31 August 2006

Moral blindness

It's tempting sometimes when confronted with the arrogance of power and the results of its abuse to think that any opposition to it is justified. Who could not react to the heart-rending images of team A's bombings of team B's children by concluding that anything done in the name of team B deserves our support? It's a very human response, a natural reflex to man's inhumanity to man. But being just such a reflex it does nothing to stop the violence. It is purely a reaction, with no other organising principle. It perpetuates the cycle by strengthening a coalition allegedly in support of team B, which strongly believes in its right to oppose team A. Which it does by adopting similarly murderous tactics.

So it’s not surprising, though it will be disappointing to some, to read today that:

[Venezuelan President] Mr Chavez was given the red-carpet treatment as Syrian President Bashar al-Assad welcomed him at the presidential palace on a hill overlooking the capital, Damascus.

In one corner, then, we have the US and its allies, in the other those who are defined entirely by their opposition to the US. We are all part of this process and most of us lose from it, but perhaps outcome-orientated policymaking can break the cycle. It could start fairly small: by issuing Social Policy Bonds that target localised conflicts. A bond regime could build a coalition that is motivated by ending violence, rather than promoting it. Under the current system, the financial incentives on offer tend to augment our base human instinct to oppose violence with violence. A Social Policy Bond regime that rewarded peace would supply countervailing incentives. In other words: give greed a chance.

29 August 2006

Coming next: a fake kidnap

Here in Thailand the buzz is all about the bizarre alleged bomb plot against the Thai Prime Minister Thaksin Shinawatra, who appears to be as unpopular in Bangkok as he is popular in rural areas. A car packed with explosives was found near the PM’s home a few days ago, but there are several indications that all is not as it seems – as so often in Thai politics. So the rumours are that it was a stunt, set up by the PM or his allies to win sympathy for Thaksin at a turbulent time. The shame is that it’s quite plausible, and not just in Thailand or the developing countries. Objective criteria count for so little in our political system that winning sympathy is as good a way of getting elected, or re-elected as any other. City dwellers are deeply skeptical, but early indications are that this assassination attempt, real or staged, will be to Mr Thaksin’s benefit.

25 August 2006

Why I don't like Kyoto

In response to a comment on a previous post, I will elaborate on my opposition to the Kyoto Protocol, and explain why I think Climate Stability Bonds could do a better job.

Like most people on the planet I don’t really know what’s going on. As far as I can tell the case that the climate is changing faster than ever before is strong and growing stronger. It is the speed of change, not necessarily the end point of the change, that is of concern: it’s changing too fast for many of the earth’s species and ourselves to adapt.

It also looks increasingly as though there is as strong causal link between anthropogenic greenhouse gas emissions and climate change. Proof is of course lacking, but the stakes are too high to wait for it. Accepting this, and even accepting that anthropogenic emissions of greenhouse gases including CO2 are the main cause of climate change, I still think Kyoto is flawed. These are my reasons:

1. Reducing anthropogenic greenhouse gases might not be the best way of reducing the concentration of greenhouse gases in the atmosphere;

2. Reducing the concentration of greenhouse gases in the atmosphere might not be the best way of preventing or mitigating climate change;

3. Preventing climate change might not be the best way of preventing the worst effects of climate-induced catastrophe.

A Climate Stability Bond regime would be more adaptive than Kyoto. Right now it certainly looks as though capping greenhouse gas emissions is the best way of preventing or mitigating climate change. But our knowledge of the scientific relationships is growing all the time.

However, even assuming that capping anthropogenic greenhouse gas emissions is consistently found to be the best way of averting climate change; even then I still think Kyoto is deeply flawed. How would a Climate Stability Bond be better in those circumstances? Holders of Climate Reduction Bonds would still target anthropogenic greenhouse gases in a similar fashion to Kyoto, but they would have strong incentives to do so more efficiently. They would want and would have wider scope for action. For example, they wouldn't be bound by political correctness or realpolitik of the sort that exempts some countries that emit huge quantities of greenhouse gases from any disciplines at all. They would simply buy these regimes off or otherwise undermine opposition to the disciplines. And this brings me to another important point: the presentational aspects. Kyoto doesn't focus on a desirable outcome: it's focused on processes and activities. So it is now so politicised and its money flows so unpalatable that it is seen as an imposition; in the rich countries it's seen as an imposition by the greenies on everyone else, and in the poor countries it's seen as an imposition by the rich countries on them. Kyoto means huge upfront costs for a very small payoff well in the future. So large parts of the world disagree with it, or are totally exempt from it. A triumph for the bureaucrats but a tragedy for the planet. In times of financial stress, or slowdown, everyone will repeat the George Bush and Tony Blair line: "I'm not going to sign onto anything that involves economic sacrifice."

