30 January 2007

Trust the locals

The current ‘Economist’, in an article entitled Trust the Locals (subscription), talks about the usual British response to being diagnosed as ill-governed: an ‘endless cycle of restructuring followed by disappointment followed by more restructuring.’ The journal proposes an alternative: ‘the centre could be forced to do less and local government trusted a little more.’

I agree. Social problems, when reduced to single quantifiable indicators, such as ‘unemployment’, ‘crime’, or ‘illiteracy’ might have the illusion of being uniform across a country. The tendency, especially for remote policymakers, is to dream up solutions that are similarly monolithic. So the usual response is the bureaucratic one: something imposed from the top down, on a one-size-fits-all basis. Something cumbersome and unresponsive to events, and incapable of adapting to wildly varying circumstances across a diverse country. One result is that, in Britain, as the 'Economist' says:

[W]hen the government is searching for new ideas it always has to look abroad (usually to less centralised places such as America), since councils in Britain have little freedom to experiment with new ways of doing things.
I’d like to see Social Policy Bonds issued, because they would bring about still more devolution: from the public to the private sector. My reasons are not inspired by blind ideology, but because enlarging and motivating the pool of people interested in solving social problems would make their solution both more likely and more cost-effective. The benefits of this sort of contracting out would, I think, be incalculable.

28 January 2007

Lessons from the gym

If we’re not careful we become obsessive about a single particular quantifiable measure – to the exclusion of things that really matter but that are less quantifiable. It could be the exchange rate for foreign currency, our weight, or the number of kilos we can bench press. The effects can be pernicious: witness the large numbers of adolescents with eating disorders, or the athletes who sacrifice their health to win.

Does this happen for the same reason that our minds are, by default, not in the here-and-now but are apparently set to daydream? Perhaps our education is so totally verbal that we cannot handle the complexity of the present, but not being able to switch off, we focus on something simple, measurable that we can do something about.

Well, enough speculation about the why. The fact is, as individuals we do have this tendency, though it can be, thankfully, checked by our intuition, intelligence and insight.

I’m not so sure, though, about when that same focus on a single indicator bedevils the policymaking process. Government agencies, for instance, that focus on narrow numerical targets often miss seeing the wood for the trees. At the national level, the consequences can be dire. Generally there is no systematic use of indicators that reliably correlate with social wellbeing. But what fills the vacuum? Anecdotes, image, spin and inertia. Combined with the non-explicit targeting of, most usually, Gross Domestic Product, or GDP per capita – which is terrible as an indicator of social welfare.

As I see it, there are two remedies.

  • Downsize the policymaking remit. By which I mean, devolve policymaking as far as possible to a level at which normal people can tell what’s going on without depending exclusively on quantifiable indicators. Or:
  • Choose broad social and environmental indicators, that correlate accurately with social and environmental wellbeing; as against the Mickey Mouse micro-targets that characterise current policymaking. That is the principle underlying Social Policy Bonds, which apart from being more efficient at raising welfare than the current setup, would focus on outcomes. Which means that ordinary people could participate in defining them; an end in itself as well as bringing about more buy-in into social affairs.
Jonathan Rowe puts our predicament well:
The Atlantic this month cites a recent study by economists that purports to show that the suburbs actually are bastions of social cohesion,based on membership in civic groups. It is a classic case of confusing available data with reality.

26 January 2007

Centralisation versus diversity and dynamism

Referring to the UK’s central Government the current ‘Economist’ says:  

When the government is searching for new ideas it always has to look abroad (usually to less centralised places such as America), since councils in Britain have little freedom to experiment with new ways of doing things. Trust the locals (subscription?), 25 January
One of the advantages, as I see it, of a Social Policy Bond regime is that, while there would be uniformity of desired social outcome, there need be no uniformity of approach. For most social and environmental problems, a mosaic of different, dynamic projects and initiatives will work best. There needs to be the freedom to experiment with new ideas, and for those ideas that fail to be terminated. It’s also a matter of incentives: when government stipulates one approach, there is every incentive to follow it and to keep it going even when its failures are obvious. Too many interests become vested in its perpetuation – not least those of the programme administrators.

