front-office or back-office role, whatever the skills you are required to apply in your daily job, and whatever the hierarchy level you have, little things may have a big impact on the quality of your job.

The purpose of this post is to outline a set of questions any employee should keep asking himself/herself; those questions often are undermined by the daily routine job tasks, but are crucial nevertheless:


  • Can I rely on the information at my disposal? : If the information may be quantitative or qualitative, it will take the form of data most of the time. All data are not equally important, in addition, data can be missing, incomplete, or irrelevant and consequently bias the entire sample; it is crucial to build efficient platforms to process and manage large volumes of raw data and be sure they are accurate. It may seem obvious, but wrong model outputs often are explained by an inadequate dataset and not modeling errors. It is also crucial to understand what your data really represent (i.e. are prices clean or dirty, or returns arithmetic or logarithmic, etc.) ;
  • Do I maintain simple processes and tools? : Less is often more, and not only in Risk Management, you often may have a clear picture of what is going on with simple charts and formulas; even if advanced modeling may seem “trendy”, it should only be used when no other solutions can be implemented. Reasons to choose simple models include but are not limited to (1) the more sophisticated your model, the more the validity of your parameters, assumptions and inputs will be discussed, (2) it is much easier and intuitive to explain and defend basic models than advanced concepts to a large audience ;
  • Could someone take my job over easily? : Be sure that someone with a limited understanding of your job could easily take it over when you are a few days off, or even if you decide to change of position; this implies, inter alia, being sure that methodologies are up-to-date, folders organized, even that eMails are clearly written. People may think this is not in their interest to proceed that way because keeping things unclear makes an employee more “indispensable” to the company; but keep in mind that a sloppy work is problematic for you first, particularly when you want to understand what you did a few months or years ago.


What a Strong Risk Manager Should First Care About!

Risk Management is become a key business discipline in any large organization and particularly in Financial Institutions; the 2008 financial crisis largely shed light on this discipline and prompted companies to massively strengthen their Risk and Compliance departments in order to cope with regulatory requirements and prevent another financial crisis. Independently from the Risk area you want to specialize, i.e. Market Risk, Credit Risk, or Operational Risk, a successful Risk Manager will never earn credibility among a well-informed audience though speechifying, but by a clear and precise message sustain by a robust data set, this can be achieved by paying a particular attention to the following:

  • Be obsessed by data-quality: Modeling using an irrelevant data set or with an incomplete range of data will always lead you to have a contested outcome. If the Risk Manager cannot directly improve the quality of data, he should nevertheless spend some time on cleaning and reorganizing figures; the Risk-Manager must perfectly be aware on how the model will be impacted by low quality data, and explain the implications to the audience ;
  • Think “automation”:  Processes that can be automatized must be automatized, it does not necessarily mean using complex coding, but sometimes just using basic codes or formulas. Every “manual” action undeniably increases the Operational Risk, i.e. a badly performed copy/paste leads to a wrong model output and consequently to wrong conclusions ;
  • Keep it simple: It is not always required to build very advanced models to supervise Risk; most of checks can be performed through simplistic tools. If the supervision requires advanced modeling, it is always good to apply a second layer of basic controls on the model, abnormal figures may translate technical issues and not effective Risk breaches ;
  • Always back-test / stress-test: Regular back-testing and stress-testing should be performed to ratify the model validity; it is very common that the model robustness changes across time ;
  • Care about statistics: If the output should be presented to colleagues or counterparties, keep focusing on the core information, while clearly defining assumptions. If the output produced by a Risk Manager is an automobile, statistics are the outer finishing; you must be confident about the mechanics, but don’t feel obliged to show the entire engine to the audience, they rather care about the design and how fast is the vehicle.

The above list is clearly not exhaustive, but it enables the Risk Manager to share his output with confidence, and will undeniably facilitate the discussion with internal and external counterparties.



Consider as much the Manager as the Job!

