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.

Climate and the environment: it could have been so different

Several years ago Michelle Nijhuis reviewed Losing earth: the decade we almost stopped climate change, by Nathaniel Rich. She wrote about missed opportunities to address climate change in the 1980s. In 1980 the US National Commission on Air Quality convened a meeting of climate and energy: 

[W]hen it came time to commit to specific solutions, the experts began to hesitate. China, the Soviet Union, and the United States were all accelerating coal production; [President] Carter was planning to invest $80 billion in synthetic fuels. Proposed laws or regulations would focus attention on the costs of emissions reduction, instantly politicizing the issue. “We are talking about some major fights in this country,” said the economist Thomas Waltz. “We had better be thinking this thing through.” By the third day, Rich recounts, the experts had abandoned solutions and were even reconsidering their statement of the problem, loading it with caveats. (Were climatic changes “highly likely” or “almost surely” to occur? Were said changes of an “undetermined” or “little-understood” nature?) In the end, the meeting’s final statement was weaker than the language the commission had used to announce the workshop .... Early warnings, Michelle Nijhuis, New York Review of Books, 27 June 2019

Then, as now, politicians' priority is to avoid difficult 'fights'. Much easier to move on to other, less contentious, issues. 

One of the advantages of Social Policy Bonds is that they put in place positive incentives. They channel self-interest into the public good. Sure, bondholders could lobby in favour of public funds being diverted to their target goal, but there is nevertheless a presentational advantage. With Climate Stability Bonds, people would be rewarded for avoiding climate change and its negative impacts. The climate goal could be expressed as a range of physical, ecological, financial and social indicators, all of which would have to fall into an approved range for a sustained period before the bonds would be redeemed. Importantly, the bonds could work well regardless of whether people believe or disbelieve (or say they disbelieve) that the climate is in fact changing. As with other goals that Social Policy Bonds could target, what matters is that the goal is achieved, not the effort required to achieve it, which means that, if the climate were somehow to revert to that deemed to be acceptable, bondholders would be paid out, even if they merely held the bonds and hoped for that outcome. Of course, if a bond regime were to target a goal seen as likely to be achieved, the float price of the bonds would be close to their redemption value. 

I say all this knowing that it's unlikely Climate Stability Bonds are ever going to be issued. They would require a huge redemption fund, backed by governments the world over, and there's no will now for such an initiative. The missed opportunities abound also for other environmental issues. Thus, the current Economist tells us that:

One study found the average size of wildlife populations had shrunk by 95% since 1970 in Latin America and the Caribbean - more than in any other region of the world. The drug lords' side-hustle: smuggling macaws, jaguars and frogs, the Economist, 10 October 2024

It's to be expected that vested interests will oppose policies that threaten their short-term financial goals. It's more of a tragedy that those who should be showing leadership back down in the face of such opposition. The Social Policy Bond principle, with their focus on rewarding meaningful social and environmental outcomes, could help, but inspired leadership would still be required. I'm not holding my breath.

Useless organisations

Adam Kogeman writes to the Economist:

 [T]he UN does some good through the provision of humanitarian aid, but it is a net negative contributor to global peace and prosperity. [It] prevents no conflicts and brings about no peace. Millions of Rwandans, Ukrainians, Sudanese, Lebanese, Syrians, Iraqis and Israelis, among others, can attest to that. It doesn’t follow through on its grandiose but unserious pledges to heal the environment and improve the lot of the world’s poorest. It provides diplomatic cover to the world’s worst human-rights abusers and physical cover to terrorist groups. It is consumed by a rabid obsession with denigrating the world’s only Jewish state. ...America’s occasional inability to hold sway at such a compromised, ineffectual institution is a reflection of the UN’s dysfunction and illegitimacy, not an indictment of its unmatched geopolitical influence. Letter to the editor, Adam Kogeman, the Economist, 26 September 2024

Whatever their founding intentions, I believe that every institution, be it public- or private-sector, including government (at any level), trade union, church, university, charity or large corporation, eventually, inevitably, becomes consumed by one over-arching goal: self perpetuation. Vested interests get bedded in, acquiring the power to oppose meaningful reform. (See one of my previous posts here about how, despite the many efforts of many organisations to reduce greenhouse gas emissions, nothing has been achieved.)

