Buy-in: just as important as efficiency

In my efforts to promulgate Social Policy Bonds I’ve usually emphasised their efficiency, which arises from a number of sources, including their harnessing of market forces, their encouragement of diverse, long-term approaches, and their capacity to adapt to changing circumstances. All these attributes are, in my view, essential if policymakers are going put in place systems that solve our urgent social and environmental problems.

Less obvious, but just as important, would be a bond regime's transparency: the bonds would target outcomes that are meaningful to ordinary people. So: if we are targeting national levels of crime, instead of arguing over funding, structures and operations of police forces, or surveillance cameras, or street lighting, etc, a bond regime would target crime, as experienced by the country's citizens. Yes, there would be arguments about how to weight different crimes, and how to define crimes in terms that could be robustly quantified, but the important point is that ordinary people understand the outcome and can (if we want) participate in the targeting process. As well, there's more consensus over outcomes than the supposed means of achieving them. 

Even if we take no real interest in the targeting process, our having the opportunity to make a contribution gives us something critical - but sadly missing - in today's political environment: buy-in.

This would apply even if our views are over-ridden by others: at least, we'd have been consulted. If people have the chance of participating in such discussion, we shall come to understand the limitations and trade-offs that are intrinsic to public policymaking. This means quite a few things, but to my mind buy-in is the most important. It could reconnect citizens with our policymakers; it would entail the sharing of responsibility and concern for policy initiatives.

This matters hugely when government has to do things that hurt people's narrow, short- or medium-term interests: improving our air and water quality, for instance. The current system discourages buy-in because it's difficult and tedious to follow. As such, it's easily influenced by the wealthy or powerful, be they in the private- or public sector, who can afford to pay people to follow the process. The lack of transparency does much to widen the gap between politicians and the people they are supposed to represent. Social Policy Bonds, because of their focus on outcomes, would help close that gap.

Pdfs of past blog posts

Posts on this blog from October 2024 to yesterday, 21 March 2025 can now be downloaded as a pdf from here.

All posts on this blog from December 2004 to yesterday, 21 March 2025 can now be downloaded as a - large - pdf file from here. 

Whipping up a tempest

From the current Economist: 

Mr Trump is expanding his threats, promising to hold Iran to account for the Houthis' attackes and warning them of 'dire' consequences. Yet his approach is only hardening the mullahs' hearts. They may seize the chance to rally their embittered people against a common enemy and go for confrontation and a nuclear momb. Israel might then join the fray. The Houthis would come to their patron's [Iran's] aid and fire again at Gulf cities and oil terminals. It is all too easy to imagine the worst. America’s strikes on the Houthis could whip up a regional tempest, the 'Economist', 20 March 2025

Indeed. I keep returning to the possibility of a nuclear exchange, because it would be a catastrophe in its own right, as well as a terrible portent. We could rely on some combination of world governments to make nuclear conflict less likely but, in today's political environment, I think we should look for a complementary solution. 

My suggestion is that we issue our own (pdf) Nuclear Peace Bonds. All it would take would be for some interested philanthropist to put up the funds, and let the market for the bonds do the rest. Of course, once the ball got rolling, contribution from other bodies and members of the public could be solicited, which would swell the total redemption rewards. Even governments, if they could put aside their short-term interests for a moment, could add to the pot. 

The goal of sustained nuclear peace would actually make an ideal target for the Social Policy Bond idea. One, because it's a complex, long-term goal that will require diverse, adaptive solutions. Two, it's an easy goal to verify. And lastly, it's a goal that, on all the evidence, including that of the above excerpt from the Economist, is unlikely to be reached under current policy. The idea would be to issue bonds that reward a sustained period of nuclear peace. This could be defined, as, say the non-detonation of a nuclear device that kills more than 100 people for 40 years - the long time period is necessary so that systems are put in place that work in the long term. With sufficient backing the bonds would help offset and (one hopes) outweigh the incentives currently on offer to the military-industrial complex and to ideological and religious fanatics.