Now what I am entirely focussed on here is the outcome - and this excludes justice, morality, the historical record, or the venalities of politicians. Unfortunately Kyoto, being a political construct, is I think so compromised that even its most ardent advocates will agree that it's ineffectual. And there's little argument that it's going to be ruinously expensive. They justify it as a first step, but that step is unlikely ever to be taken. (As distinct from being talked about, recommended and embodied in law.)

A bond regime would target an outcome that people could understand, empathise with and support, and that would entail taxpayer spending only when it had been achieved. So even if we took reducing anthropogenic greenhouse gases as an end in itself (which I certainly don't); even then Climate Stability Bonds would be more acceptable as well as more efficient than Kyoto.

I have said this dogmatically to save time, but I am ready to be convinced otherwise. In a way I hope I am wrong and that Kyoto will avert a calamity. It's certainly got more traction than Climate Stability Bonds at the moment.

22 August 2006

Live chat now available

I've added a live chat panel to the right hand column. It will probably be a temporary measure, unless it gets used a lot. I am happy to have conversations about Social Policy Bonds or outcome-based policy through this medium.

21 August 2006

The sterility of British politics

When you're a senior politician and you don't have any idea what leadership is, nor do you dare do anything radical like target outcomes for a change, there isn't much left really:

The [UK] Tory leader will announce that in future at least half the names on the final shortlist for selection in these seats must be women.
Yes, that's right; just follow everybody else, except more so. What a bunch of losers. With the world facing serious environmental challenges; with the UK's soaring crime rate and disintegrating social structure... this is the reaction from the British Parliamentary Opposition. Someone should teach these people the difference between ends and means, between actions and results - and between gestures and reality.

19 August 2006

Obscuring and entrenching our irrationality

Filmmaker Michael Moore happened to note on CBS' popular 60 Minutes last year that “the chances of any of us dying in a terrorist incident is very, very, very small.” His interviewer ... promptly admonished, “But no one sees the world like that.” Both statements, remarkably, are true — the first only a bit more so than the second. It would seem to be reasonable for someone in authority to try to rectify this absurdity. In [risk analyst Howard] Kunreuther’s words, “More attention needs to be devoted to giving people perspective on the remote likelihood of the terrible consequences they imagine.” That would seem to be at least as important as boosting the sale of duct tape, issuing repeated and costly color-coded alerts based on vague and unspecific intelligence, and warning people to beware of Greeks bearing almanacs.
This, and the other quotes in this post are from John Mueller's, A false sense of insecurity (pdf).Is there a case to be made for valuing deaths caused by terrorism more highly than those caused by, say, road accidents? There may be, but it is not made. Yet:
...an American’s chance of being killed in one nonstop airline flight is about one in 13 million (even taking the September 11 crashes into account). To reach that same level of risk when driving on America’s safest roads — rural interstate highways — one would have to travel a mere 11.2 miles.
Media attention and consequently public resources are overwhelmingly devoted to the terrorist risk, while something like 900 000 people die on the world's roads every year. As so often, policy is made according to an agenda dictated by visual imagery, fear and irrationality. I don't think there would be anything necessarily wrong with this, provided we did it knowingly, explicitly and with our eyes open. If society truly believes it's worth, say, destroying the airline industry - which could happen if there were another 9/11 disaster - because we'd rather 10x people die on the roads than x people die through terrorism, then let us be transparent and say so when we make resource decisions. Unfortunately obscurity is built into the current policymaking system. We fund institutions and activities, which all sound good and well-meaning and highly principled. But the outcomes that result are perverse. And even more unfortunately, these outcomes can be self-reinforcing, creating and enriching government agencies or corporate bodies, giving them the muscle to oppose any move to wind them down. So, decades after it was known that, to take just one example, farm support policies are economic nonsense, socially inequitable and environmentally disastrous, these programmes persist, at great cost to everybody except a few well-padded landowners and agribusiness corporates. Anti-terrorist measures look like going down the same path:
What we need is more pronouncements like the one in a recent book by Sen. John McCain (R-Ariz.): “Get on the damn elevator! Fly on the damn plane! Calculate the odds of being harmed by a terrorist! It’s still about as likely as being swept out to sea by a tidal wave. Suck it up, for crying out loud. You’re almost certainly going to be okay. And in the unlikely event you’re not, do you really want to spend your last days cowering behind plastic sheets and duct tape? That’s not a life worth living, is it?”