[T]the National Institute on Drug Abuse in Washington has sometimes claimed greatly to have advanced human understanding of addiction, largely thanks to itself, at the same time as the country in which it is located has suffered from an unprecedented epidemic of deaths from overdose—of drugs of addiction. The total of these deaths far exceeds that of all American military deaths since the end of the Second World War, two major wars included. ...The vast increase in the study of crime has not resulted in the diminution of crime, on the contrary, though it has certainly increased the number of criminologists. ... Another field of study whose academics and practitioners have made claims to great strides in understanding is psychology. This study too has undergone a vast expansion, indeed out of all recognition. Psychology is now the third most popular subject in American colleges and universities, and no doubt elsewhere as well. ...Despite unprecedentedly large numbers of psychologists, the psychological condition of the population does not seem to have improved. Finding a cure for psychology, Theodore Dalrymple, Quadrant, 30 September 2024

Whereas large private-sector corporations at least, in theory, are subject to the discipline of the market (which they do their best to undermine), those organisations whose supposed goals are to solve our social and environmental problems face no such restraint. All of which means, to me, that we need a new type of organisation: ones whose every activity is dedicated to achieving their stated goals. A Social Policy Bond regime, targeting broad, long-term goals, would lead to the creation of such organisations. They'd be driven entirely by financial incentives, which need not be as mercenary as it sounds. We pay people to teach, for example, or to care for people, but that doesn't mean those professions should be regarded with the disdain that many feel when the concept of paying people to achieve social goals - a la Social Policy Bonds - is mentioned. 

A bond regime would work by raising funds to pay investors in the bonds only when a targeted social goal had been achieved. Incentives would cascade down from investors to all those contracted to work to achieve the goal. In the long run, a new type of organisation would evolve with the sole function of funding the most promising approaches to achieving the goal and, importantly, terminating those that are failing. Payment is thus inextricably linked to achievement of the goal. For more about such an organisation see here.

Uncertainty is not an excuse for inaction

We need to recognize our limited knowledge. We don't know how best to solve many of our social and environmental problems. With some problems, we do acknowledge our limited capacity; war, for instance, has been thought to be an intractable aspect of our species, so that efforts to reduce it are sporadic, regional, incoherent and mostly ineffectual. 

Similarly with climate change. We feel the need to 'do something' and so we use the tools at our disposal. With climate change, the main tool is ossified science. We know that our knowledge of the scientific relationships between our activities and the climate is not complete, yet we make policy as if it were. Most our efforts to reduce the pace of climate change are directed at reducing our emissions of greenhouse gases. It was only the Kyoto Protocol of 1997 that targeted for reduction gasses other than carbon dioxide, some of which, fluorinated gases for instance, are extremely potent.

There's a case for saying that the multitude of policies supposedly aimed at combating climate change are made cynically, and that they really have no such intention. Hence: 

A paper published in Science last month reviewed 1,500 climate policies around the world, and found that only 63 have delivered significant benefits. Perceptionware, George Monbiot, 19 September 2024

With the predictable outcome: 

 

'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

But just because our knowledge of the causes of climate change is incomplete, that is not a reason for inaction or - the chosen course - for making ineffective policy. We don't have to wait for certainty. My suggestion is that, instead of basing policy on fossilised and incomplete science, we target our desired climate goal. This could be expressed as an array of quantifiable outcomes, each one of which would have to fall within a targeted range for a sustained period, before the goal would be deemed achieved. And once it has been achieved, and only then, the people who helped achieve it would be rewarded. The outcomes targeted could be physical (eg, temperatures), social (eg people made homeless by adverse climatic events), ecological (eg fates of keystone species), or financial (eg insurance rates for homes in developed countries). I suggest that governments, in conjunction with non-governmental organisations, philanthropists and others back Climate Stability Bonds, which would provide funds for the redemption of the bonds once the targeted outcomes had been achieved. The main advantages of such the bonds would be: 

• the bonds would supply incentives for investors to explore, investigate and implement diverse, adaptive solutions to the climate change problem; and
• the bonds would use market incentives to motivate people to be efficient in their pursuit of successful solutions.

For links to much more about Climate Stability Bonds, see here. 

Finance, like dog food advertising, is a low priority

Social Policy Bonds are intended to channel our ingenuity and ever more impressive technology into achieving our social and environmental goals. I often suggest that many of the activities into which we currently devote boundless energy and resources are socially useless or in conflict with society's wishes. It is not only the relatively minor indulgences that somehow win society's approval against which I inveigh: advertising dog food for example, but such far more consequential resource sinks, such as nuclear weaponry (see my previous post), or finance: 

That’s finance. The total value of all the economic activity in the world is estimated at $105 trillion. ...The value of the financial derivatives which arise from this activity – that’s the subsequent trading – is $667 trillion. That makes it the biggest business in the world. And in terms of the things it produces, that business is useless. It does nothing and adds no value. It is just one speculator betting against another and for every winner, on every single transaction, there is an exactly equivalent loser.  For Every Winner a Loser: What is finance for?, John Lanchester, London Review of Books, 12 September 2024

We ought not to condemn those who choose financial trading as a career, whatever the net results of their collective actions. These people are reacting rationally to the incentives on offer. As Mr Lanchester says:

[I]n our society the classic three ways of making a fortune still apply: inherit it, marry it, or steal it. But for an ordinary citizen who wants to become rich through working at a salaried job, finance is by an enormous margin the most likely path. And yet, the thing they’re doing in finance is useless.

