The Greeks saw war as an inescapable fact of human life. In the aftermath of terrorist outrages many commentators take the same view; and preventing every such outrage is indeed a formidable task. Which is why, in my view, it should not be the sole responsibility of the state. Government, I believe, could contract out much of the work needed to eliminate terrorism. It could issue Social Policy Bonds redeemable for a fixed sum only when there had been no people killed or injured by terrorist attack for a sustained period.
Bondholders would then have incentives to prevent terrorism efficiently. They would explore and invent new, more diverse options than are currently open to government. They could, for example, subsidise intermarriage between members of different religious communities. They could sponsor school exchange visits, sports matches or the broadcasting of peaceful propaganda. They could arrange for the most virulent preachers of hate to take long, luxurious holidays in remote resorts without access to communication facilities. They could pay people to seduce arms dealers into other areas of activity. Whatever holders of bonds targeting war and terrorism do, they will have successes and failures. But they will also have incentives to terminate projects that are failing and to refine and replicate their successes - to be efficient, in other words.
Government has no such direct incentive. It cannot offer direct financial rewards for success, and its talent pool is limited, partly for that reason. It would get into trouble if it advocated things like intermarriage, or sponsored sybaritic vacations for rabble rousers. As in other areas of social policy, its options are limited. They tend to be one-size-fits-all, slow to adapt and justified mainly because they have been done before, rather than by their efficiency.
The private sector can and should be given the chance to operate more freely. After all, it is largely private incentives that have aggravated the problem of war and terrorism. We need to redress the balance and reward those who strive for peace.
Under a bond regime targetting war and terrorism, Government would still have the responsibility of defining our peace goal, and it would be the ultimate source of finance for achievement of that goal. But the actual achievement would be contracted out to the private sector, who would have powerful incentives to achieve it as cost-effectively as possible. Government and the private sector would each do what it does best: respectively, articulating its citizens' wishes, and finding the most efficient ways of achieving its goals.
1 comment:
Thanks Mike for your comment. Your first para seems to be saying that terrorism is always a legitimate response to the projection overseas of illegitimate state aggression. This seems at least questionable if you look for example at present-day Thailand, Spain or the Philippines, but I don't want to get involved in that argument. Let me, for the moment, retreat into what is the purpose of economics: to allocate scarce resources to better achieve prescribed ends. Social Policy Bonds, I think, can do the efficient allocation of resources. I have views on what policy goals should be, but they are only my views, and others will have different ones. That said, I believe people can more readily come to consensus on these goals (outcomes) than they can on the means to achieve them, and one of the virtues of Social Policy Bonds is that policy goals would be explicit, transparent and agreed outcomes, rather than the incoherent hotch-potch of policies that serve established state and corporate interests that we increasingly see today.
Now, on your particular point. First, I think the private sector is quite an important influence on the military, so private entities, especially those within the military industrial complex can, I believe, do much to influence military practices by, for example, withdrawing their support for them. Second, private sector bodies outside the military industrial complex can have an effect through means other than what you rightly call the the 'same old political processes'. The private sector can, for instance, issue its own Social Policy Bonds targeting war or terrorism. The effect would be to offer countervailing incentives to those on offer through the existing system to those that create mayhem.
Taking up that thread, rather than go for subgoals, I would prefer a much broader goal. I propose that an alliance of enlightened governments, NGOs, charities and individuals back 'Conflict Reduction Bonds' that target all deaths caused by conflict, anywhere in the world, impartially (numbers would be unweighted by country/citizenship etc). Philanthropists could get the ball rolling by setting up a fund to which the public could contribute. I have discussed this idea and some of the issues it would raise in one of my books: Market incentives to end war (click on 'Books and ebooks' in the right hand column for more details). But feel free to comment further in this forum if you wish.
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