Saving lives by capital punishment?

Nearly 30 convicted killers released from jail over the past 10 years have gone on to kill again, according to Home Office figures released yesterday. Convicted murderers who were set free to kill, [London] ‘Daily Telegraph’, 26 January
Along with most of my generation I have an instinctive horror of capital punishment. I wonder though just how rational is that visceral feeling? The process is undoubtedly distasteful, but much of my own disquiet centres on the possibility of a government executing an innocent person. This probably would happen (and has happened) but, as the article cited attests, no less real are the innocent people killed by people who would probably have faced capital punishment if it were applied. If one of our high-priority goals then is to save innocent lives, perhaps there is a case for restoring capital punishment for convicted murderers?

23 January 2007

Forget climate stability; let's pay people to do nothing instead

From the Economist (subscription)
In recent weeks, a rush of climate-change bills has started circulating in America’s new Congress. … A national cap on emissions of carbon-dioxide, the main greenhouse gas, looks closer than ever. … Part of the approach is likely to be a carbon-trading system, which companies prefer because it is more flexible than a carbon tax. The basic idea is that power plants and manufacturers will be allowed to emit a certain number of tons of carbon dioxide. If they exceed that amount, they must buy “credits” from companies that pollute less than their allowance.
I find this quite disturbing. A whole new bureaucracy will be set up to allocate CO2 credits to thousands of emitters. What will this achieve? A cap on the levels of CO2 that they emit. That’s all.
This ludicrous administrative exercise is not designed to, and will not, achieve: a net reduction in CO2 levels emitted by the US, still less a net reduction in anthropogenic greenhouse gas emissions emitted by the US, still less a net reduction in greenhouse gas emissions by humans on this planet, still less a reduction in the proportion of greenhouse gases in the atmosphere. And if anybody does care at all about the health of the planet, as against setting up an elegant but futile trading system, it will not bring about climate stability, because it is not designed to do so.

22 January 2007

The institutional goal par excellence: self-perpetuation

I'm not going to comment directly on the latest British Airways strike, or on the way it's being (mis)reported; (though this is colourful: "British Airways workers are to strike for the right to take time off for a cold or ingrown toenail, without it counting as sick leave."). I'll just use it as an excuse to point out that all big institutions have one thing in common: their objectives are different from those of the people they are supposed to represent. Sometimes the two sets of goals are in conflict with each other. In this respect trade unions are no worse, or better, than religious bodies, government agencies, schools, universities or large corporations.

How can this be, and what are the consequences? With large institutions of any kind there is a disconnect between the attention that those lower down (ordinary people) can give to those higher up the hierarchy. Trust is not always misplaced, but in practice it works best within families, extended families, small communities and small organisations. Large organisations, including big government, tend to be remote organisations. And the consequences can be disastrous.

Large organisations have as their over-arching goal that of self-perpetuation. This can not only conflict with the goals of individual trade union members, churchgoers or taxpayers – those who fund the institution – but also with the individual goals of the people working in the organisation. Most senior politicians the world over, I am sure, would do anything to avoid a nuclear exchange or global environmental catastrophe – in their capacity as individuals. But how seriously are they confronting these challenges as politicians?

They may think they don’t have the answers, but that should not stop them issuing Social Policy Bonds targeting peace, or environmental stability. Under a bond regime, politicians would contract out the achievement of social and environmental goals to the private sector.

If politicians targeted the outcomes that mean most to their citizens; well, that would be a change from their usual business of trying to maintain power, but it would have its own rewards and, - who knows? – might actually result in their staying in power anyway.