It's the incentives that are perverse, directing our efforts into socially useless, or worse, activities. One way of re-jigging the incentives would be to issue Social Policy Bonds, which would inextricably link the rewards gained by efficient resource allocation to the achievement of our social goals. These non-interest bearing bonds would be redeemable for a fixed sum only when a specified social goal. These goals would be broad and, importantly, meaningful to ordinary people, who could thereby participate in which goals would be chosen, and which would have higher priority. Such goals could include: reduced crime, an improved environment or, at the global level, nuclear peace, or a reduction in adverse climatic events. 

A Social Policy Bond regime would allow us to target broad global and national goals explicitly, while channeling the market's efficiencies into the best use of our limited resources. Given that the survival of the planet itself is under threat, I think the case for such targeting is a strong one, even if financial markets lose a fraction of their liquidity in order for us to get there.

Bypass the generals and politicians: target nuclear peace

How do we get to the point at which the US has 14 US Ohio-class submarines, each one of which has the destructive power of 1250 Hiroshima bombs? It's a complicated, expensive, extremely dangerous way of achieving ...what exactly? I'm not singling out the US here: all countries are doing it. What I'm getting at is the disconnect between the stated goals of policies - in this case, presumably, national security - and the likely results of the way we go about achieving them.

As with other social and environmental problems, we really don't know the most efficient and effective ways of ensuring national security. But our decisions as to who gets to choose these ways embody the assumptions that the military, especially those generals who fought previous wars, are those who know best. I believe that there could well be other, less potentially disastrous, ways of achieving the security that we all yearn for, and that we should explore those ways. Actually, we can go further back and ask: who chooses the choosers? Those who delegate national security to the military are invariably politicians whose expertise lies in the acquisition and retention of power. 

I suggest we explore alternatives; or rather, that we put in place incentives that would encourage people to explore alternatives. A goal that we should target immediately is, in my view, sustained nuclear peace. It's one that probably everyone on the planet would like to see, and one whose achievement or otherwise is easy to monitor. If it's a priority at all, it's one that only a few dedicated people have as their vocation and for which they receive derisory funding. 

By backing nuclear peace bonds, a combination of governments, non-governmental organisations, philanthropists and ordinary people could increase the rewards to existing bodies working to achieve nuclear peace, but also increase the resources available for them - and, crucially, others - to work with in support of the nuclear peace goal. It would be up to highly motivated investors in the bonds to research, experiment and eventually implement the ways in which they best think nuclear peace could be achieved and sustained. To be sure, they might decide that the best way of doing so is for big countries to pile up masses of nuclear destructive potential and hope that nothing goes wrong. But they might also look into alternative approaches that pose less danger and that are being neglected by those who currently make all the relevant decisions.

We might then look at other social problems, and decide to target those directly, rather than via politicians and so-called experts working in organisations whose interests invariably differ from those of society.

So, if we want to raise literacy, why not target literacy directly? If we want to reduce crime, why not reward people for reducing crime, however they do so? If we want to improve the environment, why not target the well-being of human, plant and animal life? In short, why not target outcomes, rather than activities, institutions, inputs or outputs, and let the most effiicient operators, be they public- or private sector, rather than the taxpayer, be penalised for failure? Such would be the effect of a Social Policy Bond regime.

Most environmental and social policies are ineffective

New Scientist says it bluntly, but truthfully:

Most climate policies aren't effective

I have been suggesting for many years now that, instead of enacting policies that are entirely focussed on cutting emissions of those gasses thought to contribute to climate change, we should be clear exactly what outcomes we wish to see, and then reward the people who do actually achieve those outcomes. Instead we have an array of divisive, expensive policies, such as subsidising the substitution of one type of car for another, that have done nothing to affect the climate. Even in their own terms - cutting greenhouse gas emissions - they have failed in their ostensible purpose:

 

'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

If we were serious about tackling climate change we'd first answer the fundamental question: do we want to stop the climate changing, or do we want to mitigate adverse events caused by the climate? Then we'd admit that, while we don't really know how best to achieve either of these outcomes, we do know that a multitude of diverse, adaptive approaches will be required. Then we'd put in place incentives for people to research, experiment, refine and then implement these approaches, terminate those that are ineffective, and invest in those that are most promising. 

The problem is a wider one in the public sector: we do not express policy goals in terms of broad outcomes that are meaningful to ordinary people. Instead we put resources into existing institutions, which have their own agendas, top of which is usually self-perpetuation. These agendas may have little to do with the institutions' stated purpose, still less to do with bringing about meaningful improvements in environmental and societal well-being.

So we end up with the climate change bandwaggon, on which hordes of well-meaning, hard-working (for the most part), people are working in bodies whose finance depends on their carrying out specified activities, rather than actually improving the environment or society's well-being. Companies in the private sector - those that operate in a competitive market - don't have that luxury. When they fail, they go out of business. A Social Policy Bond approach, applied to the climate or to other goals, would impose such discipline on organisations that work in the public sector. Achieve what society wants you to achieve, and be rewarded. Fail and you disappear. It's not as harsh as it sounds, as everyone ultimately depends on our environmental and social policies being effective.