Social Policy Bonds blog

Biologically programmed to crash and burn

noreply@blogger.com (Ronnie Horesh) — Sun, 05 Jul 2009 22:42:00 +0000

As products of evolution probably the one thing that we are not designed for is to live sustainably. Evolution selects for reproductive fitness. Now that can be consistent with restraining our numbers in the short run or, less often, with restricting our consumption levels, but it is more generally in conflict with them. Our institutional apparatus - bodies like United Nations peacekeepers, atomic energy watchdogs, or the numerous non-governmental organizations working in the developing world - do heroic work in difficult circumstances. But their influence on the big picture seems peripheral. Are they merely pebbles on the road to ruin? Faced with overwhelming environmental or man-made catastrophe, we appear not to be very interested in looking after the long-term interests of human, animal or plant welfare. We all know that it's in nobody's interests to have, for instance, a rapidly changing climate, or the proliferation of nuclear weapons. But we seem unable to link that knowledge to effective action. Perhaps we are genetically incapable of defusing crises unless they are fast-moving and have readily identifiable causes.

Social Policy Bonds could help by targeting universally desired outcomes: perhaps above all the avoiding of catastrophe. They could blur the distinction between our narrow, short-term, individual goals, and the greater good of the planet. They could align our daily self- and family-sustaining activities with the achievement of our broad social goals. It's a big claim, but I do not see any alternative. The current political system is, frankly, not up to the job of managing our future. More and more it seems we are destined to crash and burn.

Emails gone astray

noreply@blogger.com (Ronnie Horesh) — Sun, 05 Jul 2009 22:30:00 +0000

If you have recently tried to email me using the encrypted email address on the socialgoals.com site, and not received a reply, please try again, using the new link the right-hand column on this page. There was a technical problem which has now been solved.

Flying blind

noreply@blogger.com (Ronnie Horesh) — Wed, 01 Jul 2009 16:24:00 +0000

There is optimistic talk about emerging from the recession in the UK and Europe. I think we are confused on several fronts. First, the health of an economy, even if it were accurately measured, is not the health of a society. Second, because what passes for the health of an economy these days are, essentially, the profits and sales of large corporations, and the rate of growth of house prices. Far more important though, are what is left out: the numbers of unemployed, debt levels, crime rates and the huge negative non-market impacts that a growing fossil-fuel dependent economy has on the environment. All this is not to deny that there are positive non-market externalities when the economy, as simplistically measured, is doing well. There are, but the negative impacts: climate change, for instance, or the risks of other environmental catastrophe, or an alienating physical infrastructure; these are ever more serious on a shrinking planet.

And we're not addressing them. The politicians and their corporate paymasters are desperate to revive the old economy. At the global level there are no systems in place to deal with climate change, nor man-made disasters such as a nuclear exchange. There's very little explicit targeting of such desirable but elusive goals as 'avoiding catastrophe'. At the national level, governments fiddle with well-intentioned, but meaningless or even harmful Mickey Mouse targets. The problem is similar to that of the public sector: the interests of government agencies and public sector auditors are the interests of their organization, and when they conflict with the greater good - for which, admittedly, goals are difficult to define - it's the wellbing of the organizations that wins every time.

So we are flying blind. Our flightpath is determined by powerful corporate interests and their friends in government. On our aircraft there are many well-intentioned people doing the right thing. But the overall direction they are travelling in bears little relation to their efforts or intentions. It's not the wellbeing of ordinary people that will determine whether, or when, we fly into a mountain, or crash into the sea, but the short-term interests of large organizations, public and private sector, as measured - badly - by the accountants.

Download the book, free

noreply@blogger.com (Ronnie Horesh) — Sun, 28 Jun 2009 20:50:00 +0000

The pdf of my book on Social Policy Bonds is now available for free download. There is a permanent link in the right hand column.

Threat simulation

noreply@blogger.com (Ronnie Horesh) — Sat, 27 Jun 2009 12:14:00 +0000

We'll probably never fully understand why we dream but, in an article suggesting reasons, Jesse Bering describes the 'Threat Simulation Theory':

Originally proposed by Finnish neuroscientist Antti Revonsuo, this clever evolutionary theory holds that dreaming serves a biologically adaptive function because it allowed our ancestors to simulate problem-solving strategies for genuine, waking life threats. Antonio Zadra, Sophie Desjardins, and Eric Marcotte of the University of Montreal neatly summarize the central argument of the theory this way: “By giving rise to a full-scale hallucinatory world of subjective experience during sleep, the dream production mechanism provides an ideal and safe environment for such sustained practice by selecting threatening waking events and simulating them repeatedly in various combinations.” What we should see in contemporary dreams, argues Revonsuo, are “threat scripts” depicting primitive themes of danger that would likely have been relevant in the ancestral environment, such as being chased, falling and so on. Dreaming of Nonsense: The Evolutionary Enigma of Dream Content, 'Scientific American', 25 June

Could the benefits of testing alternative scenarios outweigh the costs, in terms of a brain that's more active than you'd think it needs to be? It's plausible, if unprovable. But it's a fact that whether we are conscious of it or not, much of our individual decision-making relies heavily on trial and error. Real life is messy, in the sense that there often are too many variables and time lags to to relate unequivocally cause and effect.

