Gradual re-orientation of policy

On January 27th [Gordon Brown] announced a £2.3 billion ($3.2 billion) package of loan guarantees to support carmakers, the development of clean low-carbon cars and the skills to produce them. Another scheme, yet to be devised, will aim to stimulate demand by helping finance companies that lend money to buy cars. Mandy's Promise, 'Economist' 29 January

There's no real discontinuity between the perverse subsidies given to agriculture, the fishing industry and the fossil fuel sector over many decades, and the current bailouts of the finance and car-manufacturing sectors. In all cases short-term expediency and the interests of powerful corporate and government agencies are given a higher priority than those of ordinary people. This is little different from what the way we have treated our physical and social environment. My own feeling is that the logic of incremental adaptation has led us too far from our best interests, and that that is now becoming clearer to everybody. Whether the inevitable re-orientation of policy occurs peacefully and constructively is, I think, open to question. One way of minimising the inevitable pain could be to move towards a Social Policy Bond model.

Such an transition could occur gradually, with existing institutions that are charged with solving our social and environmental problems (mainly government agencies) having their funding reduced by a couple of percentage points a year, while funds are diverted to the redemption of Social Policy Bonds targeting the goals supposedly being achieved by these bodies. The existing institutions, if they were efficient, could work to achieve these goals, and expect to gain at least as much funding as they had before - but only if they were efficient. And their efficiency, and hence their funding, would be objectively assessable at all times via the market for the bonds.

My book goes into more detail about such a gradual transition, as it does about all aspects of the Social Policy Bond idea, but if you are interested you can also contact me directly, through a comment here or via the email address given in my profile page.