Those billions of us who would benefit from nuclear peace are presumably a massive numerical majority, but we currently have few means of channel our wishes effectively. The tendency is to assume that governments will do what's necessary, with the support of hard-working, well-intentioned people in the private sector. But the rewards to all these people are not linked to their success. This is unhelpful in itself but, more importantly, it discourages investors who, seeing little opportunity to benefit from working to reduce nuclear conflict, will focus instead of less edifying enterprises. Most important of all is that our current strategy is just not working.

We need to reward those who achieve nuclear peace at least as much as those working to undermine it. We don't know exactly how to reduce the chances of a nuclear exchange, nor who will be best placed to do so, over the long period during which our goal is to be achieved, but we have no excuse for not encouraging people to find out. Nuclear Peace Bonds would apply the Social Policy Bond principle to this goal. Investors in the bonds would form a protean coalition of people dedicated to achieving it as efficiently as possible. Their goal would be exactly the same as society's. Human ingenuity knows no limits. Currently, too much of it is devoted to relatively unimportant or socially questionable goals. Nuclear Peace Bonds would channel our ingenuity, and stimulate more of it, into minimising the risk of a global catastrophe. 

My short piece on Nuclear Peace Bonds is here. The links in the right-hand column of that page point to papers on similar themes: Conflict Reduction, Disaster Prevention, and Middle East Peace

Nobody takes a panoptic view

Peter Gøtzsche writes:

In 2024, PubMed indexed 1,728,666 articles. Compare this with the little progress there is in healthcare from year to year and consider also that most research results are unreliable or outright false. Ridiculous names for predatory journals (clicking the link will download a docx file), Peter C Gøtzsche, Institute for Scientific Freedom, 7 March 2025

This is exactly the sort of overview we need to take in health and other policy areas: a comparison of the resources devoted to a goal and the actual outcomes achieved. Unfortunately, few people have the incentive or capacity to make such comparisons. Professor Gøtzsche himself has been vilified for questioning the role that the pharmaceutical industry plays in psychiatry. Yet taking a panoptic view makes it clear that there's something very wrong with the world's healthcare. It's not just healthcare:

From 2004 to 2014, aid spending increased by 75%. “There was a real feeling,” says Stefan Dercon of the University of Oxford, “that if there was a time things were going to get going, this was it.” Things did not get going. From 2014 to 2024, the world’s 78 poorest economies grew more slowly than in the decade to 1970, when aid was first emerging. This is perhaps unsurprising, given earlier studies. In 2004 William Easterly of New York University and co-authors found that, from 1970 to 1997, aid was just as likely to shrink the world’s poorest economies as to help them grow. Aid cannot make poor countries rich, the 'Economist', 6 March 2025

Again, how many people take this sort of overview, and what influence do they have over policy? Very few, and negligible, I'd say. Arguably, the same failings occur in education in some of the rich countries. Certainly they apply to climate change if we take greenhouse gas emissions as an indicator of policy success:

Why are we so hopeless at making effective and efficient policies? One answer is that we rarely evaluate their effectiveness:  

[G]overnment bureaucracies non-self-evaluate. At a minimum, agencies with evaluative responsibilities are not invited to evaluate - they are kept out of the loop, their opinions unsought. At a maximum, government agencies actively suppress their own internal evaluative units and are discouraged from evaluating the beliefs and policies of other agencies. Why States Believe Foolish Ideas: Non-Self-Evaluation By States And Societies (pdf), Stephen Van Evera, Massachusetts Institute of Technology Political Science Department and Security Studies Program, 2002

Another answer is that our policies do not adapt to changing circumstances, nor are national policies sufficiently adapted to different regions. From the same article in the Economist: 

[D]isillusioned economists have turned to the work of Esther Duflo, a Nobel laureate at the Massachusetts Institute of Technology, who uses randomised controlled trials to study interventions. Yet she has come to a dispiriting conclusion: there is no reason why what works in one neighbourhood will do so in the rest of a district, let alone on another continent. In one Indian village, for instance, giving women pensions made their granddaughters (if not their grandsons) healthier; in another, handouts failed to improve health or even raise household consumption. Ms Duflo’s findings chime with other research....

