Politics without policy

Even by the standards of recent years, this year's US election campaign is unusually devoid of discussion about policy. The would-be presidents' age, race, gender, and friends seem to be the issues that matter. To some extent this is understandable: politics under the current system fails to hold the attention. There's little relationship between what candidates promise and what they deliver. Real issues do come up: whether or not to go to war, or whether to favour the very rich at the expense of everyone else, but rarely in any of the democracies are candidates' positions explicit. Once the election is over, public opinion is something to be ignored or manipulated.

It's easy for politicians to get away with that because current policymaking systems are opaque. Where they are not secret they are simply too boring for anybody other than experts or academics to capture people's imagination. Policymaking centres around arcane, technical issues: legislative, regulatory or fiscal matters that the average politician doesn't fully understand, let alone normal members of the public. Corporations with powerful vested interests do understand the system - or can afford to bankroll those who do - and revel in it. Politicians and bureaucrats, work hard, take their index-linked pensions and genuinely believe they are doing a great job. The larger, slow-moving problems go unsolved: the degradation of our commons at the hands of government and the large corporations; the alienation of people not only from the political process but, divided by a car-crazy infrastructure, from their neighbours.

Re-engagement is possible, I think, by expressing political goals as outcomes that are meaningful to ordinary people. Instead of proposing this or that reorganisation of health care systems, for example, target real-life health goals: longevity, quality-adjusted life years, infant mortality etc. More broadly, instead of sacrificing quality of life to economic growth, target social and environmental goals and subordinate the economy to those. People can understand such goals. We don't, really, care about the race of politicians, and we don't have the time to compete with corporations and specialists when it comes to arguing over policy. But we do understand and care about social and environmental outcomes.

Dodgy donors, etc

An interesting story here about the costs to the public of political parties in the UK. On this issue I think I'm with the paricipants of the 'eighteen months of cross-party talks' which 'stalled in October, amid failure to agree on a raft of recommendations....'. Given the current system, in other words, I don't have an opinion on where funding for political parties should come from. I do think it should be more transparent, but I'm more inclined to think in terms of outcomes rather than political parties. The current system is quite odd really. Corporations or wealthy individuals give funds to political parties, openly or in secret, on the basis that these parties will (probably) enact certain measures that (possibly) will lead to the outcomes they want to see. Why not finance outcomes directly? Under a Social Policy Bond regime that would be feasible. It might not be a bad idea for people other than wealthy donors to think in terms of outcomes rather than political parties and the ideologies or interest groups they represent; and again, a Social Policy Bond regime would encourage that. In fact, the bonds would mandate outcome-based policymaking. I think that would be a big improvement over the current system, which is anachronistic and opaque.

Big government = remote government

Whether or not the UK's 'special liquidity scheme' is actually a taxpayer-funded bailout, it's clear that big organisations can afford to be out of touch in ways that small businesses and ordinary people cannot. Big companies can influence government in all sorts of ways. They often receive subsidies, or protection from imports. They can manipulate the regulatory environment in such a way as to impose disproportionately higher compliance costs on smaller enterprises. And if they are banks, they are deemed 'too big to fail' and governments fall over themselves to rescue them with funds from taxpayers. Smaller businesses have to respond to the market. Big business distorts the market.

But what happens when the big organisation is in fact the government? Now that government increasingly dominates our economic, social and environmental sectors, we can look forward to a whole new set of problems. Big government is remote, out-of-touch government. It works in the same way as a big corporation. If it can't sell its policies it can impose them. Its size insulates it from day-to-day reality. Bureaucratic logic has a momentum of its own, and dreadful policies have a powerful interest group in the people who get to administer them. Big government is cumbersome, monolithic and, ultimately, contemptuous of the people its supposed to serve. All this is not to say that people working for government bodies are the same. It's the system that is at fault, not the individuals caught up in it.

When organisations are big they have underlying objectives other than their stated ones. The over-arching organisational objective is self-perpetuation. Smaller companies survive and prosper by meeting market demands. Big government issues streams of targets that sound worthwhile but are essentially about reinforcing and expanding the role of government. There's hardly a single example of governments holding themselves responsible for achieving a meaningful, worthwhile outcome of value to ordinary people. Instead we get Mickey Mouse micro-objectives, like compliance with the Kyoto Protocol, or smaller waiting lists for hospitals, that have nothing to do with real people, and everything to do with control.

Urban monoculture

One thing governments and big business can't deal with is diversity. After decades of government intervention, 'industry concentration' - the degree to which a few large firms dominate, is very high in the the input and processing agribusinesses; that might have happened anyway, but the trend has been amplified by government. Its subsidies go overwhelmingly to the biggest landowners, input suppliers and processing companies; it creates a regulatory environment that imposes disproportionate compliance costs on small, local, businesses (the irony being that its the activities of the larger companies that generate the need for regulations at all); and it identifies economic success with the fortunes of bigger companies. Apart from the environmental depredations and unappealing aesthetics, the resulting monoculture in the countryside leaves us open to potentially disastrous pest or disease invasions.