Unfortunately, in handing our social and environmental problems to large organizations, like governments, we are effectively making the very large assumption that the causes of our problems can be fixed with a minimum of trial and error. That's because large monopolistic organizations just do not do trial and error: they have their own ideas about how to go about things, often dictated by ideology or, more likely these days, by corporate interests and campaign funders, but either way, immune from competition from alternatives. So failed experiments are never terminated, while ordinary people's coping mechanisms are undermined.

All of which is not to say that government shouldn't get involved in solving our social and environmental problems. There are some things that only governments do, and that they can do well. One such is raising the revenue to tackle our problems; the other would be to articulate these problems in the first place. But the efficient achievement of our targeted outcomes requires the sort of trial and error, and the continual selection of only the best method; and that is something that governments are too big, too monolithic and too unmotivated to do. And that's where Social Policy Bonds enter the picture. Under a bond regime trial and error - essential at the societal as well as the individual level - operates automatically to select the most efficient projects and programmes. Failures are swiftly terminated. And this happens because society's targeted goals are exactly the same as those who invest in the bonds who bear the risks of failure while society benefits from their success.

Outcomes trump intellect...

noreply@blogger.com (Ronnie Horesh) — Wed, 24 Jun 2009 19:34:00 +0000

...as a policy driver. Chris Blattman quotes from Mahmood Mamdani’s Saviours and Survivors:

'The Rwanda genocide unfolded at the same time as the elections marking the transition to a post-apartheid South Africa—during the first half of 1994. At a meeting of African intellectuals called in Arusha later that year to reflect on the lessons of Rwanda, I pointed out that if we had been told a decade earlier that there would be reconciliation in one country and genocide in another, none of us could have been expected to identify the locations correctly—for the simple reason that 1984 was the year of reconciliation in Rwanda and repression in the townships of South Africa. Indeed, as subsequent events showed, there was nothing inevitable about either genocide in Rwanda or reconciliation in South Africa.'

Mr Blattman goes on to ask:

I’m only a few pages into Mahmood Mamdani’s Saviours and Survivors, but I’m immensely enjoying it already. ... The book is Mamdani’s broadside against the tide of Darfur advocacy movements in the US. The academic in me loves Mamdani’s basic point: politics, like life, is complex. Boiling the Darfur conflict down to a slogan and popular campaign is at best naive, and is probably doing a disservice to peace and stability itself. The problem as I see it: simple messages, credos for action, and the call to "save" Africans will always mobilize more attention and enthusiasm than "Well, on the one hand...". Are we ...doomed to obscurity by our monotony and evenhandedness?

I think the answer is 'yes', but obscurity need not mean ineffectiveness. It probably does when there's a strong correlation between spending and results, but that doesn't always apply. Indeed, some conflicts, particularly in the Middle East, would probably benefit hugely from obscurity to the point of being invisible to the outside world. Complex issues are rarely amenable to the solutions available to large single organizations, like governments. Such organizations just are not responsive enough either to local variations, to information flows, to new technology, or to events on the ground.

Where governments, or supranational organizations like the United Nations could help is in funding the achievement of objectives by, for instance, issuing Social Policy Bonds. Preventing or ending conflict in Darfur or anywhere will probably require a mosaic of diverse, responsive projects, policies and initiatives. Social Policy Bonds would motivate investors to explore and implement these and, importantly, to terminate those that don't perform.

By issuing Social Policy Bonds governments, or the UN, or any group of interested philanthropists could fund a complex array of solutions to the conflict they target, even if they cannot anticipate what these solutions shall be. For more on this, see my essay on Conflict Reduction Bonds.

Success cannot always be codified

noreply@blogger.com (Ronnie Horesh) — Sun, 21 Jun 2009 21:12:00 +0000

For anyone who genuinely wants to quit smoking, an Easyway session can be both an enlightening and exhilarating experience. For an observer, especially a non-smoker, it must be as interesting as reading the instructions for assembling a model aircraft kit, without have the slightest intention of actually putting the contraption together. After sitting through four four-hour sessions, [Dr] Judith [Mackay, Director of the Asian Consultancy on Tobacco Control and anti-smoking campaigner] had to admit that she could not fathom how the method works. Not knowing the answer to this question has never bothered me.... Allen Carr, Packing it in the Easy Way (page 237)

There are large, important areas of individual life where even after we have achieved something, we find it difficult to articulate how we did it. Mr Carr's Easyway method was successfully followed by millions of smokers who wanted to quit, but Mr Carr found it impossible to explain how it works.

Doing the right thing so often is the result of behaviour that cannot be codified, even by an individual practitioner. How then can we devise institutional arrangements that will ensure, for example, that a catastrophic nuclear exchange will not take place, that we can avoid environmental calamity, or that children shall not die of malnutrition or malaria in their millions? I think it can be done, but only in retrospect. Allow experimentation, and in particular the termination of failed approaches, so that only the successes are widely applied. But for that to happen, we need to start with an array of diverse approaches.

So it's unfortunate that those the organizations to whom we look for solutions to our most important social and environmental problems are large enough to be immune from extinction if they fail: I refer to national governments and supra-national bodies such as the United Nations. Particularly when it comes to global challenges, they function as monopolies, insofar as they crowd out diverse approaches even if they do not actively stifle them.