Especially for long-term goals, we need policies that are diverse and adaptive. Social Policy Bonds, as well as injecting market incentives into the solution of our social and environmental problems, would encourage investors to explore different approaches, to refine those that are most promising and, importantly, to terminate failing approaches. 

For more about how the Social Policy Bond principle could be applied to health, see here. For how it could be applied to development see here.

Government of the people, by the bureaucrats, for the bureaucrats...

One of the advantages of a Social Policy Bond regime is that it would oblige democratic governments to do what they do well: articulate society's wishes and raise the revenue to fund their achievement. Sadly, much of the choosing and prioritising of society's goals has shifted from our elected representatives to bureaucracy:  

Bureaucrats no longer saw their role as “looking for methods to fulfill responsibilities defined by the public through politics,” wrote University of Chicago historian Barry Karl in a 1976 essay, but rather as “fulfilling the demands of interests defined by their own growing expertise.” ...The “public good” is now explicitly defined by the bureaucracy, not elected leaders. Defending democracy means defending the right of bureaucrats to ignore elected leaders. Denizens of the Deep State, Bruce Gilley, 'The American Mind', 26 February 2025

Reasons why this shift occurred are not hard to find: politicians have to react, and be seen to react, to daily events. With frequent opinion polls, their time horizons are even shorter than the period between elections. Bureaucracy is more permanent. So we have the 'deep state', whose over-riding interest, as with all institutions, is self-perpetuation. Its goals are formulated, explicitly or not, without reference to - and perhaps in conflict with - public opinion. 

A Social Policy Bond regime would be different. It would take as its starting point those social and environmental goals that are of interest to a country's citizens. These goals would be long term in nature and meaningful to ordinary people, who could therefore participate in their selection and prioritising. As a result, we'd have greater public buy-in. That's in stark contrast to today's policymaking systems, in which debate centres around the supposed means of achieving unarticulated or vague goals rather than the goals themselves. By default, then, decisions as to what society wants and where it's going are made by bureaucrats. It's not healthy.

Betting on socially desirable goals

The Social Policy Bond idea materialised when I thought about how, when betting big money on an uncertain outcome you could use some proportion of your expected winnings to make that outcome more likely. Fixing horse or greyhound races that way would be illegal, but could the same principle be used legitimately for society's good? Perhaps new betting markets are a way in which we could effectively issue Social Policy Bonds.

Let's take a look at Polymarket, 'the World's Largest Prediction Market'. 

Today (27 February 2025) we see that you can bet on whether Timothee Chalamet will take his mother to the Oscars ceremony. This is a simple one-off event that's easy to verify. It's not difficult to imagine that, having placed a sufficiently large bet, a group of punters could persuade Mr Chalamet to bring about the outcome they desire, if necessary with the promise of a significant proportion of their expected winnings. One of the difficulties of the Social Policy Bond principle is that of setting up an experiment. The bonds have their biggest advantage over conventional policymaking when the desired social or environmental outcome is likely to be complex, long-term in nature and require the investigation of a range of diverse, adaptive approaches for its solution. Such socially desirable outcomes could include the slashing of crime rates, significant improvements in the physical and mental health of a country's citizens or, at the global level, a reduction in the adverse impacts of natural disasters. We can't test the efficacy of Social Policy Bonds against current policymaking aimed at achieving such outcomes. 

