What do we really want?

Guy Standing, in a letter to the Financial Times, argues that, contrary to what statistics appear to be saying, inequality in the UK has, in fact, risen. As well as pointing out that official income statistics, by ignoring the very highest and lowest earners, tend to underestimate inequality, he writes: 

For most of the 20th century, state benefits represented a rising share of workers' social income. ...But, since the 1980s [they] have withered to a fraction of the average wage.... The same applies to community benefits, which come from the commons. The commons includes ...parks, libraries, childcare, allotments, a subsidised justice sytem, schooling. Most are worth a lot, and are withering. Guy Standing, letter published in the 'Financial Times', 13 January 2025

As well '[w]ealth relative to GDP has soared' and 'stronger property rights means [sic] a rising share of GDP goes to owners of physical, financial and intellectual property.'

To me, this points to the need to develop and target indicators that are inextricably correlated with societal well-being. Statistical measures of financial inequality, as Mr Standing writes, fails this test. It matters because, in the absence of coherent policymaking, badly thought out indicators become a de facto targets. Probably the most important such measure is GDP; its flaws as an indicator of well-being are well known but governments worldwide target it implicitly and explicitly ('economic growth'), though it has no necessary link to well-being and, indeed, can show an increase even as there is more activity that conflicts with well-being.

It is, perhaps, regrettable that, on the national and global levels, we require numerical indicators to get an idea of what's really happening. But, accepting that, we need to develop broad measures that are inextricably linked to whatever we actually want to measure; these we can then explicitly target. Targeting outcomes, rather than the alleged means of achieving them, would add some much-needed transparency to the policymaking process. Stability too: broad social and environmental goals are more stable over time than the many different policy approaches ostensibly aimed at achieving them. This matters because most of our broad social and environmental goals will necessarily take many years to achieve. We might also clarify whether supposed goals such as 'reduced inequality' are ends in themselves or rather a less precise way of targeting a perhaps more noble aim: the elimination of poverty.

Social Policy Bonds are one way in which we can focus on outcomes rather than, as now, personalities, funding arrangements, sound bites and ideologies, when making policy. They would oblige us to clarify what we really want to achieve. And, as well as their being explicit and transparent, they would inject market incentives into the achievement of our goals. Opinions will differ, but a big plus of targeting outcomes is that they can be understood by ordinary citizens, and so can generate public engagement and, hence, public buy-in: an important but currently neglected aspect of policymaking.

'The outcomes were terrible but the process was immaculate'

'The outcomes were terrible but the process was immaculate'

Social Policy Bonds aim to achieve social and environmental goals as efficiently as possible. For many years, I've written about how politicians and the public are distracted, cynically or otherwise, from these goals to the supposed ways of achieving them (see here, here, here and here for some random examples). So we fuss over funding arrangements or the composition and structure of the bodies whose ostensible remit is to help achieve these goals, but whose over-arching objective is almost invariably self perpetuation. When it comes to politics, we focus on the politicians: their personalities, their looks, soundbites, what they may have said when they were decades younger. In short: anything except the outcomes we want to see. The current Economist looks at how Britain uses process, often in the form of committees of enquiry, as a delaying mechanism: 'When the choice is between doing and discussing, British politicians instinctively opt for the latter.' 

Social Policy Bonds would be completely different. Their starting point would be the social and environmental outcomes that society wants to see. Politicians would retain the power to articulate and prioritise society's wishes, and to raise the revenue that would reward their achievement. But they'd relinquish the power to decide how our goals would be achieved, and which organisations would achieve them. That would be left to investors in the bonds, who would be rewarded for choosing only the most efficient approaches to solving our social problems. Most of our goals are long term in nature: slashing crime rates, reducing unemployment, improving health, for instance at the national level; ending conflict, mitigating the effects of climate change, and improving the environment at the global level. Today's politics, with its focus on politicians, personalities and process, is ill equipped to address our long-term needs. I suggest that Social Policy Bonds could be the way forward. They would lead to the creation of a new sort of organisation, whose sole focus would be on the achievement of our desired outcomes. I hope the article in the Economist (How means conquered ends, 9 January 2025, from which the quotes above are taken) is a portent of a necessary shift of policymakers' focus from means to ends.

