27 September 2005

Goals for a bond regime

Social Policy Bonds are versatile in that they could deal with any quantifiable social or environmental goal. That said, broad objectives would be ideal. To see this take, as an example of a narrow goal, that of reducing burglaries in a small locality. Bondholders could solve this problem merely by laying on taxis to transport burglars to areas outside the scope of the bond regime. Or they could offer courses that would upskill burglars so that they could become white-collar criminals instead. Either way, the bondholders would achieve their objective and cash in. But society's broader goals would not be helped. It would be far better to issue bonds targeting all crime in as large an area as is feasible.

Similarly with other goals. It would be better to target all forms of pollution simultaneously than a single pollutant. It would be better to target a broad definition of poverty than a narrow definition.

That said, if a Social Policy Bond regime is to get off the ground, it is most likely to be by social entrepreneurs or philanthropists with fewer resources than government, who will issue their own bonds to achieve a specific goal with which they identify closely. Careful specification of the goal will be crucial. Any readers interested in issuing their own Social Policy Bonds could first visit the Social Policy Bond website. Then feel free to contact me directly.

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