Achieving social goals requires imagination, not selection

Even if you could get more RAM for your brain, the extra storage probably wouldn't make it easier for you to find where you left your car keys. What may help … is a better bouncer – as in the type of bouncer who manages crowd control for nightclubs. Source

This research measured the brain activity of people asked to remember arrays of colored squares or rectangles. In one experiment, researchers told subjects to hold in mind two red rectangles and ignore two blue ones. Those considered to be ‘high-capacity’ individuals excelled at dismissing blue, but low-capacity individuals held all of the rectangles in mind. The researcher said that:

People differed systematically, and dramatically, in their ability to keep irrelevant items out of awareness. This doesn't mean people with low capacity are cognitively impaired. There may be advantages to having a lot of seemingly irrelevant information coming to mind. Being a bit scattered tends to be a trait of highly imaginative people.

There are many ways to interpret these results, (published in full in Nature, 24 November). From the Social Policy Bond point of view, I would make these points:

• Today’s society defines ‘high capacity’ individuals as those who can be most selective in the choice of information they consider; and

• Policymakers – politicians, government officials, corporate bosses – are overwhelmingly drawn from the ranks of those considered to have high capacity.

Excluding extraneous information may be desirable, and even necessary when looking at defined tasks where success will be measured in terms of one-dimensional units such as sales, market share, profits, or numbers of people on waiting lists, etc.

But aggregating such uni-dimensional targets, whether corporate or government, will not optimise society’s well being. For this, we need to target broader social and environmental outcomes. These could, and should, include quality of life indicators; the provision of a tight safety net that maximises rates of basic literacy, health and housing; baseline environmental indicators; and the maintenance of law and order.

A government could define such broad social and environmental goals, but it should not prejudge how best to achieve them. Such achievement requires an awareness of a huge number of variables and a responsiveness that policymakers do not have: all the evidence bears this out, and the research mentioned above explains it. Excluding information is necessary for articulating society’s wants and raising funds – which governments do quite well. But when it comes to actually achieving our goals, we need a different sort of intelligence; one that is comprehensive, imaginative, pluralist and highly adaptable. Markets, in the service of social goals, are the answer. Social Policy Bonds are a means through which government and markets could each do what they are best at.

Fraud, dammed fraud, and the CAP

The BBC reports that fraud costs the average UK household £650 a year.  They mean, of course, illegal fraud. The other sort of fraud is even more costly. Research commissioned by Open Europe estimates that ditching the Common Agricultural Policy would be worth £1500 a year to the typical UK household.

Eradicating small businesses: all join in

Government and big business seem to run a cartel with a single aim: to eradicate small businesses. In this they are aided by all sorts of organisations. This, from today’s (UK) Daily Telegraph:

The misery women go through all over the world queuing for public lavatories would be eased under new principles proposed by the World Toilet Organisation. Guidelines issued at the weekend by the National Environment Agency in Singapore, where the WTO is based, would mean women have at least equal facilities to men.

The code requires medium-sized restaurants, bars and nightclubs to have as many female cubicles as they have male cubicles and urinals. Larger venues, and those such as theatres and cinemas where usage is confined to peak periods, would have to favour women's facilities by a ratio of 14:10.

“It's very important where there are a lot of people,” said Elisabeth Maria-Huba, a German social scientist. “Women need longer. And in a lot of cases women have to arrange themselves to go out again.”

The World Toilet Organisation does exist.

Subsidising our oil addiction

Reading Jane Jacobs' new book Dark Age Ahead, published in May, I’m reminded that the western world’s dependence on cars, highways and fossil fuels is not a market-driven outcome. Rather it’s a product of government-subsidised road building programmes, government-backed corporate welfare for oil companies, a government-funded military to secure oil supplies and guard their routes; and (in the US) sales of tramways to General Motors that breached anti-trust laws. I have had spirited arguments with people who claim that public transport is heavily subsidised; true, but let’s not forget that not only was our private transport infrastructure subsidised, but the external costs that it continues to impose are effectively underwritten by the taxpayer. These include the grievous accident and environmental costs, the unquantifiable but large losses of community, and the direct and indirect costs that arise from our dependence on oil imports.

Kyoto is dead ...still

This article was published in today’s New Zealand Herald

‘The blunt truth about the politics of climate change is that no country will want to sacrifice its economy in order to meet this challenge.’ Tony Blair, speaking at the G8 Climate Change Conference on 2 November, confirms what many of us suspected: the Kyoto agreement to cut back on greenhouse gas emissions is dead. It is unworkable, hugely expensive, politically divisive and most important, ineffectual. Unlike many who oppose Kyoto I do not think all its supporters are insincere or motivated purely by a wish to secure funding for their research programmes. The evidence that the climate is changing is strong and getting stronger, and there is no question that it could have catastrophic effects on large numbers of people.

It also seems likely that anthropogenic greenhouse gas emissions are a cause. But that doesn’t mean that cutting back on these emissions is the best way of preventing or mitigating climate change. In their efforts to get the absurdly unworkable Kyoto agreement off the ground, its proponents have squandered precious political capital, and set back the cause of those looking for realistic alternatives.

Perhaps some of them, including some in the New Zealand Government, knew Kyoto would never fly, so could support it safely. They’d thereby be demonstrating their immense care and compassion for humanity, knowing all along that Kyoto would come to nothing and they wouldn’t actually have to sacrifice anything themselves. This certainly seems to apply to the European Union: the EU had pledged to reduce its total greenhouse gas emissions to 8 per cent below 1990s levels by 2008-2012, but by 2002 they had dropped only 2.9 per cent – and carbon dioxide emissions had risen slightly. Only four EU countries are on track to achieve their individual targets. And the EU is economically stagnating: any significant growth would probably end its chances of meeting the Kyoto targets.

