27 September 2014

Bertrand Russell anticipates Social Policy Bonds

Bertrand Russell (1872-1970) wrote: 
There is one peculiarly pernicious application of the doctrine that human nature cannot be changed. This is the dogmatic assertion that there will always be wars, because we are so constituted that we feel a need of them. .... If political organization were such as to make war obviously unprofitable, there is nothing in human nature that would compel its occurrence, or make average people unhappy because of its not occurring. Exactly the same arguments that are now used about the impossibility of preventing war were formerly used in defence of duelling, yet few of us feel thwarted because we are not allowed to fight duels. An outline of intellectual rubbish, first published 1943,from 'The Basic Writings of Bertrand Russell', Routledge Classics 2009
Incentives are important and so too is belief that we can end war. Of course, nobody knows how to end even a single conflict, but much human progress has happened serendipitously, with no overall plan. I think we can do better than that, and issue Conflict Reduction Bonds, for instance, which supply incentives for people to find ways of ending conflict that we cannot know in advance. The causes of war are many, complex and volatile. No organization as currently structured can possibly anticipate and address them. We need new types of organization that have incentives to research, adapt, and address all likely causes of war. War and any form of violent political conflict are too important to be left to government or the generals.

26 September 2014

Is global health overmedicalised?

Are we overmedicalising global health? is the title of a recent podcast by Dr Jocalyn Clark, who has also written an article (which I haven't read) on the subject. It's a great question, and one that needs answering. My suspicion is that, as in other policy areas, approaches are too much determined by existing institutions and their outlook and goals. These goals don't always coincide with those of society; sometimes they could even be in conflict with them. In global health, Dr Clark says, there is:

...a medicalisation of these global health problems which occurs when global health issues, which are so strongly linked to poverty and inequity, instead get defined and framed in medical terms and then the solutions developed for them are similarly medicalised.
As society becomes more complex, relationships between cause and effect in physical and mental health, and also in crime, environmental well-being, illiteracy and many other areas, become less easy to identify. But current approaches rely largely on government institutions to make a stab at identifying these relationships and then try to do something to influence them and so improve outcomes. For simple relationships, this can work well and, indeed, government might be the only organization that can deal with certain social and environmental problems. But for complex relationships, especially those that vary markedly over space and time, approaches that rely on government are going to be inefficient at best and in conflict with wider goals at worst. We need, instead, to subordinate institutional structures, outlook and goals to outcomes. And these outcomes must be broad, societal outcomes, rather than those articulated by  existing institutions.

'Health care is but one determinant of health', says Dr Clark, rightly. Targeting broad health outcomes would be a more reliable way of achieving health goals than, as is done now, framing health goals in terms of existing institutions and existing approaches. One solution might be to adopt the Social Policy Bond principle and issue Health Bonds, which would inject market incentives into the achievement of our health goals and reward whoever achieves these goals, whoever they might be, and however they might do so.

06 September 2014

When government should step back: higher education

Marina Warner writes:
[T]here is a central contradiction in the [UK] government’s business model for higher education: you can’t inspire the citizenry, open their eyes and ears, achieve international standing, fill the intellectual granary of the country and replenish it, attract students from this country and beyond, keep up the reputation of the universities, expect your educators and scholars to be public citizens and serve on all kinds of bodies, if you pin them down to one-size-fits-all contracts, inflexible timetables, overflowing workloads, overcrowded classes. Diary, Marina Warner, 'London Review of Books' dated 11 September

Quite. There are some easily quantifiable benefits of education, such as universal literacy and numeracy, but not many. Government can and should target such goals and it could also usefully target attendance at approved educational establishments for children up to the age of 16 or 18. But when it comes to higher education, government should perhaps step back; it could still fund institutions if there's a public will for it, but there is a strong case for making its funding conditional only on certain minimum standards, rather try to apply the narrow, accountancy-based, short-term goals that are a feature of the business world. The demand for tertiary education is relatively informed; students relatively mobile. Government in this, and other policy areas, needs to exercise some humility. Diversity of funding sources, as between government and other sources, and within government, would also be helpful. I've done a short piece here on how an outcome-focused Social Policy Bond regime could approach education.

An update: released today (8 September) is a report done by the charity Save the Children, which says, referring to the UK: "The most comprehensive study of pre-school and primary school-aged children in a generation found disadvantaged children are the worst affected, with four in ten not reading well by the age of 11."

27 August 2014

Who cares about outcomes?