16 August 2006

It's the outcomes, stupid

Incentives for distant goals, like the ending of terrorism, can take years to work, so I've steered clear from commenting on the short-termist approaches followed nowadays. In an important sense, we've already failed when we've got to where we are today. Even now, though, there would be far better ways of doing it than the one mentioned on theDenverchannel.com:

Marshals: Innocent People Placed On 'Watch List' To Meet Quota
Marshals Say They Must File One Surveillance Detection Report, Or SDR, Per Month

DENVER -- You could be on a secret government database or watch list for simply taking a picture on an airplane. Some federal air marshals say they're reporting your actions to meet a quota, even though some top officials deny it. The air marshals, whose identities are being concealed, told 7NEWS that they're required to submit at least one report a month. If they don't, there's no raise, no bonus, no awards and no special assignments.

This is the antithesis of the outcomes-based approach that I advocate. It attempts to convert fighting terror into a civil service type activity, with boxes to be ticked, norms to be met, procedures to be followed - and who cares what actually happens? What is needed, and quite desperately, is a system that rewards people and institutions not for turning up to work, but for achieving results: in this case prevention of terrorist acts. It's the outcomes, stupid.

14 August 2006

Outcomes trump ideology

Negotiating with rogue regimes may not be pretty, but the evidence shows that it works far better than tooth-gnashing. Nicholas Kristof, International Herald Tribune (subscription only), 14 August
I read this column in a cafe's issue of today's IHT, and don't have a subscription, but my recollection is that, unusually, the writer compares the outcomes of two different policy approaches. He looks at former US President Clinton's policy of talking with North Korea, and contrasts that with President Bush's approach: no engagement with rogue states. Mr Kristof, I'm pleased to say, looks not at the principles, the politics, or the morality of the two styles, but at their results. And on that basis, the Clinton approach is the clear winner. Under Clinton, no nukes manufactured in North Korea. Under Bush, ten - with more to come. I'm pleased that somebody else cares more about policy outcomes in this critical subject than they do about ideology, image or anything else.

12 August 2006

War and asymmetric incentives

We are not quite rational about war. We regard its opposite, peace, as an ideal: as unattainable as it is desirable; something to be worshipped from afar, and something that will never actually happen. War appears to many of us, as it did to the ancient Greeks, to be part of the natural order of things.

Perhaps our inbuilt expectation of a never-ending succession of wars is why we don't take efforts to stop it very seriously. Sure, we have international bodies ostensibly committed to peace-building, and we have countless well-meaning dedicated individuals working behind the scenes trying to prevent or defuse armed conflict. It's not obvious but thankfully their efforts helping reduce the numbers of people killed in armed conflict, as I have blogged before.

But the potential for catastrophe is rising with nuclear proliferation, and it would seem worthwhile trying a new approach. The resources going into conflict prevention are derisory when we look at some of our other expenditures. Why is that? I suspect it's because the achievement of peace is either a national or international government initiative, or because the non-governmental organisations involved are essentially charitable organisations. They cannot be seen to pay very large salaries to their personnel. While these bodies unquestionably attract some of the best and brightest, as well as the most altruistic, these heroic men and women in turn cannot deploy the resources they might need.

The contrast with the private sector is striking. Large corporations operate in an environment in which if they are not efficient they go under; efficiency here doesn't always measure how much output they can generate per unit input.
Particularly for the largest corporations it can describe how effective they are in lobbying government for special favours, such as trade barriers. Nonetheless, their achievement in rewarding their shareholders, performing all the tasks necessary for such unglamorous goals as exchanging warehouses full of toilet rolls for cash, is impressive. Would they be as effective if they faced the same rewards on offer as government employees or NGOs? I think not.

So why don't we channel some of these incentives into the achievement of public goals, such as world peace? Not just the avoidance of armed conflict, but the avoidance of its preconditions. The asymmetry between the incentives on offer to the public and private sectors is as marked as that between their efficiency in achieving their objectives. There is no inevitability about such a disparity. It's mainly historical accident that some hugely important tasks, such as peace-building, impeding trade, building roads educating children are largely the responsibility of government; while others, such as distributing food, printing books or making computers, are mainly carried out by private corporations. There's no need to perpetuate this state of affairs.