But what some high-minded philanthropists could conceivably do is to take out a large bet against a readily verifiable one-off outcome like, say, the detonation of a nuclear device that kills more than, say, 500 people within 30  years? They could then use their influence and funds, predicated on their winning the bet, to make such a detonation less likely. At first sight, this sounds tempting: indirectly channelling resources into the achievement of an unambiguously positive social goal. In net terms: yes; nuclear peace is hugely and unambiguously positive. But Polymarket is merely a platform that facilitates peer-to-peer trading, so that people are betting against each other. So for every $1 million bet on achieving nuclear peace, there would be people on the opposing side of that bet who would lose that much. If governments collectively decided to supply the funds that would be paid out on redemption of Nuclear Peace Bonds, then millions of taxpayers would, in effect, be paying for that outcome: a diffuse set of people, none of whom would benefit in any discernible way from a nuclear detonation. The Polymarket is different: it's likely there would be few people on the opposing sides of the bet of our philanthropists, and they could lose substantial amounts if sustained nuclear peace were achieved. They would be well placed and highly motivated, then, to co-ordinate efforts to foil any attempts to achieve that goal. 

Social Policy Bonds would be best issued to encourage goals that are not only almost universally desired, but that also do not create a small group of highly-motivated people who would oppose those goals. The goals I discuss are all like that, but it's also important that they be issued in such a way that any losses from successful achievement of the targeted goals would be spread so thinly that nobody would be motivated to take action to frustrate the targeted goal. So, for instance, halving crime rates could reduce the prospects for lawyers, jailors and nurses, but I don't think that would motivate them actively to oppose that goal. 

The quest for a way of experimenting with Social Policy Bond continues...

 

 

 

'Complexity is fraud'

The late P.J. O’Rourke once wrote, in The Atlantic in April 2002, that: 'Beyond a certain point complexity is fraud…. when someone creates a system in which you can’t tell whether or not you’re being fooled, you’re being fooled.'

When people's wishes clash with vested interests it's the vested interests (the political class and those groups that can afford expensive lobbyists) that win every time. Our political systems are too complex, arcane or corrupt for ordinary people to stand a chance. The result is clear: an ever-rising gap between politicians and the people they are supposed to represent. 

Voting makes little difference. And, while we don't really know the intentions of the people in power, I suspect that whoever they are doesn't make much difference either. The vested interests are too powerful. They have perpetuated a policymaking process that effectively excludes influence from people outside their exalted circle. They have weaponised the complexity and obscurity of our systems of government for selfish ends.

They can get away with this because our political discourse centres on sound-bites, personality, and image. Actual policymaking is an entirely distinct process: much of it focuses on the structures and funding of government bodies, law and regulation; all of which are opaque to non-professionals - which is to say, ordinary people. The only people who now really understand policymaking are those who are paid to do so, and the only people who influence it are those who have the millions of dollars necessary to pay them.You might even think the system has been specifically designed to keep ordinary citizens out of it.

Bernardo Mueller's 2019, Why public policies fail, is perhaps less cynical: 

The failure of public policies is ubiquitous.This paper ascribes this failure to the complex system nature of public policies. A key characteristic of complex systems is that they cannot be closely controlled or predicted. Yet the traditional approach to public policy is fundamentally based on both control and prediction, as it proceeds by comparing the expected costs and benefits of a postulated set of alternatives. In this paper I provide five pathologies of complex systems and show how they cause the failure of the traditional approach. If a public policy is recognized as taking place within a complex system, it is necessary to use instruments that can work within those informational and epistemological constraints. I provide several examples of the types of policies that meet these demands. But when dealing with complex systems, even with appropriate instruments it is nevertheless necessary to adjust the expectations of what can realistically be achieved. Why public policies fail: Policymaking under complexity, Bernardo Mueller, September 2019

I believe that we can set up a system that solves our long-term problems by bypassing government decision-making and rewarding solutions however they are achieved and whoever achieves them. Social Policy Bonds would work by giving incentives to people to try many different approaches to problems, such as crime, conflict, climate change, and pursue only those that are most promising. Such a system would resemble biological evolution, in that there would be constant pressure, in the form of incentives, to select only the most successful approaches to achieving our social and environmental goals.

