I'm convinced, despite the current lack of interest, that Social Policy Bonds' their time will come. Or at least, that there will be a move towards specifying desired outcomes and rewarding people for achieving them - the heart of the Social Policy Bond method. Why? Because of the rising world population and the increasing complexity of our social organisation. As well technology is changing at a faster rate. These factors all make it near-impossible for conventional policymakers to identify the most important future problems and, even more, the relationships between those problems and their causes. Reading about climate change you realize how close we are to a catastrophe that few could have anticipated while the trail of gunpowder was being laid (and how little we are doing even now to avoid it). But climate change has had a long lead time and there were people, decades ago, who suspected it might happen. There are now so many potential catastrophes without even those portents that the organizations we hope will help us anticipate and avoid them - government agencies, mainly - can't realistically be expected to do so.
Some government bodies currently issue catastrophe bonds, but most are issued by insurers, and all appear to protect against losses arising from specified perils (such as hurricanes). I envisage that more government bodies will begin to issue them against unspecified disasters that lead to large-scale loss of life. I actually think it would be irresponsible of government not to manage risk in this way. With large enough sums at stake, bondholders will realize that they could benefit by working to identify the most likely disasters and doing what they can to minimise their impact. That would essentially be Social Policy Bonds, in principle. Issuers will then start to issue bonds specifically to encourage such behaviour: Social Policy Bonds in practice.
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