20 January 2007

Dealing with unknown unknowns: Social Policy Bonds

One of the big advantages of Social Policy Bonds, in my view, is that they can target problems whose magnitude is uncertain. People have wildly different views about, for instance, climate change or the likelihood of nuclear conflict. (I have wildly different views myself depending mainly on the line taken by the most recent material I have read.) How can policymakers, confronted with luminaries on both sides of an argument about what might be a huge threat, like climate change, best respond?

Issuing Social Policy Bonds is one way in which they could let the market, rather than a handful of government employees, make the judgement. Take Climate Stability Bonds: an enormous amount of valuable information about climate change and the direction in which the climate is moving could be gathered from the market value of the bonds, and from changes in their value. Assume Climate Stability Bonds are issued that would reward bondholders with $10m once the targeted definition of climate stability had been reached. Then even the initial information garnered from their float value would be extremely useful. If the bonds sold for $9m each that would mean the market considers climate change a less serious problem than if they sold for $1m each.

Such information would be continuously available. It would respond to our expanding knowledge of  the scientific knowledge and to the expected effectiveness or otherwise of actual and planned policies. Contrast that with the dead hand of Kyoto, where fossilised science and institutionalised cuts in greenhouse gas emissions will continue regardless of changes in the seriousness of the climate change problem.

Social Policy Bonds score heavily over Kyoto and other responses (or non-responses) to potentially serious challenges, because they give people incentives not only to find solutions to urgent problems, but for finding out how urgent these problems actually are.

Petition against Common Agricultural Policy

British Citizens and expatriates: you can sign a petition calling on Prime Minister Tony Blair to end the EU’s unfair trade barriers against developing countries, and to scrap the Common Agricultural Policy here.

18 January 2007

Five minutes to midnight

Professor Stephen Hawking and I agree that climate change and nuclear proliferation are probably the most urgent challenges that we face as humans. As Professor Hawking says:

We foresee great peril if governments and society do not take action now to render nuclear weapons obsolete and prevent further climate change.
It’s correct, but tragically so, for Hawking to distinguish between government and society when talking about these challenges. The distance between the two, even in the democratic countries, is wide and getting wider. Governments, whether dictatorships or democracies, seem to be transfixed into inaction by these twin perils. Their overwhelming priority is to stay in power, even if the people who comprise these governments are genuinely concerned about the long run wellbeing of the people they serve. It is, unfortunately, institutional goals that drive policy that drives outcomes.

Social Policy Bonds reverse this approach, which we can no longer afford: the stakes are too high and the time lags between the perceived need for institutional reform and its payoff are far too long. Instead of waiting for decades, or resigning ourselves to oblivion, we could issue our own bonds targeting whatever social or environmental problem is of most concern. We don’t have to second-guess the best ways of mitigating or preventing climate change, or of halting and reversing nuclear proliferation. All we have to do is specify exactly what we want to achieve in those areas, and raise sufficient funds to motivate investors to find their own adaptive, diverse solutions to these looming problems. This link (pdf) gives some guidance to those thinking in issuing their own bonds, but I’d be happy personally to advise those seriously interested in doing so.

17 January 2007

Migration: get rid of barriers to goods and services first

I haven't yet read Philippe Legrain's book Immigrants: Your Country Needs Them, but I have read this article (amongst others) on the subject: Don't believe this claptrap. Migrants are no threat to us, in which Legrain says:

Just as EU trade barriers that prevent African farmers selling the fruits of their labour in Britain are unfair, so are immigration controls that stop Africans selling their labour here.
I agree 100 per cent with this comment. But I'd rather see the trade barriers come down first. Then let migrants decide to come to the west because they want to, not because they have no chance of prospering in their own country. We need and want willing migrants, not those compelled to come here because we stifle their country's development by corrupt, insane trade barriers like the EU's Common Agricultural Policy.

A related point, and one that I have not seen mentioned in other reviews, is the effects that emigrants from the third world have on the country from which they depart. Much of the discussion that there is centres on the financial remittances that flow back from the rich countries. But there are incalculable social costs that arise when a country's most ambitious, energetic and talented people would rather work in a foreign country than try to improve their country from within.

