27 July 2008

Obesity is like climate change

Rob Lyons, discussing The Diet Delusion by Gary Taubes, writes:

What seems abundantly clear is that banging on at entire populations to eat less and exercise more has been an utter failure in terms of reducing levels of obesity.

Social and environmental systems are as complex as obesity and as unresponsive to the 'cause and effect' model of government intervention. In the early days of benign government the relationship between a problem and its cause was often much easier to identify - and probably still is for the afflictions of the poorest members of society. In such cases provision of, for example, basic infrastructure, education and housing was - and is - an almost unambiguous good. But society today is as complex as the human body. Identifying a single cause of, for instance, obesity, or baldness, cancer etc, is unlikely to be fruitful. Sadly, that is the way governments operate: indeed it is the way our individual thinking operates. But for complex problems more subtle ways of finding solutions are necessary. They require diverse approaches, and ones that adapt over time. Climate change and nuclear proliferation, to take a couple of urgent challenges, are at least as complex as obesity, and are going to be at least as unresponsive to the usual approach.

The Social Policy Bond approach is to stipulate the targeted goal: a stable climate, or nuclear peace, and reward people for achieving it, however they do so. It would be up to investors in the bonds to research, investigate, and implement different approaches. They would be highly motivated to terminate their unsuccessful projects (something that government rarely does) and to adapt and replicate their successes. I think the bonds offer a better solution to complex social and environmental problems than the current, cause and effect, model.

24 July 2008

Fannie Mae and Freddie Mac: more perverse subsidies

Commenting on the US taxpayer bailout of Fannie Mae and Freddie Mac, the Economist (subscription) says:
Normal financial-services firms should have been dealing in the safe, middle-of-the road mortgages that Fannie and Freddie specialise in. Except that they were crowded out into subprime mortgages. Fannie and Freddie should never have grown so large. Except that they wanted to exploit the margin between the government-guaranteed borrowing costs and the commercial lending income. They should have been stopped by Congress and their regulator. Except that they spent some of their subsidy on a fierce lobbying machine.
It's a vicious circle: the subsidies enrich an interest group, enabling it to resist anything that threatens its power to enrich itself further. We see it in other sectors: agriculture, fisheries and corporate welfare generally, and there's very little transparency about it. Ordinary people don't vote for subsidies to the wealthy (and that often accelerate destruction of the environment), but that's where quite a significant proportion of consumer and taxpayer subsidies go. (In the current draft of my book I estimate perverse subsidies to amount to about 7 or 8 percent of all the world governments' spending.)

Governments and their corporate beneficiaries can keep this nonsense going because we are used to accepting as reasonable the specification of policy goals in terms of vague promises, are so turned off by the arcane business of policy making, with its emphasis on legalisms, spending plans, institutional structures and process, process, process.

A Social Policy Bond regime would be different. Outcomes would be explicit and transparent. They'd be meaningful to voters and they'd be costed. If the goal is, for instance, to help poor people buy their own homes, then that would be targeted, rather than some alleged means of bringing that about. Bonds would be issued that rise in value once the number of poor people helped to buy their homes had risen beyound a specified level for a stipulated period. There'd be no ambiguity, and no substitution of corporate goals for voters' wishes.

21 July 2008

Justice or expediency

The current 'Economist' (subscription), discussing whether the president Sudan should be brought before the International Criminal Court:
The spectacle of justice thwarted is hard to stomach. But in the argument between justice and expediency, both must have their say.
Quite. Sometimes it's worth holding your nose and subordinating the interests of justice to those of ordinary people who just want to get on with their lives in peace. It's difficult, in the heat of conflict, to reach that conclusion, but I suspect that if people in areas of long-running conflict (the Middle East, for instance) were given the chance in a secret ballot, they would opt for compromise and peace over war every time. I might be quite wrong about that, but surely they should be given the chance to make that decision. In most conflicts, one person's justice is another's revenge, but even in cases (like the Sudan or Zimbabwe) where the wrongdoers can be objectively identified, expediency is sometimes going to be the best solution for almost everybody.