A bond regime would require that policymaking focus on outcomes, rather than the alleged means of achieving them. Outcomes are more meaningful to ordinary people than the current policymaking emphasis on legal pathways, funding arrangements, institutional structures and composition, and other arcana.

Meaningful outcomes are one essential element of the Social Policy Bond idea. The other is the injection of market incentives into their achievement: rewarding those who achieve our goals according to their efficiency in actually achieving them. The idea might sound outlandish at first hearing: handing over the solution of our social and environmental problems to investors. But government would still articulate our goals and raise the revenue for their achievemnt - things that democratic governments can actually do quite well. Only their achievement would be subject to the market, which economic theory and all the evidence suggest is the most efficient way of allocating society's scarce resources. No doubt the Social Policy Bond idea could do with some discussion and refinement. But the real question is: what is the alternative? To continue as we are doing, where the gap between vested interests and ordinary people grows ever wider, risks, in my view, social collapse.

The widening gap between politics and people

Unlike many economists I have no view on the size of government. Government is a means to various societal ends and those should be decided by people. I don't believe that taxation is theft, nor that economic freedom is the most important consideration. It is the large and widening gap between government and people that I believe needs to be addressed. 

The gap would narrow if more people participated in policymaking. One reason, I believe, why we're not very interested is that policy is formulated in terms that are difficult to relate to outcomes that are meaningful to us as natural persons, as distinct from corporate bodies. Policymakers seem to concern themselves with decisions about funding for different government agencies, dispensing patronage to big business and other lobbies, presenting themselves in the best light ... almost anything, in fact, except outcomes that mean something to real people.

A government that issued Social Policy Bonds would, from the outset, have to think clearly about social and environmental outcomes, rather than the supposed means of achieving them. Its main roles would be to articulate society's wishes regarding social and environmental outcomes, and to raise the revenue that would fund these outcomes. Unlike most of the current determinants of policy, the language of outcomes and the necessary trade-offs between them is comprehensible to people other than politicians, bureaucrats, lawyers and public relations experts. For that reason, more people would be drawn into policymaking - an end in itself, as well as a means toward getting greater public buy-in to the resulting policies.

Expressing policy in terms of outcomes, and the consequent closing of the gap between public and policymakers would be one valuable benefit arising from a Social Policy Bond regime. The other would be the much greater efficiency in achieving social and environmental goals once the market, rather than a handful of government employees, decides who shall achieve these goals, and how they shall be achieved.

World Peace

Targeting long-term goals means that we can greatly extend the realm of achievable oucomes compared to those available to today's policymakers. 

For example: world peace. Today that simply means an absence of war or civil war - violent political conflict. So the current definition of peace can (and does) allow for: piling up of all sorts of weaponry; including weapons of mass destruction; and hateful and provocative propaganda in the media, schools, and religious institutions. These increase the probability of deadly conflict in the long run, but would still technically be defined as 'peace' today. Rewards under this short-term vision accrue to arms merchants and others intent on fomenting conflict to take place some time beyond the horizons of today's politicians. Today's incentives then do little to prevent conflict. 

World Peace Bonds would be different. They would be issued with a very long time horizon: perhaps five decades. Any outbreak of large-scale violence would see investors in the bonds the prospect of losing money. But if they are effective in ensuring world peace, then they stand to benefit - as does everyone else on Earth. World Peace Bonds, with sufficient backing, would outweigh today's incentives. With such a long-term view, it would be in the interests of bondholders to eliminate the hateful indoctrination of schoolchildren and everyone else, and to control the sales and lethality of armaments. Bondholders would have incentives also to research, experiment and implement new approaches to conflict reduction, concentrating on those that are most promising and efficient. 

The goal of 'world peace' is readily categorised as unrealistic, utopian, idealistic and, of course, impossible. That's partly because we have only to look at human history in confirmation. But incentives have unleashed such human ingenuity that the quantity (population and longevity) and quality (standard of living) of billions of our species have risen spectacularly in recent decades. Long-term challenges threaten our achievements. We urgently need to supply incentives commensurate with the magnitude and long-term nature of those threats. 