Something like Easyway - successful, but impossible to codify - would never be considered by a government body. Tried, tested and failed approaches will always be preferred to something that by its success and its non-compliance with codified procedures threatens existing organizations' over-arching goal of self-perpetuation.

That's where Social Policy Bonds could help. Under a bond regime our existing monopolistic bodies - national governments - could still have roles to play: articulating society's concerns, and raising the revenue for their achievement. These are crucial roles, and the monopoly powers of government mean that only they can do them effectively. But under a bond regime the actual achievement of social and environmental goals would be contracted out to the private sector. Bondholders would have incentives to investigate and explore diverse approaches, and there would be no safety net for failures. Success in achieving social goals efficiently would be the sole criterion for a particular policy approach. In such a way could we bypass the stultifying barriers to successful new approaches imposed, consciously or not, by government, with its monopoly powers and insistence on codifiable, tested methods.

Why the state cannot save the economy

noreply@blogger.com (Ronnie Horesh) — Fri, 19 Jun 2009 18:01:00 +0000

Concluding his article titled Why the state cannot save the economy, Frank Furedi says:

[The UK public sector's] inefficiency will not be overcome any time soon. This is not to counterpose the state to the market, but rather to say that there are states which are weak or strong, smart or stupid. We are good at recognising failed states in Africa, but not so good at noticing the failed states closer to home. Similarly, markets are by no means always robust and there are some in major need of overhaul. What we need, and this is something we can all help to bring about, is a state with new policies that are more worthy of the twenty-first century and which is better able to meet our needs. We do need a state that can contain the most destructive effects of the global crisis, but we mustn’t think for one second that the state can save the economy. That is because we shouldn’t be trying to save the economy – we should be restructuring it. 'Spiked', 18 June

I'm not sure what Mr Furedi means by 'we' here. I'm more sure that any conscious effort at restructuring is unlikely to be fruitful and quite likely to be disastrous. Society is a complex as an ecology and if the economic history of the past 100 years teaches us anything it's that central planning and picking winners fail even in their own terms. And that strenuous, government-backed efforts in economics usually concentrate on one or two specific variables - with Mao Tse-Tung it was steel production or sparrow destruction; with most governments now it is economic growth - at the expense of everything else, including human wellbeing.

So I for one am wary of vague efforts calling for the sort of reform that can be carried out only by government and its agents. I'd rephrase Mr Furedi's last sentence to say: 'we shouldn't be trying to save the economy - it should be refocused so that it supplies broad social and environmental goals'. Government does have an indispensable role to play and those are in doing what only it can: articulating society's concerns, and raising the revenue to finance their achievement. Where government fails is when it detaches itself from society, and tries to achieve goals itself. Part of the reason for its failure is that it's not subject to the efficiencies of a competitive market. In particular, it doesn't terminate failed experiments. Any monopoly, whether private or public sector, stifles diversity and the variant approaches to which it gives rise. We need diverse, adaptive projects and programmes, focused toward achieving our broad social and environmental outcomes.

Social Policy Bonds are a means whereby this sort of restructuring could come about. Under a bond regime, government would do what it's good at doing: setting social and environmental target, while investors in the bonds would do what the private sector is good at doing: exploring, investigating and implementing an array of approaches, responsive to events and specific to regional variations, all in the service of the overall goal. Their rewards would be inextricably linked to their success in bringing about society's wishes, as articulated by government. Only then would efficiency in the fulfilment of social goals, almost a forgotten concept in government circles these days, be maximised.

SocialGoals.com

noreply@blogger.com (Ronnie Horesh) — Thu, 18 Jun 2009 20:42:00 +0000

The Social Policy Bonds website is up and running again. It's not the most visually innovative site, but it does the job. It will probably need some tweaking, which I intend to do over the next few days.

Ends and means in transport

noreply@blogger.com (Ronnie Horesh) — Mon, 15 Jun 2009 23:14:00 +0000

Though I try to look after myself, eating carefully and going to the gym frequently etc, I now doubt whether Social Policy Bonds will be issued within my lifetime. But, quite apart from the potential of cryonics, I take heart that at least one of the principles underlying the bonds is entering the mainstream; and that is the much deeper thinking about the social and environmental outcomes we want to see. Away from the mainstream media anyway, there is greater clarity about the conflicts between vague, implicit or unstated policy goals and these outcomes. For instance, transport is being seen more and more not as an end in itself, but as a as means to various other ends - with which it might be in conflict. A large part of the problem is that many of the outcomes we want to see are less easily quantified than traffic flow figures and the like, so they fall through the cracks in our highly centralised bureaucracies. John Adams is perfectly aware of these ends, and thinks that as well as asking:

Would you like a car, unlimited air miles and Bill Gate’s level of access to all the electronic modes of travel? Hypermobility: too much of a good thing (pdf)

we should also ask:

Would you like to live in the sort of world that would result if everyone’s wish were granted? Assistance with the answer might be given by rephrasing the question - would you like to live in a dangerous, ugly, bleak, crime-ridden, alienated, anonymous, undemocratic, socially polarized, fume-filled greenhouse threatened by terrorism without precedent?