A Social Policy Bond regime targeting world peace, broadly defined so as to include secure borders, reduced threat levels etc, could combine the efficiency of the private sector with the needs and goals of ordinary members of the public - those who don't benefit from armed conflict. It wouldn't assume that the idealists and ideologues, the politicians, the generals, and the men of religion are the best people to bring peace to the world. But neither would it assume that none of them have any contribution to make. A bond regime would not represent a single way of ending violent political conflict, but rather it would be a way of stimulating solutions to war that does not prejudge its causes.

As an aside, and to put things into perspective:
...two bringers of mass death were at work in 1918.... By late October the influenza pandemic was killing 7000 people in Britain every week and in all it claimed over 500,000 American lives, exceeding US deaths in battle in the two World Wars, Korea, and Vietnam put together. WOrldwide fatalities far exceeded combat deaths in the [First World] War and may have topped 30 million. David Stevenson, 1914-1918: The History of The First World War (page 498).

09 August 2006

Taking stock after 17 years

With so many ideas of wildly varying quality in circulation, and being frustrated at Social Policy Bonds’ lack of visible progress, I thought I’d compile a brief resume of the concept, intended to show that it does have some respectability.

It’s 17 years since I first wrote about and spoke publicly about Social Policy Bonds. Since then it has had an unusual fate for an unusual idea. It has not been adopted anywhere, to my knowledge. But neither has it been dismissed outright. It tends to provoke initial enthusiasm amongst economists and decision makers, but then to be forgotten as day-to-day issues demand immediate attention. In 1991 it won an award for the Best Political Social Invention from the UK Institute of Social Inventions; now the Global Ideas Bank. In early 1997 I received a letter from Robert Shiller, Professor of Economics at Yale University, praising the Social Policy Bond idea, saying that it creates ‘a large interest group for the solution of important problems. The political and other effects of creating such an interest group could be incalculable.’ Professor Shiller later mentioned the concept in his book The New Economic Order. The first draft of my core text (see Social Policy Bonds at length, in the right-hand column) elicited extreme comments at both ends of the range from the two referees: one dismissed the text as an irrelevance. The other called the idea ‘original and ingenious’ and ‘a substantial contribution to debate about public policy’. My draft was rejected and my books have since failed to find a mainstream publisher.

In 1999 an essay on Social Policy Bonds was one of the three finalists at the inaugural US$25000 St Andrews Prize given by Conoco and St Andrews University, UK. I have given presentations on Social Policy Bonds at other fora, including the University of Cambridge, the Institute of Economic Affairs (London), and the Institute of Public Affairs (Melbourne). I have also discussed it with a former New Zealand Prime Minister’s Chief Policy Advisor.

In April 2002, I presented a paper on the Social Policy Bond concept to a joint meeting of the Agriculture and Environment Committees at the Organisation for Economic Cooperation and Development (OECD) in Paris. Delegates from most of the OECD’s member countries commented on the paper. These were mostly along the lines of  ‘this is very interesting — but unworkable in practice.’ Perhaps one of the delegates articulated the deeper feelings of those present, who were overwhelmingly government employees: ‘if this gets adopted we'll all be out of jobs!’ My paper went no further at OECD.

Over the years quite a few private individuals have talked with me about issuing their own Social Policy Bonds, for projects as diverse as boosting voter registration, raising literacy in developing countries, reducing homelessness and developing open-source software. Sad to say, as far as I am aware all these discussions have come to naught. I am particularly disappointed because I believe Social Policy Bonds could improve greatly on current approaches to what I see as very grave concerns: climate change and nuclear proliferation. Common to both these challenges are (1) their complexity, which means they need adaptive, diverse solutions, the precise nature of which cannot be known in advance; (2) their urgency and enormity; and (3) the failure of the current policymaking system to address them adequately.

06 August 2006

Recasting political debate

Public disenchantment with, and disengagement from, the political process are a concern; not only in themselves, but also because of their major secondary effect: politicians get away with murder. Ok, not always literally, though often it's something not very different. They certainly get away with massive misallocations of resources in the form of perverse subsidies and help create an economic and legal system heavily biassed in favour of their mates (and paymasters) in big business.

Efforts to close the gap between politicians and the people they are supposed to represent don't seem to be very sincere or successful. There is talk of changing the basis of party funding in some of the western democracies. That might cut out some of the most obvious cases of corruption, but it's unlikely to make real people take an interest in policymaking.