Unfortunately, the way in which policy made tends not to target outcomes such as 'peace'. We think it wrong for murderous leaders to be given at the expense of overseas taxpayers a perpetual holiday in a golfing resort of their choice. But that might be the most efficient solution to conflict, and one that the people most involved would, if they had the opportunity, wholeheartedly support.

17 July 2008

Targeting walkability

It's difficult to come up with robust indicators of well-being. This difficulty is particularly obvious when we are thinking about which goals a Social Policy Bond could target. But it's just as relevant, if more obscure, when we look at policymaking under the current regime. Many indicators of well-being are good at the basic level. At the lower levels of wealth, income, nutrition, literacy, for instance, numerical indicators (dollars, caloric intake, ability to read) are both easy to measure and strongly correlated to well-being. At higher levels, such correlations tend to break down.

If we needed, though, indicators for well-being at a community, or neighbourhood level, I'd think seriously about including walkability. Here's the complete post from Grist:

Software company Front Seat has released a ranking of the most walkable U.S. cities, rating the relative distance to and density of businesses like grocery stores, bars, book stores, and coffee shops to calculate an overall walkability score. San Francisco took top honors, followed by New York City, Boston, Chicago, and Philadelphia; the lowest scoring cities were Jacksonville, Fla.; Nashville; Charlotte, N.C.; Indianapolis; and Oklahoma City. The rankings also singled out the nation's most walkable neighborhoods, with Tribeca, Little Italy, and Soho in NYC placing first. "It's both healthy for the Earth and for humans to be able to walk to most of the places they need," said Kate White of the Urban Land Institute. "Your carbon footprint is significantly lower than someone who has to drive everywhere ... and you're able to have real neighborhoods where you're not totally separated from your neighbors." People [in the US] can see their own 'hood's walkability score at Walkscore.com.

I like this idea. With quantification comes the possibility of measurement and targeting. There are always going to be other criteria, but walkability, I think, is important, and deserves a higher rating in town planning than it has right now.

16 July 2008

The logic of incremental adaptation

Social systems seem to behave in similar ways to ecological systems. An economy is not (despite lazy journalism) something that is steered, but rather a complex web of agents, flows beset by time lags, and mutations - some adaptive, some not. Same with society as a whole. The current economic system is undergoing a shakeout, and I see two broad scenarios. Everything will be done to try to shore it up: taxpayer bailouts of financial institutions, vastly inefficient biofuel programs, subsidies to those who make the most noise, who have the biggest clout, or who make the largest political campaign contributions. Even that might not be enough, and the second possibility, a systemic collapse, will ensue. Then Milton Friedman's phrase comes to mind: 'Only a crisis produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.'

To be honest, I can't see Social Policy Bonds being deployed before such a crisis. To my knowledge, nobody has issued them in the 20 years or so that the idea has been in the public arena. However, the idea is at least lying around, and I think it's a lot better than some of the other ideas that could be (or indeed have been) picked up at times of severe social disruption. I am about to finish a book of about 70000 words on Social Policy Bonds. If any reader can help me find a publisher please could you contact me?

13 July 2008

Biodiversity or cheaper petrol?

How much is biodiversity worth? How is the avoidance of lost biodiversity to be weighed against people’s wish for cheaper fuel?

Social Policy Bonds cannot answer these questions, but they can help in two ways:

Bonds could be issued that target some index of biodiversity. The market prices of the bonds at flotation and thereafter generate estimates of the total and marginal costs of achieving targeted goals. The total cost estimates would be continuously refined and updated by a large pool of motivated observers. They would probably be better estimates than those calculated from the sort of estimates made nowadays: typically one-off calculations performed by a relatively small number of academics or government employees. The marginal costs derived from bond prices would also represent a big improvement over the information currently available to decision-makers, once they have decided which projects to support. So the cost of maintaining a given level of biodiversity can be calculated.

Ultimately, any decision as to whether it's worth maintaining that level against a few pennies off the price of petrol will have to be made on a political basis. But here again, a Social Policy Bond regime could help: a bond regime, because of its transparent targeting of meaningful outcomes would make it easier for more people to participate in policymaking generating more buy-in than current politics affords. If we want to trade off orang-utans, then, for biofuels, at we'd know whose responsibility it is - ours - rather than, as now, delude ourselves that it's the fault of corrupt third-world governments.