Quite so. We need absolute clarity about the ends of all social and environmental policy. There might have been strongly causal relationships between means (road links, for example) and ends (more wellbeing) in the past, or at certain stages of societal development, but that doesn't mean they will always apply. Or, as Mr Adams puts it, in relation to transport:

To question the benefits of hypermobility is not to deny freedom and choice. It is to ask people what it is that they really, really want, and to confront them with the fact that their choices have consequences beyond the primary objects of their desires.

Where are we heading?

noreply@blogger.com (Ronnie Horesh) — Sun, 14 Jun 2009 16:04:00 +0000

Diminishing numbers of people voting; a disdain for incumbent parties; a disenchantment with existing politics...the results of the recent European Union elections just reinforce what we already know and feel: the widening gap between politicians and the people they are supposed to represent. The British Members of Parliament expenses scandal adds piquancy to the mix. The centralising of government and its continued accretion of powers great and small are reaching their logical conclusion: an almost complete detachment of politics from ordinary people. Apathy and resentment - and the possible rise of extremist parties - are an almost inevitable result. It's particularly unfortunate now, when humanity's challenges are so urgent, and so demanding of a consensus and social cohesion that are rapidly disappearing.

I don't think we can continue along these lines, and see a necessary, painful transition to a new sort of politics. But what will be the result? Here are some possibilities:

1. A benign authoritarianism, Singapore-style. A corporatist-style government : freedoms are sacrificed to economic growth, punishments for misdemeanours are harsh, parliament is a rubber-stamp, and any political opposition is only token. Social cohesion is enforced and synthetic. Society and the environment are managed. The big advantage is that the streets are safe and with smart people at the top, the system works well in its own terms.

2. The US model, but without the economic growth that sustained it. Something along South African lines, where people retreat into their own communities; intra-community relationships are tense; anybody who can afford it lives in a gated suburb.

Neither model is attractive to those used to the western way of doing things. And that's where Social Policy Bonds, or something like them, could enter the picture. Currently politicians form a separate caste, and political debate centres on arcane spending and legal decisions with all the opportunities that presents for conscious corruption or the massive over-representation of special interest groups. Under a Social Policy Bond regime political goals would be expressed in terms of outcomes that are meaningful to ordinary people. Government funds would be exactly congruent with the achievement of social and environmental outcomes. Risks of underperformance and failure would be borne by the private sector, rather than taxpayers. Goals would command a wide consensus, being of broad appeal. There wouldn't be the destructive, corrosive and ultimately distracting arguments about who should provide various socially beneficial goods and services. Instead there would be a strong emphasis on efficiency, and one that would arise naturally by the workings of a free market in Social Policy Bonds.

People understand outcomes, and there would be greater public participation in which goals shall be targeted. Such participation is an end in itself, and could be worth even more than the efficiency benefits that, in my view, a Social Policy Bond regime would generate. At a time when the current system appears to be disintegrating, and the alternatives seem unattractive or repellent, Social Policy Bonds, with their focus on meaningful outcomes and consensual goals, would bring something absolutely critical to policymaking and something that is fast running out. And that is buy-in: people's agreement to support something because they have been involved in formulating it.

Studying ordinary people

noreply@blogger.com (Ronnie Horesh) — Wed, 10 Jun 2009 20:34:00 +0000

Graham Watson, one of the leading lights of the Liberal EU Parliamentary Group responded to the most recent [EU] election results by saying he couldn’t understand why the turnout was so low, and therefore ‘we need to study why people don’t go out and vote’. Sadly, Watson’s lack of understanding of the realities of political life in the EU is not just an act; he is genuinely so out touch with public sentiment that he simply doesn’t get it. Leading EU politicians frequently look upon their electorates as exotic and incomprehensible species whose habits and sensibilities must be ‘studied’. How EU bureaucrats are destroying public life, Frank Furedi, 10 June

It was perhaps inevitable that politicians, as with other professions, would evolve into something like a separate caste from the rest of us. As with airline pilots, we actually want our highly polichymakers to specialise and know exactly what they are doing. The problem is that, unlike airline pilots, our politicians' goals have become quite distinct from, and often in conflict with, those of ordinary people - the public they are supposed to represent. Is 'studying' these people the best way of re-aligning policymakers' goals and visions with those of society?

A better alternative might be to rethink the entire policymaking process. Instead of expressing policy goals in vague terms, or as the product of arcane, stultifying debate about legalisms, funding, or institutional structures, we could instead define policy goals in terms of outcomes that are meaningful to the non-politicians amongst us. Take, for instance, climate change. The psychological connection between cuts in emissions of greenhouse gases and climate stability is a tenuous one, even if the physical relationship turns out to be direct and significant. Legislating for cuts in greenhouse gases is already proving divisive, and threatens our entire climate stabilising project. Much better, in my view, for policymakers to target climate stability itself; a goal with which all of us can identify. Let investors in Climate Stability Bonds work out how best to achieve this goal; responding as only motivated private sector agents can to our rapidly growing knowledge about the causes and effects of climate change.

