Bottom Shekel / How Not to Punish Misbehavior

Drat those parents, she'd think every day.

Here she was with her own private preschool in north Tel Aviv and she Could. Not. Get parents to pick up their children on time. Every day a different parent (and often the same miscreants too) ruined her afternoon plans, arriving 10 or 20 minutes late. Excuses included traffic jams and lengthy business meetings.

One day she tacked a notice onto the preschool door: "From now your tardiness will carry a price. Parents arriving between 4 and 4:10 P.M. will be fined NIS 10. Every minute thereafter will cost an additional NIS 2."

"Now my life is going to change," the woman said to herself, as the last parents dropped off their children.

Meanwhile, in other news the Israel Securities Authority convened a press conference in Tel Aviv on Monday to discuss mouthiness, or, statements in the press made by company owners and executives.

The watchdog is miffed with company officials who talk with journalists, but neglect to issue formal "immediate reports" to the stock exchange, as required by law. (If they have something important enough to tell a reporter, it should be important enough to tell investors.)

As a deterrent, the authority said, it decided to fine anyone who persists with this practice between NIS 15,000 and NIS 120,000.

Will this make any difference? Imagine if people were fined 0.01% of their salary for parking illegally, instead of NIS 100 fine. Thus someone who earns NIS 10,000 a month would be fined NIS 1. Would that make anyone think twice before parking illegally?

After all, when Lev Leviev boosted Africa Israel's share price by 8% with a single statement, he earned NIS 975 million in one day (on paper). Would a NIS 120,000 fine - 0.01% of his profits that day - deter someone?

Now we return to our North Tel Aviv preschool teacher. Her life did change, but not as she had thought.

From the moment fines were applied to tardiness, parents felt no more guilt about being late. They no longer had to face the woman's angry scowl or phone her from their cars. It was much more comfortable for them to arrive late and pay the fine. (A similar experiment was conducted at the Technion and quoted in economics textbooks).

Apart from ISA Chairman Zohar Goshen getting his picture in a few newspapers, it is unlikely that anything more will come of that press conference. While the ISA is preoccupied with trivialities, we are interested in much weightier questions, such as where the authority's people are when companies stop paying their debts just one year after issuing stock.

What about checking the responsibility of the rating companies, underwriters, investment banks, accountants and companies themselves for the wave of insolvencies that we can expect in the coming year?