Dealing with real or purported doubt about climate change

What should policymakers do when they face a challenge where the evidence appears to indicate a huge, urgent problem - but some purport to be convinced that it's not a real problem and doesn't require any action? I'm thinking here of climate change, but the same conundrum can apply to other challenges. Politics always implies trade-offs, and any attempt to solve a slow-moving, long-term problem will mean that other demands for government funds must go unsatisfied. So it's perhaps inevitable - at least in countries whose citizens' views count - that governments will do what they can to postpone taking effective action. Greenhouse gas emissions have been the focus of policies aimed at dealing with climate change and it's fair to say that the aggregate effect has been nil:

 

'Climate activism became a big public cause about halfway along this graph. Notice any effect?' From Riding the Climate Toboggan, John Michael Greer, 6 September 2023

The policymaking conundrum is a genuine one. Even for politicians who believe that climate change is happening and that we need to address it, the temptation instead to fund health, education and housing and other short-term social needs must be almost irresistible. We could, of course, fund yet more research with the aim of proving beyond all doubt that anthropogenic climate change is happening and that we must do something about it, but some would say that's already being done and that the interest groups opposed to, for example, cutting back on greenhouse gas emissons will always be able generate enough doubt in the minds of the public to ensure that their business can carry on as usual. 

So what can those policymakers who are convinced that climate change is real and urgent do? One approach would be to issue Climate Stability Bonds. The market price of the bonds would embody investors' continous assessments as to the likelihood and magnitude of climate change, and the costs of efforts to deal with it effectively. As such, governments would need take no action beyond articulating society's desired climate outcomes and providing the funding necessary to reward investors for achieving these outcomes. There's a lot more, of course, and there are links to my work on the bonds here, but the important point here is that regardless of whether climate change is happening; regardless of whether enough people believe it's happening, Climate Stability Bonds would stimulate the most efficient ways of achieving our climate goals.

Mediocrity and the lust for power: why politicians aren't going to issue Social Policy Bonds

The Economist writes about the career choices of some of the brightest US students:

Look at where graduates of Harvard, for example, end up. In the 1970s, one in 20 who went straight into the workforce after graduation found jobs in the likes of finance or consulting. By the 1980s, that was up to one in five; in the 1990s, one in four. ...[I]n the past quarter-century there has been an even more pronounced shift: in 2024 fully half of Harvard graduates who entered the workforce took jobs in finance, consulting or technology.... More than before—more even than when your correspondent entered Harvard less than a decade ago—life on campus feels like a fast track to the corporate world. Finance, consulting and tech are gobbling up top students, the Economist, 19 December 2024

Why become a politician? Your past and present private lives will be scrutinised and anything unfavourable that you have done or said will be made public. You and your relatives will need more security. You will lose your anonymity and you won't (legally) make a lot of money. So it's understandable, though regrettable, that most of our top intellects forgo a career in politics for careers that are less exposed, less personally dangerous, and more lucrative. There will always be some who, at least initially, go into politics for noble, idealistic reasons. But it does seem likely that the majority of politicians are only moderately talented people whose main goal is to be close to, and acquire power. That's one reason, in my view, why the remit of governments tends to expand over time. 

It's also one reason why governments are unlikely to be the first to issue Social Policy Bonds. While a bond regime would allow or, indeed, require governments to articulate society's wishes and to raise the revenue for the achievement, the bonds would see private-sector bodies competing with government agencies to be rewarded for actually achieving them. Only the most efficient investors in the bonds would benefit from holding them. Idealistic politicians would perhaps be interested in Social Policy Bonds, and investigate whether the efficiency gains that I foresee would in fact occur, to the benefit of a society's citizens. But today's crop of politicians would be reluctant, I imagine, to consider issuing the bonds unless they had been tried, tested and shown to be successful by private-sector bodies. Since the bonds would work best for goals considered very long term, it's going to be a long time before our politicians would consider issuing them. Even then, they'd struggle to relinquish the power they currently possess, and greatly value, to fund favoured bodies and to let the market make those decisions on the basis of efficiency. Realistically then, I'm hoping some private-sector body, be it a non-governmental organisation, a group of philanthropists, or a charitable foundation, will show some interest in the concept.

Elites should manage ends, not means

 John Michael Greer writes about the costs of economic growth:

the cascading failures of the managerial elite that claims just now in the teeth of the evidence to be able to lead the world to a better future. Those failures have happened, and are continuing to happen, because the world is too complex to understand rationally. It is so full of unpredictable variables and intricate feedback loops that no degree of human expertise, no set of abstract principles, no concept of world order can provide accurate predictions and allow the creation of a viable and productive order on a global scale. The laughter of wolves, John Michael Greer, 20 March 2024

I agree wholeheartedly - except that I don't believe 'accurate predictions' are necessary. The Social Policy Bond approach does not require accurate predictions: it requires and encourages constant adaptation to changing circumstances in order to achieve targeted outcomes. An evolutionary path towards society's ends. As Mr Greer says, the managerial elite (government, big corporations) can't do this: their interests are not the same as society's and they are too wedded to existing structures and ways of doing things. But what our managerial elite can do is articulate society's wishes and raise the funds for their achievement. No - I agree with Mr Greer - it can't actually achieve them: the complexities make that impossible. But it can reward their achievement, and this is what Social Policy Bonds would do. 