It's just too complicated...

noreply@blogger.com (Ronnie Horesh) — Tue, 09 Jun 2009 22:47:00 +0000

...for government, or indeed any single organization, to handle. From 'New Scientist':

The life-cycle emissions generated by cars, buses and aircraft are dominated by tailpipe emissions pumped out in day-to-day running of their engines. Hence, the best way to reduce emissions from these modes of transportation would be to increase fuel efficiency and push for renewable fuels. Crisscrossing the US with a rail network, however, creates a different problem. More than half of the life-cycle emissions from rail come not from the engines' exhausts, but infrastructure development, such as station building and track laying, and providing power to stations, lit parking lots and escalators. Any government considering expanding its rail network should take into account the emissions it will generate in doing so.... Train can be worse for climate than plane, Catherine Brahic, 8 June

Can you imagine any government doing that? And getting it right? And continuing to get it right when new technology or new information about emissions and their effects becomes available? It's not going to happen.

Which is why we need, urgently, an outcome-driven approach. The old way of doing things, with government doing what it thinks is best, might have worked when government was well intentioned and environmental depredations much simpler to identify. It just doesn't work nowadays, when government does what its paymasters want it to do and environmental relationships are much more complex. Government is not up to the job of working out whether climate change is best tackled by subsidising rail, windmills, or catalytic converters. It's not what government is good at, it's not what people go into government to do, and it's not what they are motivated to get right.

What government can do is set up a regime whereby people are rewarded for achieving climate stability, however they do so. In other words, it could contract out the achievement of a more stable climate to a motivated, diverse, adaptive private sector. It could, in summary, issue Climate Stability Bonds.

What matters in politics?

noreply@blogger.com (Ronnie Horesh) — Sun, 07 Jun 2009 15:52:00 +0000

George Monbiot, writing about the recent £6.2billion contract to expand the M25 motorway around London, contrasts it with the politicians' expenses scandal in the UK, with its costs to the taxpayer amounting to about one-thousandth that of the road-widening scheme:

The issue is too remote and too complex to ignite public indignation. The scheme’s obscurity has protected it from the outrage now being directed towards [British] MPs. George Monbiot, 'The real expenses scandal', 26 May

What is frightening is how this has now become quite general. Hugely important decisions about the energy, transport, immigration, law and order, are taken almost by default. Public attention, and this is especially noticeable in the UK, settles on images and personality, and on crises only if they have effects that make a dramatic impact when filmed for tv. Slow-moving, complex crises, like climate change or the ballooning of public and private debt, deteriorate over the years, until they manifest themselves unequivocally forms that can be covered in a short news bulletin. There's an inevitability about this, and it's perfectly explicable in a world in which we are bombarded by information. But it is not efficient, because resources are devoted to avoiding images of failure, rather than actual failure. Serious but non-visual crises, as we have seen in finance and the environment, slowly and undramatically gather pace until their effects become unavoidable. By that time, of course, it might be too late to do much about them, even with enormous quantities of spending.

A Social Policy Bond regime could be different. It could target the maintenance of the favourable aspects of the status quo: avoidance of too much climate instability; the absence of nuclear warfare; the prevention, indeed, of any sort of human catastrophe, however caused. The emphasis of much of the media attention in the UK currently is on the personality of the Prime Minister and possible contenders for the leadership of his party. About these matters there is much debate. It is unfortunate, to my mind, that the energy given over to such debate is not devoted to more substantial policy matters. If it were, we could better answer such questions as 'what is "too much" climate stability?', and how shall we best define 'human catastrophe', and take some steps in the direction of solving these and other genuine policy problems. Who would be the best Prime Minister is, to my mind, a distraction. We need, in short, urgently to express our political views in the form of desirable outcomes, rather than in terms of personalities or party politics.

Mickey Mouse micro-targets

noreply@blogger.com (Ronnie Horesh) — Thu, 04 Jun 2009 11:18:00 +0000

It's important, I think, that we have some way of monitoring the performance of bodies charged with solving our social and environmental problems. In our large, complex societies, that means we have to use numerical measures and indicators. They all have their weaknesses, but alternatives are, almost by definition, subjective and even less reliable. The Social Policy Bond approach would target broad goals that are meaningful to ordinary people. Its goals would, as far as possible, be inextricably correlated to social or environmental wellbeing. Unfortunately, the use of numerical indicators for targeting purposes is acquiring a bad reputation. Current targets are unsystematic, too narrow, and almost totally uncorrelated with the wellbeing of ordinary people.

Take the well-meaning goal of reducing the waiting time for patients entering the Accident and Emergency wards of UK hospitals to less than four hours. James Bartholomew explains what happens in practice:

1. The ambulance bringing the patient to the hospital is kept waiting outside. The hospital simply declines to accept the patient. This means that the starting time of the four hour wait is delayed and the hospital can claim it is meeting the target.

2. The hospital refuses to accept any emergency patients for a while. The patient has to be transported to a different hospital. This enables the first hospital rightly to claim that patients who get into the hospital are not kept waiting for more than four hours.

Why are the hospitals so keen to meet the target? Because the hospitals receive less money from the government if they fail to meet it.

Who or what suffers? Of course the patient suffers from being kept waiting for emergency treatment for more than four hours. In the second case, the patient may be carried to a hospital that is much further away, delaying treatment. Also people suffer who need an ambulance but cannot get one because ambulances are being kept waiting outside hospitals or taking journeys to hospitals far away. But this suffering is not a direct result of the target. It is a result of inadequate emergency provision in NHS [National Health Service] hospitals. What suffers directly as a result of the target and the cheating on the target is the truth and public awareness of the truth. That, of course, suits the government well. The truth that is kept secret from the voters is the extent to which the massive increase in spending on medical services in Britain has been wasted. We simply do not know the extent because NHS statistics are lies.