Now the same looks like happening in the cities. Government and its cronies in the construction business have imposed a road-based infrastructure on of the world's cities. As with industrial agriculture, it penalises small, local businesse and ordinary people. And as with agriculture too, it is absolutely dependent on oil. What government failed to factor in is how vulnerable this leaves us when the oil runs out. We might find our urban monoculture just as fragile as our agricultural monoculture

Happiness

Back in 1974 Richard Easterlin of the University of Pennsylvania published a study that seemed to show that economic growth didn't necessarily lead to more happiness; especially at higher levels of income. Now two economists, Betsey Stevenson and Justin Wolfers argue that money does tend to bring happiness, even at higher income levels. (See here for a New York Times summary of the issue.) There are all sorts of ideological positions taken about what has become known as 'happiness research'. It's something I think about when wondering what should be targeted under a Social Policy Bond regime. My inclination is to stick to objectively verifiable measures of wellbeing; but there are grey areas. It's hard to measure crime rates, for example, and much easier to measure fear of crime. Evidence suggests that in the UK in recent years, the two have actually diverged, with increasing fear of crime coinciding with falling crime rates. That's quite plausible, if people are afraid of exposing themselves to crime, say, by staying indoors after dark.

Under a Social Policy Bond regime I've always thought it would be best to concentrate on targeting for improvement the lower levels of education, health, housing etc, on the basis that (1) there is less ambiguity about such improvements leading to wellbeing; and (2) at the lower levels, more can be done with fewer resources. Also, at higher levels of income and wealth, people generally have more varied goals, and more time and information with which to make informed decisions about how to reach them.

I still hold to that view, and I'm not sure I find the Stevenson and Wolfers work convincing. Others also have their doubts.

IFC-FT Essay competition 2007

I didn't win a prize in the IFC-FT Essay competition 2007 for my essay on applying the Social Policy Bond principle to development in the poor countries, but you can read it here. It's about 10 pages long.

Same old story

The US Government Accountability Office (GAO) reports that the billions of dollars spent on research and development into alternative fuels by the Department of Energy (DOE) has done little to lessen the country's dependence on fossil fuels:

Some US$ 60 billion has been invested in R&D on so-called advanced energy technologies by the U.S. DOE over the last 30 years, but consumption from traditional fuels has remained relatively stable: today fossil fuels supply 85 percent of U.S. energy consumption compared with 93 percent in 1973. The growth of nuclear power in the 1970s and 80s accounts for most of the difference, according to the GAO. Source

It's a familiar story; the only unusual feature is that there was an official attempt to monitor performance - and that it became public knowledge. On a similar theme, a cartoon in Friday's International Herald Tribune, (which I cannot find on the web) amidst a discussion of rising world food prices shows a couple of starving wretches about to approach a stocky American filling the tank of his capacious car from a pump with a biofuel sticker. 'Sorry guys', he says 'I'm busy saving the planet.'

Re-greening the Sahel

From an interview in 'New Scientist' with Chris Reij, African agricultural expert:

[D]uring later colonial times, the farmers [in Niger] were told to grow peanuts, and experts instructed them to remove all the trees from their fields: modern agriculture was about cultivating a single crop on a bare field. ...the other thing is that trees were considered state property - as they are in many African countries - so when nobody was looking the farmers just chopped them down and sold them as firewood.

But in fact the news is good: the Sahel has been re-greened. People have planted very large numbers of trees, which have now been incorporated into their farming system. So what changed?

All across Africa, people look after the things they own but ignore or destroy what is controlled by the state. The World Bank says good governance is essential for development but in this case the weakening of the state created opportunities for farmers.

This chimes with one or two of my previous posts: government as monopoly can stifle development if it doesn't know what it's doing; and that's supposing it's well meaning in the first place. I don't think this danger is in any way restricted to developing countries. By dictating how things shall be done, instead of the broad goals we need to achieve, government can inhibit the exploration and application of diverse, adaptive initiatives.

Madness

A quick quote from Paul Krugman, explaining the rise in world food prices:

And meanwhile, land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis. You might put it this way: people are starving in Africa so that American politicians can court votes in farm states. Grains gone wild

I will say it again: we're not just destroying our planet; we're not just destroying it with our eyes wide open; we're subsidising its destruction with our taxes.

Monoculture

An ex-colleague has introduced me to the work of Vanadana Shiva, a scientist and activist. One phrase from an interview here strikes me:

When India and Pakistan were competing with nuclear tests, and India called its nuclear bomb the Hindu bomb, while Pakistan called its bomb the Islamic bomb, I said: this is the perfect example of diverse men for monoculture.

Monoculture does seem to be the result of big, remote government and its tendency to centralise. It takes physical form in the increasing uniformity of our cities, where so much diversity and vitality is sacrificed to the interests of the road lobby and construction industry. The monoculture of our countryside is better documented, and just as environmentally destructive.

