05 June 2007

How respectable are Social Policy Bonds?

When I first began talking about Social Policy Bonds, 18 years ago, I thought in my naivety that the idea would sell itself. Now, bombarded with information of all kinds, as we all are, I’m not so sure. Some sort of filtering mechanism is necessary to keep out the dross and to ration decision-makers’ scarce time. There is such an onslaught of trivia and junk that, regrettable as it may be, approval by people higher up the hierarchy can at least be understood as a rationing device, though it’s difficult sometimes to approve of that.

Anyway, against this criterion, and after 18 years, how do Social Policy Bonds stack up? How respectable are they? Some years ago Robert Shiller, Professor of Economics at Yale, wrote to me in support of the Social Policy Bond principle. His book The New Financial Order mentions Social Policy Bonds briefly, and the website for that book refers to them. One essay and presentation about Social Policy Bonds won an award by the UK-based Institute of Social Inventions - now the Global Ideas Bank; another was a finalist at the inaugural St Andrews Prize for the environment. I have given presentations about the bonds at the Organization for Economic Cooperation and Development in Paris, at Cambridge University, and at think-tanks in London and Melbourne. More about the record of Social Policy Bonds can be found here and here.

In recent years, progress appears to have faltered. The occasional flurry of enthusiasm for varied applications, which tends to die down after the initial burst of enthusiasm. The odd newspaper article published, the odd comment received on this blog site (for which I am grateful) and the odd mention in a published article (example here). But the concept remains at the margin. Until it has been tried, discussed and refined, it’s unlikely to take off, but until it finds a champion who sees it through, it’s unlikely to be tried. I believe now that government in any form is unlikely to be the first to apply the bond concept. I have drafted a handbook (pdf) to help guide private issuers of Social Policy Bonds should they be interested. As far as I know, nobody has actually taken up the challenge.

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