"It defies any kind of logic, if you look at the type of money that the world has spent on these [banking] bailouts, 2.7 trillion dollars (2.13 trillion euros) is the estimate, and it's been done so quickly and without questioning." Pachauri recalled that when the Millennium Development Goals for attacking poverty and sickness were being drawn up, a panel chaired by Ernesto Zedillo, the former president of Mexico, suggested "a fairly modest estimate" of 50 billion dollars a year in help for poor countries. "But everyone scoffed at it. Nobody did a damn thing," Pachauri said in the interview on Monday [1 December].Perhaps cynicism is built into our system of resource allocation, or perhaps a banking crisis, being much more dramatic and televisual, outweighs in the public mind the misery of poverty and sickness, or the threat of catastrophic climate change.
We need, I think, to assess policy priorities coolly and rationally. One of doing so would be to express policy goals in terms of outcomes. Instead of reflexively allocating taxpayer funds to sectors or corporations in crisis, we should take the time to discuss and agree on what exactly is the purpose of government. Is the purpose of the current bailouts to support corporations, to reduce unemployment, or to alleviate poverty?
A Social Policy Bond regime targeting poverty, for instance, would not assume that existing industries or institutional structures are to be taken as given. There might be far more effective ways of eliminating poverty than, for instance, bailing out inefficient car manufacturers. Let the market, with all its ingenuity and its under-rated but essential willingness to terminate failed experiments, answer the question of how most efficiently to eliminate poverty. Providing, of course, we want government to serve people, rather than corporations or abstract economic variables.