15 January 2007

Fad diets; fad policymaking

The Director of Yale University's Center for Eating and Weight Disorders explains the miracle formula used by diet books to become bestsellers for over a century now: "easy, rapid weight loss; the opportunity to eat your favorite foods and some scientific 'breakthrough' that usually doesn't exist." As one weight loss expert notes, "Rapid water loss is the $33-billion diet gimmick." Source
Having recently become curious about the Atkins diet, I am struck by the parallels between diet and policy. Both of them are vital, but we choose them in the same utterly careless way.

First, there is the emphasis on one single narrow measurable indicator – one that is inappropriate, but highly visible. In the Atkins world, it’s weight, rather than something more meaningful like overall health or life-span. In the world of policy it can be something like anthropogenic greenhouse gas emissions, rather than climate stability; or spending on police forces or education, rather than the crime rate or literacy rates.

Second, there is the apparent short-term success – often enough to ensure that the diet or policy sells well to a population with an ever-shorter attention span. Following the Atkins diet does bring about initial weight loss, but it’s loss of water:

The rapid loss of initial water weight seen particularly on low carb diets has an additional sales benefit. By the time people gain back the weight, they may have already told all their friends to buy the book, and the cycle continues. This has been used to explain why low carb diets have been such "cash cows" for publishers over the last 140 years. Source
Most policies have their equivalent of water loss; the short-term payoff from reacting to an immediate problem. But as with Atkins, there’s very little scientific analysis of whether the regimen is successful in the long term.

[G]overnment bureaucracies non-self-evaluate. At a minimum, agencies with evaluative responsibilities are not invited to evaluate - they are kept out of the loop, their opinions unsought. At a maximum, government agencies actively suppress their own internal evaluative units and are discouraged from evaluating the beliefs and policies of other agencies. Steven van Evera, Why states believe foolish ideas
Lastly there is the emphasis on presentation over substance. Millions of Atkins’ books have been sold; the late Dr Atkins died a very wealthy man and the Atkins corporation was once estimated to be worth billions of dollars (Fortune 17 May 2004). Yet, as my source shows, the diet even in its own terms is a failure. It doesn’t lead to long-term weight loss; as well it creates serious health risks, and has been recommended by no credible scientific body. Dr Atkins wrote no peer-reviewed articles; his books, it appears, cite only anecdotal evidence of the diet’s success. But under the barrage of daily (mis)information that we all face, presentation is everything; substance nothing. As in the world of fad diets, so in policy. This from Monday’s [UK] Times:

The [British] Government has been forced to admit that three years after promising to rebuild 3,500 secondary schools not a single project has been completed.

14 January 2007

Burying vegetables

Millions of Thai root vegetables are used in the production of starch and then dumped in ponds where they emit methane, a gas 21 times more harmful than carbon dioxide. The [British] Government claims that by sealing the pulp in plastic containers, thus preventing the methane escaping, it will offset some of the harm caused by the 600 million miles flown by politicians and officials every year. Source: Sunday Telegraph.
At first sight this idea it seems far-fetched, but for all I know it might work. Of more concern to me is how these schemes are arrived at. Who decides that burying vegetables is a worthwhile way of compensating for aircraft emissions? Or, rather, of stabilising the climate, since that is the ultimate stated objective? And how do they decide? One thing is for sure, decisions like this aren’t reached impartially, by people highly motivated to achieve highest reduction in climate change for each taxpayer’s pound. That’s why, if the real objective is actually to stabilise the climate, rather than just to appear to be doing so, you need something like Climate Stability Bonds.

So what is the likely impact of this burying-vegetables scheme? In the short run it may well reduce net measured anthropogenic greenhouse gas emissions. But in the long run, it’s effectively a subsidy to factories that convert vegetables to starch. In common with the even more spectacularly futile idea of running cars on maize and soybean derivatives it sounds to me like yet another form of taxpayer-funded welfare to large agribusiness corporates.