Mr Greer has another suggestion:

That doesn’t mean that human beings can’t co-create a relatively stable, successful, thriving order in the world. It just means that this project is best pursued on a local level, relying on personal experience, folk wisdom, and close attention to local conditions. Those are exactly what the effete managerial aristocracy that thinks it runs the world can’t provide. 

It's an appealing idea and, actually, not necessarily different from Social Policy Bonds which, if issued with care could encourage exactly such local level initiatives, though with more co-ordination and coherence. Sadly, both ideas require our elites to target society's goals (rather than their own), and to relinquish the power to dictate how things shall be done and whom shall be rewarded for getting them done. And that would require our elites to change their thinking, or to be replaced. Both are unlikely, unfortunately.

Resistance is futile. Incentives are fruitful.

Writing in 2019, Roy Scranton reviews books by Bill McKibben and David Wallace-Wells:

And at this point — after the 2003 protests against the Iraq War, the “largest anti-war rally in history,” which saw millions of people in hundreds of cities across the world protesting the American invasion of Iraq and which utterly failed to stop the war — after the “People’s Climate March” in 2014, the “largest climate change march in history,” which utterly failed to have any noticeable effect on global climate policy — after decades of failed protests against institutional racism, gun violence, sexism, nuclear weapons, abortion, war, environmental degradation, and a raft of other issues — only the deluded and naïve could maintain that nonviolent protest politics is much more than ritualized wishful thinking. In the end, McKibben’s argument falls into the same vague preaching as does Wallace-Wells’s. Human beings are special, McKibben insists, because we have free will: “We’re the only creature who can decide not to do something we’re capable of doing.” Asking hard questions about who that “we” is, how “we” make decisions, how power works, and the limits of human freedom are beyond the reach of both writers, because such questions lie outside the narrative they’re both trapped in. No Happy Ending: On Bill McKibben’s “Falter” and David Wallace-Wells’s “The Uninhabitable Earth”, 'Los Angeles Review of Books', 3 June 2079

One thing we can take away from this is that sufficiently large financial incentives can outweigh the informed wishes and protests of millions of ordinary people. Dr Scranton is writing about climate change, but the same applies to any of a multitude of other threats to our well-being and even our existence. The incentives take the form not only of profits to large corporations but of salaries to hard-working employees of conventional organisations ostensibly devoted to improving the environment and society's welfare. My thoughts about such organisations are here, but we have only to look at the state of the planet's human, animal and plant life to realise how little they are actually achieving. I do not see any of this changing, which is why I advocate Social Policy Bonds, which will encourage the formation of a new type of organisation, whose every activity will be aimed at achieving society's goals most efficiently. 

The predicament that we're in results from incentives that are mis-aligned, in that they favour existing wealthy corporations and existing bodies, be they public- or private sector, all of whose interests differ from and, indeed, are often in conflict with the long-term interests of everyone including, I believe, the individual members of these bodies themselves. The 'we' to which Dr Scranton refers does, I believe, refer to all rational beings, despite their working in a system that is at odds with their real needs and wishes. Given that large-scale protests are ineffectual, the most effective way of re-orienting society such that we give a higher priority to solving our with social and environmental problems would be to re-jig the incentives. Social Policy Bonds would do that. They would start out by defining exactly those goals we want to achieve in terms of verifiable outcomes that are meaningful to ordinary people, who could therefore participate in their selection and relative priority. These goals would not presuppose who will achieve them and how they will be achieved. So, we could target so-called 'intractable' goals, such as the ending of war. Or, once we have defined exactly which climate goals we want to see, we could target a combination of indicators of the climate and its impact on plant, animal and human life, and issue bonds that would supply incentives for people to solve the climate change problem. (See here or search this blog for my work on climate change.) 

There are various possible problems arising from the implementation of a Social Policy Bond regime, which I've tried to address here. No question: the bonds are not a panacea and will need trials, experimentation and refinement. I advocate them because (1) Our current trajectory means we are collectively facing urgent, huge crises: social, environmental, nuclear..., and (2) I think Social Policy Bonds, with their combination of clear, meaningful outcomes and market efficiencies are the best option.

