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.

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