26 October 2009

Plundering the future

A scary post on the UK's national debt concludes:
if we wanted to be cautious - admittedly not something our present rulers have been much good at - we'd say our real national debt is now in the range £7-8 trillion. Or around £300 grand for every single household. Wat Tyler, Latest on Real National Debt, 19 October
That works out at slightly more than £100000 per person. When people point out to me some of the difficulties of a Social Policy Bond regime, my response is simple: such a regime would by no means be easy to implement, but it would be better than the current system. One of the difficulties of a bond regime would be in trying to anticipate and target for elimination, all such negatives as plundering the future, whether by building up debt, or destroying the physical environment. Surely, I'm asked, we'd simply transfer problems to unforeseeable policy areas? A first answer then would be that the current system doesn't even attempt to address such concerns. There's very little, for instance, environmental accounting, and we all know now that there's very little account taken of the financial needs of future generations. The current system relies on postponing problems for at least as long as it takes a new set of politicians to take over, during which time they accumulate and their effects become catastrophic.

How could a Social Policy Bond regime be worse? It could actually be a lot better. We couldn't foresee, 50 years ago, the shape of future environmental catastrophes (the ozone hole, for instance, or climate change). But if Social Policy Bonds were around then, we could have issued something like Disaster Prevention Bonds, that would have given incentives for people to avoid all the impacts on humans of all catastrophes, however caused. People who undertook research into the long-term impacts of CFCs, or fossil fuel burning could have expected to receive additional funding from holders of Disaster Prevention Bonds. By focusing on outcomes, rather than their causes, Social Policy Bonds issued now could do a lot to prevent the building up of all disasters, environmental, financial or social, even if their full scale would not be apparent for decades to come.

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