Maintaining the status quo

In the aftermath of Hurricane Katrina it's worth stating that maintaining the status quo - avoiding loss of life, keeping cities functioning, etc - are goals that can be targeted by Social Policy Bonds. The expensive way of dealing with a natural disaster like Katrina may, or may not, be to cut back on anthropogenic emissions of greenhouse gases. The way I advocate is to contract out the maintenance of the status quo to the private sector, via a Social Policy Bond issue. The value of such bonds, if issued by, say, the state of Louisiana, would have collapsed at exactly the same time as the levees were breached. There would have been a powerful, unambiguous and direct incentive on bondholders to maintain the levees.

We see now the unedifying alternative: spin-doctoring and the real underlying motivation of many senior officials the world over: doing everything possible to avoid being publicly identified as incompetent. Financial incentives, inextricably correlated with performance via Social Policy Bonds would, I suggest, be more effective.