10 July 2008

Violent crime in the UK

From an article about violence in England in the current Economist:
Policemen may hold surgeries for local people, but they can take or leave whatever requests such meetings throw up. Instead, they are subservient to a rigid system of central targets, which has inadvertently encouraged coppers to focus on busting minor offenders rather than on keeping their patches safe. Violent Britain
I think it's inevitable that in large, complex societies, policy is going to be determined and measured by numerical indicators of our well-being. This may be regrettable, but it's probably unavoidable. Unfortunately our governments aren't much better at devising decent indicators than were Soviet-era central planners. Their choice of targets is largely a product of their bureaucracies: they relate to the functions and structures of government agencies more than they do to outcomes that are meaningful to ordinary people. It's similar in the health services: targets are too narrow and can be too easily manipulated to serve any useful non-bureaucratic purpose.

Sadly, British Government seems to be responding to the rising level of (non-murderous) violent crime by trying to preserve:
the police authorities that now exist, but insisting that their members be elected. [UK] Home Office research shows that the “vast majority” of Britons have never heard of police authorities, and most of those who have don’t know what they do.
As the Economist says 'It is hard to imagine chief constables being bossed around by anonymous people elected on a minuscule turnout.' And as I say, the possibility of subordinating policy to broad, meaningful goals, has been sacrificed on the altar of existing institutional structures.

08 July 2008

Subsidising fisheries destruction...a continuing story

I can't put it any more forcefully than George Monbiot in the Guardian of 8 July:
The [EU] fishermen make two demands, which are taken up by politicians in coastal regions all over the world: they must be allowed to destroy their own livelihoods, and the rest of us should pay for it. Over seven years, European taxpayers will be giving this industry €3.8bn. Some of this money is used to take boats out of service and to find other jobs for fishermen; but the rest is used to equip boats with new engines and new gear, to keep them on the water, to modernise ports and landing sites; and to promote and market the catch. Except for the funds used to re-train fishermen or help them into early retirement, there is no justification for this spending. At least farmers can argue - often falsely - that they are the "stewards of the countryside". But what possible argument is there for keeping more fishermen afloat than the fish population can bear?
EU politicians are not stupid. They know what they are doing. But they cannot summon up the will to change it. They are, like the rest of us, prisoners of a dysfunctional political system. It speaks volumes that these politicians lead what are probably the least corrupt regimes in the history of mankind. What chance then that they, or governments anywhere else, will tackle the really serious problems, where even the smallest step will create far more losers than even a complete dismantling of EU fisheries?

Very little, I'd say. We need a policymaking system that transcends sectoral, entrenched interests. A Social Policy Bond regime would be a good start: by expressing policy in terms of clear, meaningful outcomes, it would see more public participation and more willingness to do things that are unpopular but necessary.

06 July 2008

The new mediators

An interesting article in the current Economist about the new mediators: small groups, away from the UN razzmatazz, working behind the scenes to resolve conflict, with some success.
The UN has traditionally provided a forum for the discussion and resolution of international disputes. However... “There are no equivalent mechanisms for intrastate dispute resolution...despite the fact that most violent conflicts today are not international but intrastate in character.” The new mediators provide the new mechanisms. Many of these contemporary conflicts involve insurgents, secessionists or even “resource-warriors”....The discreet charms of the international go-between, 'The Economist', 3 July 2008 (subscription, probably)
This is actually quite a positive story. It even puts UN efforts in a good light: at the very least they provide a distraction from the quiet efforts made by the new mediators that would fail if they attracted too much attention. Purists might object to the involvement of terrorist groups in the mediators' negotiations. It is repellent to me also; but as far as the well-being of populations is concerned, it is very often the best tactic.

Conflict Resolution Bonds would embody the principle that meaningful outcomes are more important than history, taste, ideology, facts or even justice when it comes to negotiating the end of conflict. I'm pleased that the new mediators recognise that. A CRB, by targeting socially beneficial outcomes, would probably see such valuable initiatives arising less haphazardly than now.

