Social Policy Bonds are about defining policy goals in terms of outcomes that are meaningful to real people. ‘Outcomes’ as distinct from activities, organisations, inputs (spending) and outputs; and ‘real people’ as distinct from government agencies or corporations.
Without going any further, subordinating policy to outcomes would screen out a lot of wildly expensive lunacies, such as EU or US agricultural policies, allegedly designed to help small farmers, but in fact consumer- and taxpayer- funded subsidies for wealthy landowners and large agribusiness corporates. It would also bring into question the lazy assumption that increasing spending for an organisation with high-sounding ideals will actually help bring about the organisation’s stated objectives. Giving billions of dollars in ‘aid’ to bodies such as the United Nations or corrupt governments doesn’t alleviate poverty. It is gesture politics at its worst. Likewise increasing domestic spending on health or education doesn’t necessarily improve health and education outcomes – as UK taxpayers (for instance) are finding.
But subordinating policy to outcomes would, in fact, go a lot further. For a start, meaningful outcomes are more comprehensible to ordinary people than the process-driven platitudes and obscurities that justify policies under the current regime. Being more comprehensible, they are more open to public participation: an end in itself, as well as a means to better policymaking. People would be entrusted with making real decisions rather than delegating them to a group of people who are experts at nothing other than gaining power and serving their party. Example: crime rates are rising. Under the current system, anybody interested in dealing with this problem would have to bone up on police structures, legislation, the state of the justice system, prisons etc. It’s too complex and arcane for non-specialists. But in a Social Policy Bond regime, crime rates would be explicitly targeted. Not spending on the police versus spending on prisons; not whether parents, schools, alcohol, drugs or the media are to blame. Not any number of genuinely difficult questions that even specialists cannot definitively answer. No; all the public would be asked under a bond regime is: “should we spend more reducing crime rates, given our other objectives, and if so, how much?”
Thanks to the market for Social Policy Bonds, and the mass of constantly updated information that their market prices would generate, people would also have a pretty good idea as to how much crime reduction they could buy for each marginal dollar.
Subordinating policy to outcomes has other benefits. One is that targeted outcomes would most likely be more stable than the views of ruling parties. They would be less subject to political interference or media images. This is critical for long-term goals, including global environmental goals.