First, we removed the possibility of creating real, binding contracts by allowing employers to bust the unions....Second we allowed those same employers to cancel existing contracts, virtually at will, by transferring liability from one corporate shell to another, or letting a subsidiary go into Chapter 11 and them moving to 'cancel' the contract rights....As one company after another 'reorganized' in Chapter 11 to shed contract rights, working people learned that it was not rational to count on those rights and guarantees, or even to think in future-oriented ways. Infinite Debt: How unlimited interest rates destroyed the economy, 'Harper's Magazine' (subscription), April 2009As with the environment, so with the financial system: our policymaking is heavily slanted towards the interests of the paymasters of the political parties. And these interests are overwhelmingly narrow and short-term. They have nothing to do with the long-term goals of society: indeed, they militate against long-term interests.
Rather than allocate blame for this flaw, I would advocate Social Policy Bonds as a possible solution. About policy objectives, there is a wider consensus than about the means of achieving them. Current policymaking centres on institutional structures, spending allocations, and government's necessarily limited thoughts about how best to manage problems. In contrast, a Social Policy Bond regime would subordinate all activities to society's targeted outcomes. These would be broad, and long term in nature. Stability of objectives would be one of the features of a bond regime that would make it more efficient than the current system; it would also be an end in itself; people would have a clearer idea about what society is aiming for, and what sorts of behaviour will be rewarded. As for the current system, as Mr Geoghegan says: 'No wonder people in our country began to live for the moment and take out loans and start running up debts.'