05 July 2008

Why who?

The Zen header of this post is my asking why the title of the current Economist's article about world governance is headed 'Who runs the world?' You can't blame the Economist. In common with the rest of us, it sees problems as arising from the failure of organisations. But I think this approach is outdated. Consider:
The third impetus to rejig the way the world organises itself is a dawning realisation on the part of governments, rich and poor, that the biggest challenges shaping their future—climate change, the flaws and the forces of globalisation, the scramble for resources, state failure, mass terrorism, the spread of weapons of mass destruction—often need global, not just national or regional, solutions. Who runs the world? (subscription, probably)
Yes, they need solutions, and the solutions should drive institutional changes, rather than the other way round. Reward people for solving global problems, and they will have incentives to develop institutions entirely geared up to solving them. Our current institutions are woefully not up to the task; nor are they up to devising new institutions that are. The key is to subordinate organisational structures and funding to targeted goals, not for some academics, policy wonks or super civil servants to try (as the Economist goes on):
to figure out is which bits of the global architecture need mere tweaking, which need retooling or replacing—and who should have the right to decide.
That, I guarantee, is not going to work. The question we should be asking is not 'who runs the world?', but 'what problems do we want to solve?' Then we can set about issuing Climate Stability Bonds or Conflict Resolution Bonds or whatever and putting organizations, with all their inefficiencies, hang-ups and intrigues, in their proper place: subordinate to human goals.

04 July 2008

Transcending evolution?

Over 99 percent of the species that ever walked, flew, or slithered upon this earth are now extinct. This fact alone appears to rule out intelligent design. When we look at the natural world, we see extraordinary complexity, but we do not see optimal design. We see redundancy, regressions, and unnecessary complications; we see bewildering inefficiencies that result in suffering and death. Sam Harris, Letters to a Christian Nation (page 75)

In a infinite universe the best way of making policy would simply evolve. In what used to be a diverse world, it certainly looks as though the worst ways of making policy - those that destroy or enfeeble part or all of their population - are on the defensive or even on the way out. The liberal countries are generally more prosperous, and the more fortunate citizens of failed states can migrate to those that manage their affairs better. If someone had to choose the type of real-life society in which to live, given the whole range of past and current societies, and without knowing what their status within that society would be, they would probably choose a western liberal democracy.

But, tempting as it is to believe the opposite, it doesn't follow that these societies will persist, let alone improve. A glance at history is all that's necessary to see that there was nothing inevitable about the rise of liberal democracy: if Hitler had put off his invasion of the Soviet Union or had developed atomic weapons before the US.... Similar warnings should be heeded today. There's nothing inherent in our current policymaking system that says, for example, that we can successfully avoid environmental or social catastrophe, or that any society that remains after such an event would be more pleasant to belong to. The suffering and death to which Mr Harris refers can mean the suffering and death of the entire planet. In an infinite universe, there will always be other planets that actually do evolve the best policymaking system - which might look nothing like the liberal democracy that is our current best effort.

All this is to say that there is a case to be made for deliberate intervention rather than waiting for evolution to do its work: for stipulating that one of the outcomes we want to see is the survival (at the very least) of our species and actively targeting that outcome. Our past experience barely equips our policymakers to acknowledge global threats, let alone to respond effectively to them. The threats come from too many different sources and have too much uncertainty attached. There is no inevitability that our curent systems can deal with them.

So there is a strong argument, I believe, for something like Social Policy Bonds that reward people for ensuring that no social or environmental catastrophe occurs. Such bonds could be redeemed after a sustained period during which no huge upheaval, however caused, led to large numbers of people being killed, injured or made homeless. Holders of such bonds would do their utmost to prevent social and environmental collapse. The issuers of the bonds could include global bodies (such as the United Nations), using funds raised from the world's governments. To me, this targeting of a universally desirable outcome, is far preferable to waiting millennia for evolution to come up with better systems than we have now, especially when our planet itself and every living thing on it might in the long run be merely one of those unsuccessful mutations that doesn't survive.