The Social Policy Bond principle recognises that big government can mean well and see that things are done that only big government can do; and that some of these things are extremely worthwhile; and that government should continue to encourage and reward them. But when big government goes beyond its remit and actually insists on doing things its way, then the dismal result is monoculture, with all its life-sapping uniformity and potential for calamity. That's because government agencies have their own objectives (primarily self-perpetuation) and their own way of doing things (top-down, one-size-fits-all). We need government to articulate our best interests and raise funds to reward their achievement, but we need the diverse, adaptive approach that Social Policy Bonds offer to actually achieve them.

Beyond monopoly: the coming globopoly

Raphel Sagarin studies the impact of climate change and human activity on marine life, and is based at Duke University, Durham, North Caroline. He thinks living things can show us how to keep society safer. Asked by New Scientist (subscription) whether there are any successful examples of the kind of security approach he is advocating he replied:

The one I often cite is of DARPA, an arm of the US Department of Defense that develops forward-thinking technologies. It had a grand challenge: to create autonomous robotic vehicles. Rather than contract this out to a single organization, it went out to university groups and offered a million-dollar prize. DARPA had remarkable success, as all these individual groups tried to solve the problem.

This is a slightly less refined version of Social Policy Bonds, but even so it was more successful than the default setting of the current system. As government becomes more and more dominant in our economy, society and environment, it will tend to crowd out diverse approaches with its own one-size-fits-all, top-down, way of doing things. Its approach is essentially that of central planning. My chief worry is that globalised central planning will not be subject to the decades-long attrition that led to the breakdown of the Soviet Union, which was fearsomely monopolistic in its own domain, but eventually had to face competition from the more prosperous, less uniform, western economies. This global monopoly (globopoly?) will dictate not only what should be done, but how things shall be done. It's that approach that has led to Kyoto, and the single focus on reducing anthropogenic greenhouse gas emissions as the only approved way of tackling climate change - and it's unlikely to do any better for the world environment than central planning was for that of the USSR.

Social Policy Bonds: I'm convinced anyway

I'm convinced, despite the current lack of interest, that Social Policy Bonds' their time will come. Or at least, that there will be a move towards specifying desired outcomes and rewarding people for achieving them - the heart of the Social Policy Bond method. Why? Because of the rising world population and the increasing complexity of our social organisation. As well technology is changing at a faster rate. These factors all make it near-impossible for conventional policymakers to identify the most important future problems and, even more, the relationships between those problems and their causes. Reading about climate change you realize how close we are to a catastrophe that few could have anticipated while the trail of gunpowder was being laid (and how little we are doing even now to avoid it). But climate change has had a long lead time and there were people, decades ago, who suspected it might happen. There are now so many potential catastrophes without even those portents that the organizations we hope will help us anticipate and avoid them - government agencies, mainly - can't realistically be expected to do so.

Some government bodies currently issue catastrophe bonds, but most are issued by insurers, and all appear to protect against losses arising from specified perils (such as hurricanes). I envisage that more government bodies will begin to issue them against unspecified disasters that lead to large-scale loss of life. I actually think it would be irresponsible of government not to manage risk in this way. With large enough sums at stake, bondholders will realize that they could benefit by working to identify the most likely disasters and doing what they can to minimise their impact. That would essentially be Social Policy Bonds, in principle. Issuers will then start to issue bonds specifically to encourage such behaviour: Social Policy Bonds in practice.

Zimbabwe

In the face of the catastrophe that is Zimbabwe today, the west appears impotent. Our governments and large corporations stand aloof, unconcerned, or convinced that whatever they do will be futile or counter-productive. Only the non-governmental organizations on the ground do what they can to mitigate economic and social collapse. One of the virtues of outcome-based policy like Social Policy Bonds is that it could channel people's compassion and resources into solving problems previously thought to be beyond our control. No-one knows how best to help Zimbabweans, but then no western government has yet actually specified that as a goal and rewarded people for achieving it. But the long-term welfare of Zimbabweans could be the specified target of Social Policy Bond issue backed by western governments or philanthropic organisations. With the right incentives, some of the ingenuity and resources now devoted to enriching corporations and individuals would flow into projects and programmes that we cannot yet specify, into improving the wellbeing of the Zimbabwean. Just because we don't know what best mix of projects will be doesn't mean we should stand by and do nothing.

Another advantage of Social Policy Bonds is that they enlarge the range of large-scale projects that can be considered. Western government intervention in Africa in general, and Zimbabwe in particular, is open to (deliberate) misinterpretation and the charge of neo-colonialism. For instance, the long-term prospects for peaceful development in Zimbabwe, or elsewhere, might best be enhanced by reducing inter-communal strife, which might conceivably be minimised by the encouragement of intermarriage between different communities. Western governments could not themselves sponsor such intermarriages: that would be political dynamite. But holders of Social Policy Bonds that have as their explicit objective the long-term improvement of the welfare of African citizens, would probably find fewer barriers in the way of that sort of project: it would be clear to everyone that their motivation is entirely mercenary, rather than anything more sinister.