Politicians are skilled at doing the exact opposite of what they make us think they're doing. The policymaking process in the public mind is a tedious discussion of organizational structures, organizational funding, and regulation. The tedium is so ingrained that few of us take a deep interest unless we're being paid to. It's probably deliberate, at some level. So when politicians say they want to cut back on subsidies paid for fossil fuel consumption, it shouldn't really shock us that not only are such subsidies still being paid, they're actually increasing. The International Energy Agency tells us that:
The IEA’s latest estimates indicate that fossil-fuel consumption subsidies worldwide amounted to $544 billion in 2012, up from $523 billion in 2011, with subsidies to oil products representing over half of the total.World Energy Investment Outlook 2014, IEA, June 2014
As pointed out here, this is four times the level of aid given by the OECD's Development Assistance Committee ($134 billion in 2013). 

24 August 2014


I've long argued that social policy needs institutions that must be subordinated entirely to broad, meaningful outcomes. Instead, we have institutions whose over-arching purpose is self-perpetuation. Francis Fukuyama writes, wisely in my view:
The very stability of institutions, however, is also the source of political decay. Institutions are created to meet the demands of specific circumstances, but then circumstances change and institutions fail to adapt. One reason is cognitive: people develop mental models of how the world works and tend to stick to them, even in the face of contradictory evidence. Another reason is group interest: institutions create favored classes of insiders who develop a stake in the status quo and resist pressures to reform. America in DecayThe Sources of Political Dysfunction, Francis Fukuyama, 'Foreign Affairs', September/October
The current regime takes existing organizations as a given. Debate centres around their funding, composition, remit and structure. A Social Policy Bond regime would instead fund outcomes, and let bondholders decide on the optimal organizational form; one that, especially for remote social goals, would - or just as importantly - could change shape, size, and the projects it supports, constantly, in response to changing circumstances and our expanding knowledge.
[M]any [of the US's] political institutions have become increasingly dysfunctional. A combination of intellectual rigidity and the power of entrenched political actors is preventing those institutions from being reformed. And there is no guarantee that the situation will change much without a major shock to the political order.
Exactly. Social Policy Bonds would target outcomes directly, and let motivated bondholders and would-be bondholders compete continuously  to decide how best to achieve them. Intellectual rigidity under a bond regime would be penalised. Efficiency would be rewarded. All in stark contrast to the system not only in the US, but in much of the rest of the world. 

07 August 2014

Public service reform

The Economist talks about public service reform:
But voters, and thus politicians, are especially intolerant of civil-service inefficiency nowadays. One prompt is austerity. Another is technology, which is changing not only how public services are delivered—think of “massively open online courses” in education—but also the way they can be measured. Social networks enable users to grumble about hospital waiting-times and mathematics results. Perhaps the biggest pressure is the passing of time: private-sector workers are incredulous as to why civil servants should escape the creative destruction that has changed other offices around the world.
Quite. Why is it that the achievement of social goals remains (largely) a government monopoly? No good reason, other than vested interests and highly successful patch protection.

The Economist goes on to talk about pay and the need for long-term, strategic thinking. Politicians love to restructure and re-prioritize, to tinker with funding, and to appoint placemen in powerful positions. The remedies the journal suggests include better pay, reduced security for top public service positions and, perhaps, appointing some overlord who takes an exceptionally long-term view.

I have another suggestion: target broad, meaningful outcomes, and let a motivated market decide on organizational structures, composition and the projects they undertake. Under a Social Policy Bond regime there might or might not be 'destruction' of such organizations, as envisaged by the Economist and as occurs in a well-functioning private sector, but such destruction is a means not an end. Social Policy Bonds would ensure that any such destruction would occur only if it were truly 'creative' in the sense of better achieving society's goals, as defined in the redemption terms of the Bonds. 

It's likely that a new type of organization would result: one subordinated to the efficient achievement of meaningful social and environmental outcomes rather than, as now, the caprice of powerful interests, be they government or private sector.

26 July 2014

New procurement in Barcelona and Philadelphia

Christopher Swope writes about changes in procurement in the cities of Barcelona and Philadelphia: 
Typically when cities buy goods or services, they spell out in strict detail exactly what it is they want to buy. But that level of specificity stifles innovation, because it restrains the inventiveness of companies who might bid on the work. It also limits the pool of bidders to established companies familiar with the sort of solution the tender asks for. Barcelona’s less proscriptive approach turns the old system on its head. Rather than laying out exactly what it wants to buy (say, bike lockers), Barcelona is laying out six problems it wants to fix (such as reducing bike theft). How Barcelona and Philadelphia Are Turning Procurement Upside Down, citylab, 18 July

Anyone familiar with Social Policy Bonds will see the similarity: specify outcomes, rather than the supposed means of achieving them: 
Responses could involve buying things, but they might also suggest new services, regulatory changes or any other means of accomplishing the goal.
Excellent - as far as it goes. This procurement system will stimulate diverse, innovative solutions. The difference, and it's a big one, between this mechanism and Social Policy Bonds, lies in how these various possible solutions are decided upon and rewarded.

