Conversations with friends over the weekend have encouraged me to tie together the strands of my thinking on policy. Social Policy Bonds are an attempt to address certain policy problems: what follows is my explanation of the origin of these problems.
Essentially, corporations have too much power. As James S Coleman, in the Asymmetric Society describes, the major influence on our society has changed from natural persons to corporate actors. The two parties might have nominally equal rights, but they have vastly different resources, which in any actual transaction can be decisive. Corporations have drifted apart from natural persons, partly by default. Their objectives are not necessarily congruent with those of society. Through a vast array of subsidies and trade barriers, through their unpriced negative social and environmental impacts, and through manipulation of the regulatory environment, they can and do entrench their power, and make live worse for natural persons. (To some degree offsetting these impacts, and seldom mentioned in the literature, are their unpriced positive externalities.)
Corporations and governments support each other in creating ideal conditions for corporate growth. They protect, foster and subsidise the large and global at the expense of the small and global. The large scale of social organisation, and the very high degree of specialisation and complexity of our economies, while helpful to corporations, does not therefore arise from undistorted market forces, and do not therefore originate in decisions made by natural persons; though they are certainly maintained by such decisions, as viable alternatives become ever more scarce.
Big corporations and big government go hand-in-hand. A large scale of aggregation tends to go with remoteness: people feel they have nothing to contribute to decision-making and tend to disengage from the political process: another self-reinforcing trend. The big losers from all this are natural persons and the commons.
Social Policy Bonds are an attempt to redress this balance. Their starting point would be explicit, verifiable outcomes that are meaningful to natural persons. At a local or national level their goals could be things like: universal literacy, or high levels of health and housing, low levels of pollution and unemployment. At a global level, targets could include reduced levels of violent political conflict and climate stability. Social Policy Bond regimes would inject market forces into the achievement of such social and environmental goals. Perhaps equally important, their emphasis on meaningful outcomes would draw more public participation into the policymaking process. No longer would policymakers get away with protecting their corporate friends (and paymasters) with policies whose principles sound well-meaning, but whose effects will be obscure and as far as real people are concerned, entirely wasteful. Policymakers’ goals would of necessity be transparent right at the start.