The apotheosis of process

In a long post, the entirety of which is well worth reading, Dr Malcolm Kendrick contrasts the ongoing UK public enquiry into Covid with that done by the Swedes: 

In the UK we have massive Covid enquiry going on. It consists of ten ‘modules’, one of which has been finally completed, the other nine grind on. The chair hopes to conclude public hearings by the summer of 2026. Yes, 2026… Four years after it the enquiry started. (I would place a small wager that this deadline will be missed.) After this, a majestic report shalt be written. Which will take several more years, no doubt? By which time we will all have lost interest or died of old age. Last time I looked, the enquiry had cost well over one hundred million pounds (~$125m). I guess it will end up costing close to quarter of a billion by the time it is finished. All taking longer to complete than WWII. Sweden wrapped up their enquiry by February 2022, in well under two years. Done and dusted, before ours even got started. ...

In meeting its aims, the Inquiry will:

a) consider any disparities evident in the impact of the pandemic on different categories of people, including, but not limited to, those relating to protected characteristics under the Equality Act 2010 and equality categories under the Northern Ireland Act 1998.

b) listen to and consider carefully the experiences of bereaved families and others who have suffered hardship or loss as a result of the pandemic. Although the Inquiry will not consider in detail individual cases of harm or death, listening to these accounts will inform its understanding of the impact of the pandemic and the response, and of the lessons to be learned;

c) highlight where lessons identified from preparedness and the response to the pandemic may be applicable to other civil emergencies;

d) have reasonable regard to relevant international comparisons; and

e) produce its reports (including interim reports) and any recommendations in a timely manner. (A timely manner…ho, ho.)

Dr Kendrick asks what’s missing from these aims?

Just about every question you would wish answered. Plucking a few from the air:

• What is the evidence that lockdowns did any good
• What is the evidence that lockdowns were harmful
• What is the evidence that wearing masks provided any protection
• Were the models created by epidemiologists inaccurate, if so why, and why did we listen to them – and should we do so in the future
• Should we have had a behavioural unit within SAGE (Scientific Advisory Group for Emergencies) which used messages of fear to control the public response
• Were the vaccines rushed through without sufficient consideration to safety
• Were experts who disagreed with the official narrative attacked and silenced when it would have been more effective to listen to them

Yes, these sort of questions. The sort that you probably would like to have answered. Questions that the UK enquiry will go out of its way to avoid. Instead, it will be almost entirely concerned about process. Which departments should have spoken to each other. Should there have been a different oversight committee. Not, God forbid, any analysis of outcomes. What went on during Covid?, Dr Malcolm Kendrick, 29 January 2025

Exactly. By setting up these endless reviews of process, politicians can distract us from their failings and anyway wait till we've all lost interest before they're exposed. It's a systemic problem. Our political debates centre round peripheral issues: personalities, sound bites, funding arrangements, institutional structures and, yes, process. Everything except outcomes.What do I suggest? At the national level, I propose Tradeable Health Outcome Bonds, which would take a panoptic view of a country's physical and mental health, and reward people for improving it. (A shorter version is here.) The focus needs to be on outcomes, about which there is room for legitimate debate and discussion - the sort of discussion that ordinary people can understand and in which we could participate. Such discussion would be an end in itself, as well as generating a level of buy-in - essential when it comes to complex matters such as health and the environment, but which is largely absent from our current policymaking environment. Focusing on outcomes has other benefits as well as efficiency and transparency: especially in complex policy areas like health or the environment, where our knowledge is expanding rapidly, our goals are far more stable over time than the best means of achieving them. The Social Policy Bond concept is entirely aimed at achieving society's goals. The essential first step is to clarify exactly what are these goals, in consultation with experts and the public. You would think this would be a priority for every democratic government, but, sadly, it rarely happens. The result? Politics has become a circus, and policymaking a farce.