01 September 2009

What really drives policy?

There's no one single driver of course. In many countries ideology is one of the biggest. In the UK, ideological egalitarianism has been an important driver of education policy, for instance. Personality and imagery are also important. But in the US, increasingly and overwhelmingly, corporate money is the biggest policy driver. Paul Krugman explains why health care reform is now far harder to contemplate than it was during President Nixon's time:
[O]ur political system’s ability to deal with real problems has been degraded to such an extent that I sometimes wonder whether the country is still governable. As many people have pointed out, Nixon’s proposal for health care reform looks a lot like Democratic proposals today.

Nixon also embraced tighter regulation of insurers, calling on states to “approve specific plans, oversee rates, ensure adequate disclosure, require an annual audit and take other appropriate measures.” No illusions there about how the magic of the marketplace solves all problems. So what happened to the days when a Republican president could sound so nonideological, and offer such a reasonable proposal? Part of the answer is that the right-wing fringe ...over one of our two major parties [the Republicans].

But there’s another reason health care reform is much harder now than it would have been under Nixon: the vast expansion of corporate influence. ... The health insurance industry, in particular, saw its premiums go from 1.5 percent of G.D.P. in 1970 to 5.5 percent in 2007, so that a once minor player has become a political behemoth, one that is currently spending $1.4 million a day lobbying Congress. Missing Richard Nixon, 30 August
Even that might not be reprehensible if corporate lobbying power were correlated in some way to people's preferences. But, as Noam Chomsky has pointed out, corporate power is instead used to manipulate markets and distort the regulatory environment.The winners are the big corporations. The losers are smaller businesses, ordinary people, and the environment.

We need a better policy driver. Policy is complex; there are too many variables and time lags for any but the specialist to have any idea what's going on, and even they get it wrong frequently and in big ways. Corporate interests are adept at filling this vacuum, and Mr Krugman well describes one, but only one, of the policy areas that they have adapted to their own purposes.

Social Policy Bonds could be the answer by which the interests of all of us could be represented and achieved. Social Policy Bonds would subordinate all policies, all activities and institutions, to socially desired outcomes. Corporate power would result from success in achieving these outcomes, rather than a determinant of policy. Under a bond regime corporations and their interests would be entirely subordinated to the goals of policy. And because policy goals are more readily comprehensible to the public than the myriad complex ways in which they are supposedly achieved, these goals would generate public participation in their formulation and, crucially, buy-in. Sadly both are missing when it comes to making health policy in the US; and to much policy elsewhere: one reason why the political system of the US and other countries has become incapable, as Mr Krugman puts it, of dealing with real problems.

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