12 January 2007

Target outcomes, not institutions

James Johnson, the chairman of the British Medical Association, said that if the health service failed to break even this year, ministers would "look very carefully" at what should happen next. "Don't assume there's anything automatic about the system we have at the moment continuing in perpetuity," Mr Johnson said.
That excerpt is from an article titled One year to save NHS, from today’s ‘Daily Telegraph’ and refers to the UK’s National Health Service. I’m pleased that people are phrasing some of the debate in terms of outcomes: Mr Johnson later in the article says “If you get nine per cent of GDP spent on health and you still can't make it work, people will be saying: 'Do you want to carry on doing the same thing or should we be trying something fundamentally different?'”

Quite encouraging, but the rest of the argument seems to be about which sort of institutional arrangements can bring about desired, but unspecified, outcomes. There’s a widespread sense that the NHS is inefficient, but that tells us nothing about what would be better and it hardly constitutes proof that the NHS is inefficient.

The problem as I see it is that the politicians – if they ever do get round to tackling the vested interests benefiting from the current setup – will choose some new institutional structure. Only some years or decades later might be shown (or more likely, thought) that the new structure is better (or worse) than the NHS.

Here’s a better idea: specify those health outcomes that the Government, in its capacity as representative of the population, wishes to see and is prepared to raise revenue to generate. And instead of choosing a system that appears to work in other countries, or is favoured by other teams of experts, or that conjures up most funds from corporate interests to the ruling political party, let the institutional structures be determined by the targeted health outcomes, rather than vice versa. The UK Government should develop a range of health indicators, such as Quality Adjusted Life Years. It should then issue Health Care Bonds, following the pattern of Social Policy Bonds, and in effect contract out the achievement of these outcomes to the private sector. This need not mean the demise of public sector agencies, but it would mean their funding would be allocated by the private sector which, unlike in the NHS, has incentives to achieve broad, explicit, and publicly agreed, health outcomes.

Allocating scarce resources is something that markets do well, but government has an important role in setting such desirable goals as universal basic health provision, and in raising funds to achieve them. This role can only be played by government, and in fact democratic governments do it quite well. Social Policy Bonds would allow government and private sector each to do what they are best at doing. With health care, as with other social and environmental goals, outcomes are foremost. Discussion about systems, institutions, activities or inputs is wasteful and a distraction.

09 January 2007

Limits of big government threaten us all

Making policy is very much like thinking, in that it’s limited by the way it abstracts from reality the finite range of facts available to it. For makers of policy whose remit covers more than a family, clan, tribe or village, this should be a lesson in humility, because policymaking for large numbers of people inevitably entails the use of quantifiable data. Such data are equivalent, at the level of the individual, to our thoughts. Either way, they are extremely limited; what our minds can grasp, articulate and work on do not describe reality. They are individual facts, selectively taken from memory or, when making policy, aggregated, quantifiable information. Unfortunately, as the saying has it, ‘if the only tool you’ve got is a hammer, you’re going to see every problem as a nail’. And the only policymaking tool we have is our intellect backed up, sometimes, by statistics.

In the individual our thoughts have not (yet) completely crowded out our insight. We know, most of us, at some level, that our wellbeing is not defined by a set of discrete quantifiable circumstances, but is rather a state of mind, which we’d find very difficult to describe using the limited vocabulary of whatever language we speak.

Policymaking though is in a more parlous state; at the national and super-national levels anyway. For a start, it cannot interpret unprecedented threats, such as climate change or nuclear proliferation, in any but its own terms: that is, things to be negotiated, dealt with through the political process by existing institutional structures or new ones modelled on them. It cannot see social wellbeing as anything other than aggregated targets, with maximum Gross Domestic Product (or GDP per capita) as the target above all others. But GDP is grotesquely flawed for that purpose, and most other numerical goals are hardly more reliable indicators of social welfare. There are quantifiable measures that do correlate fairly strongly with meaningful social goals, but these tend to be at the lower levels of wealth, income, nutrition or education. At these levels, quantifiable increases do generate real, meaningful rises in opportunity and welfare.