I think that one of the reasons for the widening gap between people and politics is that policy debates centre on matters whose relevance to ordinary voters is obscure. We are not interested in process, or institutional structures, volume of spending, or arcane discussions about remits and regulations. We are - unfortunately - interested in personalities, emotion and ideology, but I believe these should not drive policy and that they would not if there were a better alternative on offer.

And I believe there is: what really concerns us, when we are given a chance to reflect, are results - outcomes, in other words. A Social Policy Bond regime would recast political debate in terms of outcomes. By doing so it would encourage more natural persons, as distinct from corporations, to participate in the policymaking process. Again, this is not only an end in itself, but a means to more relevant, responsive and responsible decisionmaking.

04 August 2006

Social Policy Bonds are not utopian

The suggestion that, as under a Social Policy Bond regime, we might contract out the achievement of such goals as basic health and literacy, crime reduction, climate stability or world peace sometimes scares people. They wonder whether I'm serious. I have to remind them that a government that issues Social Policy Bonds would be contracting out only the achievement of these goals. It would still be defining the goals and raising the revenue that would ultimately pay for their achievement. Of course there would be difficulties: defining what we want as a society could be problematic; and expressing such goals in quantifiable terms even more so. But the comparison I'd wish people to make is not with some utopian ideal, but with the current system. And rather than look at the conceptual difficulties, let's look at what's actually wrong.

It seems very likely that we now inhabit a planet on the brink of environmental catastrophe. Nuclear proliferation, even that which has already occurred, is already a baleful threat. At national level the wealthiest countries in the history of humankind are blighted by soaring crime rates, large rises in mental illness, and other more intangible but no less real concerns. Moving away from the rich countries into the developing world...ok, you get the idea. It's not just that there are problems; it's that their scale and severity threaten large human populations and the current policymaking machinery is too slow and cumbersome to do much about them, even when it's well-intentioned.

Social Policy Bonds, I repeat, have their own difficulties but they do provide a means by which human ingenuity and creativity can be channelled into achievement of public goals. A bond regime would inextricably link rewards to achievement of these goals. The possibilities, once we have a system where benefits are correlated with the public interest are immense. Today, in contrast...well:
Zidane's head butt spawns unlikely pop hit

Three weeks after France’s defeat in the World Cup, the infamous moment when national footballing hero Zinedine Zidane lost his temper has been immortalised in the form of an unlikely hit song called Head Butt. The Times, 31 July

02 August 2006

Outcomes: anything else is self-indulgence

The US is the evil representative of capitalism. Capitalism will lead to the perdition of humankind and destroy everything, including friendship. Imperialists are lower ranks of human or even sub-animal because they dropped a nuclear bomb on a city.... Hugo Chavez, Venezuela president, speaking at the Vietnam Chamber of Commerce and Industry, 1 August.

I have long thought that outcomes should drive policy. And I've long suspected that many of the people who heave bricks through fast-food cafes when they protest against 'capitalism', or perform similar stunts allegedly in support of environmental objectives actually have another agenda. Certainly they're not doing much for their ostensible cause (how else to explain the re-election of the disastrously incompetent Bush administration?). But they do boost their self-esteem and successfully advertise their moral purity to their cohorts.

Sometimes advocating outcomes above everything can seem a lonely pastime So I was glad to read this message from Kathyrn Compton to the editors of Grist magazine:

.... Rush Limbaugh and the rest of the blabocracy wouldn't stand a chance if the liberals, progressives, and greens hadn't worked so hard at making the working-class stiff feel stoopid for his lifestyle and his choices. Their movement gets its oomph from the proud working person's backlash against exactly the snarky attitude your article demonstrated.

If you want to keep appealing only to your core readership, carry on. But if your goal is to actually grow the environmental consciousness of this country and preserve a hospitable climate, you might want to take a look at your own prejudices and see what they're costing our planet. If we want the green movement to be embraced the world over, wouldn't it be a logical choice to encourage the most global of all global corporations rather than ridicule every step they try to take? ....
It's an important point. My fear is that the genuine human need for bonding with like-minded others can easily be channelled exclusively into a rage against 'the enemy'. Then there's an equal, or more-than-equal and opposite reaction. Pretty soon the issues are so polarised and politicised that dialogue becomes impossible. The cause has been subordinated to our own status seeking and it's always easier to fight for your principles than live up to them. And there isn't enough fighting in the world?

So I keep chanting my mantra: let outcomes drive policy. Not ideology, not spending, politics, activities, nor institutions' need for self-perpetuation, nor our need to boost our fragile self-esteem.