It appears that after gathering together various diverse possible approaches, a selection is made, presumably of those approaches deemed (I'm not clear by whom) to be the most promising. And the reward?
Anyone around the world with a creative idea, including startup companies or even individuals, has a shot at a contract and all the market legitimacy that comes with that.
It's an improvement over the current system, but in comparison with Social Policy Bonds, I think it has weaknesses:
  • The selection of the most promising approaches might be open to favouritism, image, or corruption - in short, qualities that have little to do with efficiency. More seriously, it's a one-off selection, made under circumstances that will be very likely to change so as to make the selection sub-optimal. 

  • Once the selected approaches are made and implemented, there seems to be no further discipline: the team working on the selected approaches has little incentive to be or remain efficient. They've won the contract; there's every incentive to sit back and relax. 

Things would be different under a Social Policy Bond regime, whereby bondholders, that is those who are charged with implementing solutions, can continue to reap the rewards of doing so only if, in the eyes of motivated competitors, they are the most cost-effective provider of solutions. There is a continuous incentive on bondholders to be efficient. If they are seen to be inefficient, their bonds will be worth more to operators who think they can be more efficient, who will then buy them.

Also, under a bond regime, taxpayers (or whoever else backs the bonds) lose nothing if the specified goal isn't achieved. And if the goal is achieved, rewards will tend to be distributed to bondholders according to the contribution they make to achieving it, and their efficiency in doing so. All this makes a Social Policy Bond regime more versatile than this new procurement initiative, and one more capable of achieving larger, more remote goals, for which a single, unvarying, combination of operators is unlikely to remain at all times the team best placed to achieve society's goals efficiently.

12 July 2014

War and peace, and GDP

Readers interested in a meta-solution to the conflicts in the Middle East could do worse than read my short piece on Peace Bonds. Defining peace in terms robust enough for our purposes might not be easy, but the necessary thinking will help clarify exactly what we want to achieve. As in many other policy areas, there are plenty of statistics already being gathered and with some verification and supplementation a combination of them could be targeted by a Peace Bond regime. See, for instance, this site, for some indicators that we could target. 

On another note, David Pilling asks: has GDP outgrown its use? As I have repeatedly posted (here, for instance), the answer is an unqualified yes.

26 June 2014

Er ... we meant wind-powered cars

The Economist urges cuts in greenhouse gas emissions with this compelling argument:

Moreover, high temperatures do not affect only outdoor workers. [A] study found that a week’s worth of outside temperatures over 32°C cuts production in car plants by 8%. The costs of doing nothing, Economist, dated 28 June
Wow, this climate change business is serious: we must cut back on greenhouse gas emissions - and quickly - or we could see big falls in the numbers of cars being produced!

23 June 2014


How much biodiversity do we want? It's unfortunate that we even have to ask this question, but until we answer it we're likely to see more and more extinctions, along the lines described by Elizabeth Kolbert. Biodiversity is difficult to measure but, again unfortunately, unless we do, and somehow set quantifiable targets, we shall lose it at a high rate as habitat loss and other mankind-induced environmental changes continue apace. Biodiversity, along with other unquantified but crucial contributions to quality of life is something else that is being be sacrificed by default in pursuit of an ever-higher Gross World Product; our de facto over-arching target.

How would a Social Policy Bond regime address biodiversity? We could target it quite directly, using a combination of proxies such indicator species, and areas (and contiguity) of land and sea set aside for conservation.We could also target for reduction the negative impacts of loss of biodiversity.

Myself, I'm no expert in these matters. But there are experts who, if we were motivated, could be brought into a discussion, culminating in biodiversity goals and priorities in ways that maximize society's well-being per dollar spent.

It's not being done, partly because our policymaking is stuck with a system that doesn't allow governments to set goals unless they also achieve them - something that, when it comes to complex, long-term, goals, requiring adaptive, diverse approaches, they cannot do well.

The Social Policy Bond principle is different. Under a bond regime governments - or any wealthy group of people, corporations, or non-governmental organizations - could set goals as lofty and long-term as a world of maximum biodiversity (however it's defined), and reward the people who achieve these goals. We need now, more than ever, diverse, adapative approaches to challenges such as biodiversity loss or, for that matter, violent political conflict; huge threats, but ones that are largely ignored in pursuit of goals whose only virtue is that they can be measured by accountants.