But government has expanded far beyond helping the disadvantaged. It’s expanded into areas where its reliance on aggregated data is not only leading it awry, but into activities that crowd out the more adaptive, responsive and responsible instincts of real people. At the same time, the planet is confronted with challenges, such as climate change and nuclear proliferation, that government cannot meet. Most of the population is now so used to handing over responsibility to a large and remote public sector that we think that government will solve such problems. Or we think that if government cannot solve them, they cannot be solved. The remarkable ability of humans to adapt and survive, our prodigious energy and ingenuity, is stunted, or channelled into cynicism, despair or such flippant, but lucrative, pursuits such as the marketing of dog food, where the goals are immediate, identifiable and no threat to the existing order.

There is a widening gap between government and the people it’s supposed to represent. It wouldn’t matter very much of the public sector were small, and satisfied to remain so, and if real people controlled their own destiny. But the public sector is none of those things. It’s big, remote and intrusive, and it’s failing to meet our most urgent challenges. This combination could mean calamity, not just for millions, or hundreds of millions of human beings, but for the entire planet.

06 January 2007

Corruption is built into opaque policymaking

It’s sad to see how closely intertwined are the interests of corporations and politicians. ‘Barack Obama Inc’, an article in Harpers of November 2006 by Ken Silverstein mentions some of the compromises necessary under the current system for even the best-intentioned political movers:
[A]lthough Obama is by no means a mouthpiece for his funders, it appears that he’s not entirely indifferent to their desires either. Consider the case of Illinois-based Exelon Corporation, the nation’s leading nuclear power-plant operator. The firm is Obama’s fourth largest patron, having donated a total of $74,350 to his campaigns. During debate on t 2005 energy bill, Obama helped to vote down an amendment that would have killed vast loan guarantees for power-plant operators to develop new energy projects. The loan guarantees were called “one of the worst provisions in this massive piece of legislation” by Taxpayers for Common Sense and Citizens Against Government Waste….
The problem is with the indirect way we fund our politics. It’s comparable to the obsolescent ways in which tv programmes have been funded under the now-shrinking ‘free to air’ model. Viewers pay either a sort of tax to a state broadcaster, or they watch adverts. Either way, there’s an intermediate step between the public and the programmes they watch. That model is faltering, and perhaps we’d be better off if similarly indirect policymaking disappeared from politics too.
Currently we have a specialised class, politicians, who are funded by corporations or other institutions. Why can’t we cut out the middleman and fund our politics directly? One reason is that the policymaking process is so arcane, so opaque, that only specialists can understand it. Whether this is an inevitable by product of complex economies and societies, or whether there is some patch protection going on by a self-interested and insecure group of professionals, many of whom used to be lawyers, is debatable, but the effect is the same. Ordinary people and their interests shy away from engagement in politics, and that suits the politicians and bureaucrats just fine.

My solution is instead to subordinate politics to outcomes. I believe a Social Policy Bond approach would allocate funds more efficiently than the current system, which is largely driven by the interests of lobbyists and the interests of existing institutions, notably government agencies themselves. But efficiency is only one benefit of a bond regime. Another important one is that, by recasting our politics in terms of meaningful outcomes, we would draw more people into the policymaking process. People understand outcomes: we are less interested in the recondite discussions over funding of the myriad departments of government, or the wording of legal documents, that is such for feature of the current regime. More public participation means more public buy in. These are ends in themselves, as well as a means to more effective and efficient policy.

Mr Silverstein’s article on Barack Obama ends by quoting an anonymous Washington DC lobbyist, who pointed out:
that big donors would not be helping out Obama if they didn’t see him as a “player”. The lobbyist added: “What’s the dollar value of a starry-eyed idealist?