Given the dimensions of the climate change problem, we should not spend too much time allocating blame for failed policies. Rather we should be looking for practical ways of preventing climate change and mitigating its effects.

Kyoto suffers from the same flaw as many of our other environmental and social policies: it assumes that government knows the best way of achieving our goals. Kyoto if focussed entirely on reducing net greenhouse gas emissions. But with climate change the biological and physical relationships involved are many and complex. Even specialists in climatology disagree about the degree to which the multitude of biological and physical variables cause climate change.

The best way of addressing climate change would not embody the assumption that it knows exactly how the Earth’s climate is changing, what is causing it to change, and what is the best way of dealing with any change. It would not ignore a potentially catastrophic problem, but it would try to be as cost-effective as possible, especially because of the colossal expenditures involved. An ideal policy would stimulate the investigation and adoption of promising new technologies, and be responsive to our fast-increasing knowledge about the causes and effects of climate change. It would most probably seek to mitigate the negative effects of climate change, while doing little to discourage positive effects. Ideally too, it would use markets, the best way yet devised of allocating society’s scarce resources, to channel people’s self-interest into achieving climate stability.

If such a solution could be found, it would be certain to attract more support than Kyoto both from decision makers and ordinary people. Widespread support is essential, because stabilising the climate is going to entail enormous costs and sacrifices.

We need to recognise explicitly that we don’t know all the answers. Achieving a stable climate will mean investigating a wide range of diverse approaches that don’t have anything to do with greenhouse gas emissions - but Kyoto will do nothing to encourage such research. Reducing greenhouse gas emissions or sequestering carbon might turn out to be helpful and cost-effective. But what if new science tells us either that greenhouse gases are not as important as originally thought, or that there are far more cost-effective ways of achieving climate stability? Kyoto would grind on, with its expensive and futile controls on greenhouse gas emissions.

Our problem, of course, is not greenhouse gases; it is climate change. So our objective should not be to cut back on greenhouse gas emissions, but to achieve climate stability. A successful policy would encourage those who help stabilise the climate, however they do it.

My own suggestion is that governments collectively issue Climate Stability Bonds. These would be sold by auction, and redeemed for a fixed sum only when the climate has achieved an agreed and sustained level of stability. In this way there is no need for the targeting mechanism to make assumptions as to how to stabilise the world climate - that is left to bondholders. Climate Stability Bonds would not bear interest and their redemption date would be uncertain. Bondholders would gain most by ensuring that climate stability is achieved quickly.

Once issued, the bonds will be freely tradeable on the free market. As the climate became more stable, so the bond price would rise. Bondholders have incentives to cooperate with each other to do what they can to achieve climate stability, then to sell their Bonds at a higher price. Governments decide only on the degree of climate stability they want - not on how to achieve it. That is left up to investors in the Bonds, who have every incentive to maximise the taxpayer’s benefit per unit outlay. So, in contrast to Kyoto, a Climate Stability Bond regime would stimulate research into finding ever more cost-effective ways of achieving climate stability.

Kyoto is flawed because its focus is entirely on net greenhouse gas emissions. We need instead to look at solutions, such as Climate Stability Bonds, that have as their goal the achievement of climate stability. There is too much at stake to rely on the fossilised science that underpins Kyoto.

Prince Albert of Monaco receives 300 000 euros from CAP

Prince Albert II of Monaco, whose fortune is estimated at 2 billion euros (£1.4 billion), received 287 308 euros in subsidies from the CAP last year. According to a report from Paris-based economics think-tank Groupe d'Economie Mondiale de Sciences Po, less than one per cent of French farmers - the largest ones - receive more in subsidies than the bottom 40 per cent of farmers.

Kyoto is dead

'The blunt truth about the politics of climate change is that no country will want to sacrifice its economy in order to meet this challenge', said UK Prime Minister Tony Blair recently. He’s right, and some of us have been working on practical alternatives to the absurd Kyoto Protocol.

For people whose priority is dealing with climate change, rather than merely demonstrating their concern for humanity without actually doing anything, I suggest Climate Stability Bonds. These would be backed by governments or the private sector, and auctioned to the highest bidders. They would be redeemable for a fixed sum only when some meaningful climate stability target had been achieved and sustained. Bondholders would have incentives to do whatever is most cost-effective. They might opt to reduce greenhouse gas emissions, but they might well find that sending mirrors into Earth orbit, or developing new species of cyanobacteria (that can soak up atmospheric carbon dioxide and convert it into a raw material for biodegradable plastic), or researching into many other possibilities would be far more efficient. Click here for a short published article on Climate Stability Bonds .

Riots in Paris

As far as I can tell nobody else has traced the current riots in Paris back to what I think is one of their main causes: French protectionism and the Common Agricultural Policy. So here goes. By blocking imports of farm products (and textiles and clothing) France, consistently and with great success over the past few decades has:

• Kept more people in farming than otherwise, leading to shortages of labour in manufacturing and services sectors; and


• Blighted the prospects of economic development in poor countries, particularly in Africa.

The result has been reluctant immigration – the worst sort – into France, by people with no other chance of providing decently for themselves and their families. French protectionism has directly led to the violence on the streets of Paris. The tragedy is that the French have so manipulated the European Union that it is not just France that will suffer.