The corruption of every body

The current Economist writes about the militias and gangs in Brazil:

Founded by former policemen, Rio’s militias gained prominence in the 1990s by hunting down drug traffickers, winning the support of terrified residents and forging links with local politicians. Yet today they extract a security tax in areas they control and charge residents for access to gas, internet, transport services and electricity. More recently, they have started trafficking the drugs themselves. Brazil’s criminal groups are walking the militias’ path in reverse. Gangs are increasingly funding politicians, paying off local prosecutors and bureaucrats, and laundering their assets through the legal economy. Brazil's gangsters have been getting into politics, the 'Economist', 14 November 2024

At any scale above the smallest, we rely on organisations, be they public- or private-sector, to solve our social and environmental problems. However, organisations, once they've been going for a while, tend to develop priorities other than, and often in conflict with, their stated goals. Their over-arching goal becomes self perpetuation. It happens to all types: not only government bodies and Rio's militias, but also to religious organisations, trade unions, political parties etc.

Which is why I advocate a new type of organisation: ones whose structure and composition are entirely subordinated to their stated objective. Under a Social Policy Bond regime, investors in the bonds would form a protean coalition, whose every activity would be devoted to achieving verifiable outcomes. Those outcomes, at the national level, could include, reduced crime, and better physical and mental health. At the global level, we aim to improve the environment, reduce climate change (or its adverse impacts) or, more ambitiously, we could aim to bring about world peace. 

There are plenty of organisations ostensibly devoted to these goals, but my contention is that they too frequently lose sight of their original intentions, despite their being staffed by, in many cases, hard-working and well-meaning employees. A case in point could be the United Nations Climate Change conferences. The current one, with 67 000 attendees, is the 29th. Much of their attention over the years has been focused on greenhouse gas emissions, chiefly carbon dioxide. This graph showing the level of atmospheric carbon dioxide over time, tells us how successful they have been:

'Climate activism became a big public cause about halfway along this graph. Notice any effect?' From Riding the Climate Toboggan, John Michael Greer, 6 September

The tragedy of the Common Agricultural Policy

All countries have bad policies. What matters is whether we have systems in place that will reform or abolish them. Few policies are as unambiguously bad as the rich countries' agricultural policies.

1. They are capitalised into land values, thereby intensifying agriculture, and so worsening the environment and animal welfare, as well as making the entry of young people into farming impossible.
2. They benefit wealthy landowners at the expense of consumers, taxpayers and food-rich developing countries.
3. They generate overproduction of unhealthy products, which are then disposed of to the detriment of people's health.

These policies have been widely challenged for decades; there's been some tinkering but, we still see, focusing on point (2): 

Revealed: billionaires are ‘ultimate beneficiaries’ linked to €3bn of EU farming subsidies

Thousands of small farms have closed according to analysis of official but opaque data from EU member states. ...The European Union gave generous farming subsidies to the companies of more than a dozen billionaires between 2018 and 2021... including companies owned by the former Czech prime minister Andrej Babiš and the British businessman Sir James Dyson. Billionaires were “ultimate beneficiaries” linked to €3.3bn (£2.76bn) of EU farming handouts over the four-year period even as thousands of small farms were closed down, according to the analysis of official but opaque data from EU member states. ...“It’s madness,” said Benoît Biteau, a French organic farmer and MEP for the Greens in the last European parliament. “The vast majority of farmers are struggling to make a living.” Ajit Niranjan, the Guardian, 3 November 2024

The stated objectives behind these corrupt policies sound grand: to secure the food supply (with huge quantities of imported oil) and, laughably, to protect the family farm.  

Perhaps the most important advantage of a Social Policy Bond regime would be that politicians would have to bind the financing of their policies inextricably to their stated goals. Under the current systems, they can get away with burying the actual goals (transferring money from the poor to rich individuals and, increasingly, corporations), under grandiose rhetoric and reams of legislation and regulation. Under a Social Policy Bond regime, policy outcomes and financing for their achievement would be exactly congruent. Unfortunately, the lobbies that resist reform can afford to do so precisely because of the subsidies they receive. So much so that, as Mr Niranjan points out: 

The EU gives one-third of its entire budget to farmers through its common agricultural policy (Cap), which hands out money based on the area of land a farmer owns rather than whether they need the support.

Agriculture is one sector with which the governments have enmeshed themselves for decades. Government involvement, though, need not be corrupt nor corrupting. A bond regime could ensure that governments would intervene to bring about only the outcomes that are supported by a consensus of the people they are supposed to represent.