05 January 2007

National security: currently subordinated to institutional structures

Measuring the success or otherwise of a government agency is not always a simple matter. How, for example, would we monitor the effectiveness of the military? Is the non-invasion of your country a reliable indicator of a successful defence agency? No. There could be a mass assembly of hostile troops on your borders. No invasion, sure, and not yet a loss of sovereignty; but the threat of an invasion, and so a potentially imminent loss of security and current rise in fear and anxiety.

The point is not just that there are social and environmental outcomes that are difficult to quantify, but that our current methods of allocating resources do not attempt to do so. Under the existing political system, the main determinant of funds to government agencies is the amount of funding they received in the previous financial year. Percentages are adjusted upwards or downwards, but the institutional structures are taken as a given. National security is currently something that the military and intelligence services do, but in this age of asymmetric warfare that approach may no longer be enough. After terrorist incidents there are calls for the funding of these bodies to rise. It’s not in their interests to quantify their own effectiveness; only to report on (and exaggerate) any apparent threats.  

Something is missing, and that is the scientific allocation of scarce resources. The answer, I believe, is a Social Policy Bond regime that first of all, attempts to measure precisely what we want to achieve, and second, rewards achievement of that goal, or combination of goals, without assuming a particular institutional structure.

As I say, defining what we want to achieve in the area of national security is difficult, but precisely the same difficulty arises when we attempt to measure the effectiveness or otherwise of the existing system. Under the current system there’s less and less definition of meaningful outcomes, and more and more resources being allocated to institutions that may or may not be doing much to achieve them.

A Social Policy Bond regime as applied to national security would subordinate all its projects and initiatives to the targeted goals. Terrorism, for instance, would not be the remit of ever more bureaucracies given ever more intrusive and expensive things to do. Perhaps equally important, though, is that citizens themselves could help define national security goals. Greater participation would means greater buy in, and so not just the enhanced effectiveness of whatever projects are undertaken, but a wider range of possible initiatives.

04 January 2007

Politics without vision

Not much is unambiguous in politics, but the European Union’s corrupt, insane Common Agricultural Policy qualifies as an unambiguous disaster. It’s ruinously wasteful, it destroys the environment, it transfers money from the poor to the rich, and right now, not for the first time, it’s threatening to derail the global trading system.

We might expect therefore that the British opposition Conservative Party, not having any power to lose, would come out strongly against the CAP. Previous UK party leaders, did so, at least when they too were in opposition. Their efforts foundered against the intransigence of the France political caste, but at least they tried.

But not the current Conservative leader who takes the absurd CAP as a given. The extent of his vision is to want more subsidies for English farmers. Or it appears to be; I’d be delighted if I’m wrong.

01 January 2007

Government responses to terror

Government responses to random bombings, hijackings and other threats to our personal security are predictably incapable of adaptation, expensive and ineffectual. They owe more to the need to be seen to be doing something, however devoid of value that ‘something’ is. The problem, as with the provision of other government services, is that government does not know when to hand over to the people.

Provision of city sewerage systems in Victorian Britain was an essential task, and one that only government could do. But labelling cheese as junk food in 2007? A military-industrial complex, with professional forces and huge quantities of materiel was a valid response to threats of invasion. But checking every air passenger’s email and credit card accounts? Somewhere between these extremes, government has wandered away from the concerns of real people. It is now driven more and more by the inertia of a large and growing bureaucracy, whose over-arching goal is self-perpetuation.

Social Policy Bonds are an alternative approach. We do need government to articulate society’s goals, and to raise revenue to finance their achievement. But we don’t need go to stipulate how these goals are to be achieved. If the goal is to minimise threats from terrorism, then we need adaptive, diverse responses; not Pavlovian, one-size-fits-all reactions to news headlines. The New Year’s Eve bombings in Bangkok killed three people: over the three preceding days 179 people died on Thailand’s roads. We can be fairly sure which of the two threats to its citizens’ wellbeing the Thai Government will devote more attention to in the coming months. But I have another suggestion: issue Social Policy Bonds targeting premature deaths, and let the market allocate scarce resources to where they will achieve the highest return.