A new organising principle

noreply@blogger.com (Ronnie Horesh) — Tue, 02 Jun 2009 21:38:00 +0000

Mick Hume talks about the effect that the expenses scandal is having on UK politics:

What politics have New Labour or Conservative MPs really got to stand on today? Which of them now is really going to offer themselves to the electorate as a party loyalist? In that sense, perhaps the candidates will all be ‘independents’ at the next election, standing on no more than their expenses sheets or promises to be purer than the old gang. ... No, we may not need the old political parties or political class. But we do need politics, and much more of it - political ideas and principles that can contest a fight for the future. I do not support any of the existing parties - or, for that matter, any of the new ones to emerge so far. But I do recall why political parties were formed in the first place: to represent distinctive interests, classes and movements in society, standing on manifestoes that meant something to people. Today we have the empty shells of parties without politics, which have become little more than closed, self-serving patronage and PR machines. We would be better off without them. But to shape the future we are still going to need organised politics of some form, with people standing for collective interests, rather than ragbags of worthy but pointless wandering independents. They're all 'independent' now - but from what?, Mick Hume, 1 June

Here's a suggestion: organise politics around outcomes, rather than personalities, personal probity, or the interests of powerful corporations and bureaucracies. Political debate centres on trivial or arcane details, rather than the broad direction government should take about society and the environment. All too often, these important questions are answered by default; usually by deferring to vested interests. The big decisions are rarely put to the voters. We simply aren't used to consulting people about the outcomes they want, and the priorities they place on them.

But there's no inevitability about continuing along those lines. Policymaking is largely about making trade-offs. It would be no bad thing if we, the people, had to choose between incompatible outcomes. A Social Policy Bond regime, because it costs objectives would give us the information we need to make these choices. Apart from greater efficiency, transparency and stability of policy goals, Social Policy Bonds would therefore bring home to us the realities of decision making. They would make clear that we cannot look to government to solve all our problems, all the time.

Why we are not surprised

noreply@blogger.com (Ronnie Horesh) — Sat, 30 May 2009 17:37:00 +0000

Andy Kroll writes:

What cannot be disputed, however, is the [US government] financial bailout's biggest loser: the American taxpayer. The US government, led by the Treasury Department, has done little, if anything, to maximize returns on its trillion-dollar, taxpayer-funded investment. So far, the bailout has favored rescued financial institutions by subsidizing their losses to the tune of $356 billion, shying away from much-needed management changes and--with the exception of the automakers--letting companies take taxpayer money without a coherent plan for how they might return to viability. The Greatest Swindle Ever Sold, 'The Nation', 26 May

So why are we not surprised? The compelling reason is that there is no compass to give the bailout any meaningful, coherent, direction, unless it is simply to shore up the short-term prospects of the politicians in power and the most powerful interest groups. Ordinary people are well down on the list of things to worry about. It is this indifference that has characterised policymaking for many decades. Time was, though, that there was a reasonable correlation between the interest of powerful lobbyists and the wellbeing of the general public. Over the years, as inequalities have widened and society become more complex, that correlation has weakened. Bailouts to big business at the expense of society and the environment - the corporate-welfare state - are the result.

Social Policy Bonds would make passing this sort of corporate subsidy programme more difficult. They would subordinate all government interventions to the wellbeing of human, animal and plant welfare. How raising such welfare is to be achieved would be left to the private sector; under a bond regime raising welfare would be the private sector's goal, rather than doing things that can be sold to government as necessary or otherwise gaming the system for government funds.

State of paralysis

noreply@blogger.com (Ronnie Horesh) — Wed, 27 May 2009 12:30:00 +0000

California has immense human and financial resources. It should not be in fiscal crisis; it should not be on the verge of cutting essential public services and denying coverage to almost a million children. But it is - and you have to wonder if California's political paralysis foreshadows the future of the [US] as a whole. State of paralysis, Paul Krugman, 26 May

More than 30 years ago Californians voted for Proposition 13, under which property tax rates were capped. This has made the state more dependent on income taxes, which have been falling steeply during this recession. Initiatives like Proposition 13 give consultation with the public a , 26 bad name. The problem as I see it is that the implications of such an initiative are just too complicated for anyone to understand. That's where expressing policy goals in terms of meaningful goals, as would happen under a Social Policy Bond regime, comes in. Policymakers could target goals such as reducing the crime rate or atmospheric pollution, and if they issue Social Policy Bonds, the cost of such goals would be much more apparent than under the current system: the system that leads to a free-floating feeling that government spending on public services is too expensive, and to crude and counter-productive efforts to put a lid on it.

How so? Simply put, Social Policy Bonds are a tradable contract to achieve a specified outcome. The bonds are issued on the open market. There would be competition amongst bidders for the bonds, and in that bidding they would, in effect, be pricing the targeted outcome. Competition ensures that that cost is minimised. Crucially, such a cost is visible to everyone: the bonds' prices would be quoted just like those of other financial instruments. The transparency of such a system would not allow politicians -whether at local, regional or national level - to make vague promises or to gull the public into false beliefs about the cost of getting things done. This transparency, as well as much greater efficiency, is one of the huge advantages that Social Policy Bonds would have over the existing system, whereby contracts are doled out for the provision of certain outputs and the risk of private sector failure almost always borne by the public.