People often are considering a wide spectrum of aspects when looking for a new opportunity (i.e. title, remuneration, work-life balance, etc.), but sometimes are minimizing - or even not considering at all - one of the most important question they should ask themselves: “Will I enjoy working with my future manager? ”.

It can be challenging making an opinion on someone after only a few interviews; but I am convinced that the first impression is important, and that you can learn a lot about the comportment of a person or his global professional or academic knowledge just in a couple of hours.

In my opinion, you can already get a reliable idea of what a person is - or is not - by asking yourselves the two following questions:

  • What could my future manager bring me? The more Senior you are, the more you are expected to bring added value to your future employer (or at least this should be the case), but this assertion is also true the other way round; as for a Junior roles - and even if needs are not the same - you still are expecting your manager to share with you some knowledge (i.e. about the organisational structure), connections, etc. During the interview process, you can easily grasp how smart is your interlocutor and how he is inclined to share with you his knowledge. If you get the feeling that the person won’t or isn’t willing to share with you, you can conclude that this is not the right place for you. If the first feeling after leaving the interview is “Wow, this guy is impressive; I really learned a lot”, this is already a good start.
  • Would I be happy to work with that person on a daily basis? It is important trying to assess the personality of your interlocutor despite that it can be tough to answer this question after a brief interview; inter alia because people can easily simulate and show some aspects of their personality not representative of their real character during the interview. In case of any doubt it is always better not considering the job opportunity anymore.

Since the perfection is not attainable, do not expect your manager to be perfect, but it is better to avoid starting a new collaboration with the feeling “I have to make do with what I get”; bear in mind that a good manager is one of the most valuable aspect you can expect from your new job.

Whatever the reasons leading you to leave your current job, if you believe that your future manager will not meet your expectations, wait for another opportunity. If many aspects can be renegotiated when you are in your new work environment, do not expect changing how your manager is or how he behaves.

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Dealing with Behavioural Standardization!

In application of statistics such as modeling, standardization is defined as adjusting different values to a common scale; normalization of scores – i.e. aligning distributions to a normal distribution – is a typical standardization process. From an organizational perspective, a traditional Fordist system of mass production can define a standardization process; in other words, uniformizing tasks. I would like to dedicate this post to another type of standardization process, a phenomenon that can be observed in most large organization, the behavioral standardization. 

A wrong corporate culture - as defined by the Deal and Kennedy culture framework - is not optimal to support the organization’s activities; a potential outcome of an inadequate culture can be inciting employees to adopt smooth attitudes in line with their workplace, avoiding to put themselves at risk by expressing their opinion. Behavioral standardization is often a creeping phenomenon; there is not necessarily a stated desire coming from the employee or derived from the working environment to modify the employee attitude, but some tricks exist to fight behavioral standardization and to avoid falling into this trap:

  • Embrace opinions and keep interpreting advices: Colleagues’ opinions are valuable because you do keep your free will at the end; but remain vigilant with recommendations, particularly those concerning behavioral aspects; bear in mind that people may be tempted that you behave as they would do;
  • Find a model, but do not mimic it: It can be constructive to copying some behaviors or attitudes of people that one takes as example; but do never mimic that person. Bear in mind that the success of one person depends on a wide spectrum of criteria (e.g. academic and professional experiences, seniority, luck, etc.), only your own traits can make you successful;
  • Keep in mind that internal assessments are subjective: Internal assessments are originally made to improve your skills and competencies; this exercise can nevertheless easily derive to make you come into a shape. In my opinion, those assessments are valuable for quantitative assessments - e.g. the quantity and the quality of the work you have been through - not for qualitative ones; this is then your responsibility to interpret those assessments.

Employees not afraid of expressing their opinions in a constructive way are those that create a tangible added value for any organization. If you have been hired for a role, this is because your employer is convinced that you can perform the job; but you really can distinguish yourself from the competition by bringing new ideas an implementing them, and this can only be performed through your own personality. While remaining respectful and humble, do never try to normalize your traits, this is what really makes you unique.