09 February 2007

Call of the private sector

Paco Underhill's Call of the Mall is an easy, entertaining description of America's shopping malls. What strikes me most is the quality and quantity of human ingenuity devoted to making shoppers buy more stuff. Why is it that it's the talented people in the private sector that reap massive rewards for achieving tasks that are essentially trivial? Why is that the public sector limps along attracting some dedicated, well-intentioned people, but failing to offer incentives to most of those who'd rather solve urgent social and environmental problems than head up the strategic planning unit of a single department store?

My contention is not only that such an asymmetry is wasteful, in that fewer resources are devoted to the tasks that would generate most payback, but that it's also a historical accident. There's no other reason for it.

Market forces have a terrible press, and in many instances, rightly so. There's been no restraint from those at the top of they private sector pyramid, with their grotesquely inflated 'compensation packages'. But the market's efficiencies and incentives can be made to serve social goals - if only we were to consider them with an open mind.

Social Policy Bonds are one way in which market forces can be channelled into the public good. They would reward people who achieve social and environmental goals at least cost to the public. These people might reap sumtuous rewards for so doing, but that's no reason to deny them their chance. In giving bondholders and their agents an opportunity to make large gains, a Social Policy Bond regime would both motivate those already working to achieve social goals, and attract a larger number of talented individuals into serving the public interest (as well as their own) rather than those of large corporations - like shopping mall operators.

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