Climate change policy: another way of subsidising the rich

I will persist in believing that, if governments were serious about doing anything to combat climate change, they'd target for reduction some of the adverse impacts of climate, and either legislate appropriately, or put in place some incentives that would help mitigate those impacts. That they are not serious, can be clearly seen by the UK Government's Zero Emission Vehicle (ZEV) mandate, which...:

...sets out the percentage of new zero emission cars and vans manufacturers will be required to produce each year up to 2030. [Eighty] % of new cars and 70% of new vans sold in Great Britain will now be zero emission by 2030, increasing to 100% by 2035. Source

 There are some loopholes, of course: 

 If a manufacturer fails to meet this target, it could be fined £15,000 per car it sells that’s outside the allowance. This is unlikely to happen, though, as there are several ways to avoid this. Non-compliant manufacturers can buy ‘credits’ from manufacturers that do comply, for example. Manufacturers that do comply can also ‘bank’ sales that can be traded in years where they may not comply. This system was introduced in 2023 as a part of the ban on fossil-fuel powered cars being pushed back from 2023 to 2035. EV bargains: why some nearly new electric cars are being heavily discounted, 'Which? News', 25 October 2024

 and subsidies to that fortunate part of the population that can afford to own cars and vans:

The government’s schemes to lower the upfront and running costs of owning an EV [Electric Vehicle] includes the plug-in van grant of up to £2,500 for small vans and £5,000 for large vans until at least 2025 and £350 off the cost of homeplace chargepoints for people living in flats. EV bargains: why some nearly new electric cars are being heavily discounted, 'Which? News', 25 October 2024

This is the usual complex, faintly corrupt, totally ineffectual policy that, sadly, is the norm. It might do something to change the ratio of EVs to other vehicles, but it is guaranteed to do nothing positive for the climate. Our politicians are more concerned with placating large corporations (those that make, sell and service vehicles), and motorists; and, as in agriculture (just one example), continuing to transfer funds from the poor to the wealthy. At least there's some consistency: amidst the tax hikes announced in the UK's budget today, we read that: 

Fuel duty stays frozen

Rates on fuel duty – a tax included in the price you pay for petrol, diesel and other fuels – will be kept the same in the next financial year. The temporary 5p per litre cut introduced in 2022 will remain for one more year. Autumn Budget 2024, 'Which? News' 30 October 2024

What would a meaningful attempt to combat climate change look like? First, we'd have some idea of what we want our policies to achieve. My thinking is that our goals would be expressed as an array of scientific, social and financial indicators of the climate and its impacts, each of which would have to fall within an approved range for a sustained period before they could be deemed achieved. What we have today is an exclusive focus on atmospheric composition. The plethora of policies supposedly aimed at influencing  that over the years have had precisely zero effect: 

 

'Climate activism became a big public cause about halfway along this graph. Notice any effect?' From Riding the Climate Toboggan, John Michael Greer, 6 September 2023

For my suggestion as to how we can combat climate change or its adverse impacts on plant, animal and human life, please see the papers linked to here.

 

Now let's try to solve terrestrial problems

The Economist explains how NASA is reducing costs and enhancing efficiency in space exploration:

Over the past ten years NASA has started to move away from the time-honoured model which sees it tell private industry exactly what it wants built and then pay the price, with a handsome guaranteed profit added on. Instead NASA tells companies what it wants done; lets them say how they would do it, how much new stuff they will have to develop and what that will all cost; and then offers fixed-price contracts to the best bids. The enlightened goal is to build up a thriving competitive market in such services. SpaceX is NASA’s biggest lunar rival, the 'Economist', 17 October 2024

This is exactly the model I've been advocating for many years: stipulate the outcome and let market incentives decide who shall achieve it and how they do so. As it's working successfully for space exploration maybe we could think about applying it to terrestrial problems. I'm not sure why we don't. It could be that the politicians and bureaucrats who control spending on social and environmental problems are reluctant to relinquish the power to determine which bodies receive government funding and how they go about achieving our goals. But they would still have the remit to help articulate society's goals and raise the revenue for their achievement. Democratic governments are quite effective in doing those things, but they will persist in dictating both which bodies receive their funding, and how they are to go about achieving our social and environmental goals. That model can work well when the causes of our social problems are easy to identify, but it's less successful when our problems are inescapably complex and long term in nature. Such problems include crime, poor health, climate change and - most deadly of all - war. They probably all require a wide range of diverse, adaptive approaches to their solution, and these are exactly the approaches that government cannot follow. Nor can any single conventional organisation, whose stated goals inevitably get forgotten over time in favour of self perpetuation. 

Social Policy Bonds would do what NASA's doing: contract out the achievement of our long-term social and environmental goals to investors in the bonds, who would have incentives to co-operate with each other with the sole aim of achieving these goals. When the bonds are issued, I envisage that a new sort of organisation will form, whose every activity will be devoted to maximising the efficiency with which investors solve, or pay others to solve, society's problems. Society's goals and those of investors would exactly coincide.