A priesthood of politicians

noreply@blogger.com (Ronnie Horesh) — Mon, 25 May 2009 12:54:00 +0000

I'm sure the irony won't be lost on many. The British Minister of Finance, the man who draws up the UK's taxation policy, claims for, and receives, £1400 of taxpayers' money so that he can pay somebody else to ensure that "the correct amount of tax was paid in respect of my office costs". It's not his personal fault, of course, that our politicians are now seen as a distinct caste. The rules they devise for the rest of us are too complex and too grubby for them to engage with fully. But being of the priesthood they have no need to. Frankly, I dread to see what form the public reaction to this expenses scandal and our parlous economic state will take. I hope it will re-orientate policy so that it is expressed in terms of meaningful outcomes for ordinary individuals, and that such a transition will take place without too much pain. I doubt it though.

What government can and cannot do

noreply@blogger.com (Ronnie Horesh) — Mon, 25 May 2009 04:48:00 +0000

Government seems to keep growing. We look to government for solutions to everyone else's problem. To the degree that government creates problems, this is understandable. The lunacy of industrial agriculture, with its subsidies to rich landowners and large agribusiness corporates can be solved only when government changes its policies. Similarly for fisheries. But today's North Korean nuclear test is a dramatic example of how little governments can do. North Korea doesn't care about the wellbeing of its people; its government is answerable to no-one. Any attempts by governments to influence North Korea is going to be sold to North Koreans as coercion, and raise the stakes accordingly.

But our governments are not completely powerless: they could issue Social Policy Bonds that reward investors for the avoidance of a nuclear exchange, however they do so. More generally, they could issue bonds that target reductions in all sorts of violent political conflict. Government might not know what actions to take. And, as in the case of North Korea, it might be inherently incapable of bringing about good outcomes directly. But it can create incentives for people to research, discover and implement their own solutions to the urgent and huge problems humanity faces.

SocialGoals.com

noreply@blogger.com (Ronnie Horesh) — Sun, 24 May 2009 03:54:00 +0000

It appears that the program I used to re-create the SocialGoals.com website was not a legitimate version; this probably accounts for the scrolling or non-appearance of some of the pages and the flipped images. I will be working on a solution in the next few days.

Reform will happen

noreply@blogger.com (Ronnie Horesh) — Wed, 20 May 2009 14:42:00 +0000

When a group becomes too rich and powerful, it can wield influence over politics and over commercial activities in which its members are not directly involved. The effect is to enhance that wealth and power. This process is likely to end in political and economic crisis. That was the history of royal courts across Europe, from Versailles to St Petersburg. More recently, it has been the experience of many developing countries and transitional economies. In the three decades since Margaret Thatcher and Ronald Reagan inaugurated the market revolution, it appears that Britain and the US have joined their ranks. Beware bail-out kings and backbench barons, John Kay

Big business and government have had an easy time of it over the past few decades. Our societies have all become richer on the back of cheap energy and globalisation. So it's been easy to be tolerant of distorted, corrupted markets and financial shenanigans in high places. It's been easy, too, for governments to spend huge proportions of national income inefficiently if not corruptly.

Those days are over. The transition will prove painful and where will it lead? I'd like to suggest that we'd do well to re-orientate policy so that it is focused entirely on outcomes that are meaningful to ordinary people. Its success or failure would be measured by how close it comes to achieving those outcomes. That sounds an obvious thing to do, but it would represent a stark change from the current regime where government (when it is well intentioned) rewards the ways it thinks will best achieve social goals. These alleged ways have led to bloated government agencies, a profound and tragic reluctance to terminate failed experiments, and resistance by public sector unions to any meaningful reform. They have also helped create the conditions by which big business has captured and corrupted government. Although Social Policy Bonds have been in the public arena for something like 20 years without any signs of take up (that I'm aware of), I am confident that something like them or, even more likely, outcome-oriented policy, will play a bigger role in the future. The question is: how far away is that future? John Kay continues:

But, as Louis XVI learnt as the guillotine fell, the longer reform is delayed, the bloodier the revolution. And the more unsettled and chaotic would be the eventual outcome for us all.

Non-monetary incentives

noreply@blogger.com (Ronnie Horesh) — Mon, 18 May 2009 06:50:00 +0000

The king's counter to his subjects' reluctance to be knighted was a general order in 1234 to all sheriffs that they should proclaim throughout their bailiwicks that all men who held one or more knights' fees in chief of the the king should procure arms and cause themselves to be knighted. ... Nevertheless it is clear that through the greater part of the thirteenth century the government was trying ... to keep in being a military form of society which was out of date. It was probably with this end in view that kings stressed the pageantry of the ceremony by which men were admitted into the order of knighthood. ... Edward I realized that knighthood must be tied to the court and the glamour of the court if young men were to be drawn into the knightly order. English society in the early Middle Ages, Pelican History of England vol 3, Doris Mary Stenton, 1965

The conceptual leap that we have to make is that knighthood in those days was a burden. It entailed an obligation to serve the king in military conflicts. It's not clear how successful was the introduction of the elaborate ritual to which Lady Stenton refers. But the principle of getting people to do things for reasons other than monetary ones is clearly long established. In this recent post I refer to research showing that under some circumstances financial incentives can actually undermine our willingness to do the right thing. How would that sit with the Social Policy Bond principle, where monetary incentives at first glance seem paramount?

