24 April 2007

Role of current lobbyists in Social Policy Bond regime

A reader in Australia has asked, amongst other things, about the role of existing lobby groups under a Social Policy Bond regime. Could they recognize the"threat" posed by the bonds (that is a redirection of government resources away from themselves) and lobby to ensure that the conditions attached to any Social Policy Bond issue favour them, or even worse, are impossible to complete? I am more sanguine. There would be some attempted manipulation, but as long as there were a strong performance incentive, the goals of these lobby groups would have to become much more congruent with society's. That is where the money would be. They would find it hard openly to come out and oppose targeted outcomes. For instance, they would find it difficult to say we are against lower unemployment, or the eradication of illiteracy. Under a bond regime, government's goals would be expressed in terms of such outcomes. Which means that the public will be able to follow the policymaking process, and the attempted hijacking of it, much more closely. And there is more consensus over outcomes than the alleged means of reaching them.

So my thought, or hope, is that the lobby groups who would be inclinded to oppose Social Policy Bonds would see the writing on the wall. The bonds mean the democratisation of policymaking. Lobby groups who want to see Social Policy Bonds fail would suffer public opprobrium and, more to the point, they would be doing so very openly. Lobby groups could still influence policy, but not in secret.


Anonymous said...

I don't think that too many powerful lobby groups will try and oppose SPB directly (as you say who can argue against lowering unemployment), but that they will take a strong role in the drawing up of the SPB conditions. This process will be by its nature complex for most bonds as there is a need to carefully define the bond conditions so that the bond holders do not achieve the required outcome through undesirable approaches (eg employing every unemployed person for one hour a week so that they no longer count as unemployed). The complexity of the bond conditions will provide many opportunities to turn the condition towards a lobby groups own ends, or include conditions that make the bond effectively impossible and worthless.

I don't know how this problem can be avoided - if the bond conditions are made simple (and hence visible to the public) then the bond holders will have many opportunities to collect on the bond via technicalities. If they are complex (ie all the requirements carefully defined), then existing lobby groups have lots of opportunity for condition manipulation.

An Australian Reader

Ronnie Horesh said...

Thanks for your comment. You are right, but I would say that whatever the difficulties with formulating optimum conditions for redemption of Social Policy Bonds, they would be less than under the current system. To be sure, there would be technical opportunities to evade the spirit of any particular Social Policy Bond issue, but so too would there be a larger group of people both concerned to see that the bonds really do achieve society's goal, and with the necessary expertise to do so - at least to the extent that technical manipulation of targeted outcomes will be more difficult than technical manipulation of the myriad obscure regulations, processes and structures that govern the current policymaking system. Another point of course, is that the bonds need not be issued by the public sector. Philanthropists, non-governmental organisations, and groups of interested individuals could all issue their own bonds. Such issues would not only be more resistant to manipulation, but could serve as templates for future issues of government-backed Social Policy Bonds.