Where are we heading?

Diminishing numbers of people voting; a disdain for incumbent parties; a disenchantment with existing politics...the results of the recent European Union elections just reinforce what we already know and feel: the widening gap between politicians and the people they are supposed to represent. The British Members of Parliament expenses scandal adds piquancy to the mix. The centralising of government and its continued accretion of powers great and small are reaching their logical conclusion: an almost complete detachment of politics from ordinary people. Apathy and resentment - and the possible rise of extremist parties - are an almost inevitable result. It's particularly unfortunate now, when humanity's challenges are so urgent, and so demanding of a consensus and social cohesion that are rapidly disappearing.

I don't think we can continue along these lines, and see a necessary, painful transition to a new sort of politics. But what will be the result? Here are some possibilities:

1. A benign authoritarianism, Singapore-style. A corporatist-style government : freedoms are sacrificed to economic growth, punishments for misdemeanours are harsh, parliament is a rubber-stamp, and any political opposition is only token. Social cohesion is enforced and synthetic. Society and the environment are managed. The big advantage is that the streets are safe and with smart people at the top, the system works well in its own terms.

2. The US model, but without the economic growth that sustained it. Something along South African lines, where people retreat into their own communities; intra-community relationships are tense; anybody who can afford it lives in a gated suburb.

Neither model is attractive to those used to the western way of doing things. And that's where Social Policy Bonds, or something like them, could enter the picture. Currently politicians form a separate caste, and political debate centres on arcane spending and legal decisions with all the opportunities that presents for conscious corruption or the massive over-representation of special interest groups. Under a Social Policy Bond regime political goals would be expressed in terms of outcomes that are meaningful to ordinary people. Government funds would be exactly congruent with the achievement of social and environmental outcomes. Risks of underperformance and failure would be borne by the private sector, rather than taxpayers. Goals would command a wide consensus, being of broad appeal. There wouldn't be the destructive, corrosive and ultimately distracting arguments about who should provide various socially beneficial goods and services. Instead there would be a strong emphasis on efficiency, and one that would arise naturally by the workings of a free market in Social Policy Bonds.

People understand outcomes, and there would be greater public participation in which goals shall be targeted. Such participation is an end in itself, and could be worth even more than the efficiency benefits that, in my view, a Social Policy Bond regime would generate. At a time when the current system appears to be disintegrating, and the alternatives seem unattractive or repellent, Social Policy Bonds, with their focus on meaningful outcomes and consensual goals, would bring something absolutely critical to policymaking and something that is fast running out. And that is buy-in: people's agreement to support something because they have been involved in formulating it.