Actually Social Policy Bonds are not merely a system by which all the people who help bring about social wellbing are financially rewarded. Rather it is a 'meta-system' that motivates bondholders to find the best ways of encouraging socially beneficial behaviour - whether these be monetary or not. In my book I mention the Japanese, who have carefully graded levels of respect for people according to how well they are seen to have served society. Paradoxically, holders of Social Policy Bonds would have financial incentives to devise nonfinancial ways of encouraging people to achieve our social and environmental objectives. This could be much more efficient than our current, somewhat haphazard system of rewards. And, as the Japanese and the old kings of England knew, it could be much less expensive.

The only alternative?

noreply@blogger.com (Ronnie Horesh) — Sun, 17 May 2009 12:31:00 +0000

Financial capitalism has failed. We need to democratize the economy. Oskar Lafontaine, 'We want to overthrow capitalism', Interview with Spiegel Online

The global financial crisis is at a very early stage. What seems clear to me is that the western mixed economy model has been totally discredited. This is not to imply that there are any better systems out there; rather that it has lost the consent to operate that it enjoyed over the past few decades. The tacit agreement was that the private sector would work, within laws, regulations and unwritten codes of decency to maximise sales, market share or profits. Government would impose taxes on producers and consumers, mainly to provide public services (law and order, defence, infrastructure, education and healthcare etc) and transfer income to the poor. What happened? Big business and government corrupted each other, at the expense of small enterprises, ordinary people and the physical and social environment.

It was always a bit haphazard; the idea that trickle-down or government action would ensure that the net non-market impacts of corporate activity would be positive, and that the human (as distinct from corporate) casualties of capitalism would be looked after by a benevolent, caring state. There were always visible signs of rot, to those who had time to look at, for instance, who actually benefited from subsidies to agriculture and other corporate welfare scams. Now the extent of that rot has become visible to all.

How can we ensure a better working model, and avoid what looks like a very painful transition to it? One answer could be Social Policy Bonds; rather than leave the achievement of social and environmental wellbeing to chance or coercion, we could instead subordinate all government activities to our broad social goals. So, for instance, if we wanted to achieve full employment we'd reward people who help achieve it, however they do so. We wouldn't subsidise or bail out inefficient industries simply because they allegedly need some temporary help or are too big to fail (or more likely, have too much political muscle and aren't afraid of using it). Rather than gamble with climate change, by assuming (or pretending to assume) that cutting back (or aspiring to cut back) greenhouse gas emissions will bring about climate stability, we'd issue Climate Stability Bonds that would reward people for stabilising the climate, however they do so.

Governments everywhere have shown that they cannot master the inevitable complexities of an increasingly interlinked world. Perhaps no organization can. We need large numbers of diverse, adaptive programmes and projects to restore social and environmental harmony. Targeting outcomes, and rewarding the people who achieve them would, I believe, work better than either the corrupt corporatist-capitalist model whose day has recently ended or large-scale central planning, whose day ended many years ago.

Keeping the globe livable

noreply@blogger.com (Ronnie Horesh) — Sat, 16 May 2009 05:34:00 +0000

Paul Krugman has been visiting China:

As the United States and other advanced countries finally move to confront climate change, they will also be morally empowered to confront those nations that refuse to act. Sooner than most people think, countries that refuse to limit their greenhouse gas emissions will face sanctions, probably in the form of taxes on their exports. They will complain bitterly that this is protectionism, but so what? Globalization doesn’t do much good if the globe itself becomes unlivable. It’s time to save the planet. Empire of Carbon, 'New York Times', 14 May

In an increasingly complex and interlinked world, like it or not, there's going to be a greater need for government regulation and restrictions on the ways we have been doing things. Diffusing the negative externalities of, for instance, power generation is no longer politically sustainable when the impacts could be drastic and far-reaching - even if there is uncertainty about the exact size of the impacts.

In our newly constrained world, there may be a place for Social Policy Bonds. There will be a sharper focus on bottom-line outcomes. Up to now, governments have got away with assuming away many negative externalities. So: economic growth has always been good; so too has been the freedom of movement of goods and capital. The assumption has always been that the market and non-market positive impacts have outweighed the negative. We can no longer make such an assumption. To have a globe that is livable is now something that will require co-ordinated government action.

Of course, government doesn't have all the answers. But what it can do is determine, or rather articulate, the broad social and environmental outcomes that we wish to pursue and reward the achievement of those outcomes, however it is done. Such goals, I suspect, would include the avoidance of major catastrophe, whether natural or man-made, and the stabilising of a (carefully defined) array of indicators and measures of the global climate. Government is fairly clueless about how to achieve such goals, but it does have strengths in articulating them and raising revenue for their achievement. So, using the Social Policy Bond principle, it could issue Disaster Prevention Bonds, or Climate Stability Bonds. These would have the effect of contracting out the work necessary to achieve these fundamental objectives without prejudging how best to do so. They would also ensure that the livability of the globe would be achieved at minimum cost.