From Washington to Athens, the economic crisis is producing consolidation rather than revolution, the entrenchment of authority rather than its diffusion, and the concentration of power in the hands of the same elite that presided over the disasters in the first place. Ross Douthat, The Great Consolidation, 'New York Times', 16 MayWhen the only tool you've got is a hammer, you're likely to see every problem as a nail. Our policymakers' hammer is control. Unable to relinquish it, they accumulate more and more, creating a policymaking monocultre. And, as in agriculture, a monoculture raises the stakes: a shock can become a catastrophe.
One answer might be for government to realize that, while its stated goals may be laudable and almost universally approved of, there are many different ways of achieving them. Regulations, for example, are means rather than ends. Why not target ends rather than means? Clarity about ends would mean clarity about the costs of achieving them: something which our current system doesn't achieve. Fiscal deficits have accumulated to dangerous levels, simply because the obvious fact that you cannot spend more than you earn indefinitely has been obscured by a policymaking system that prefers vague, uncosted, mutually conflicting goals, to one that offers transparency, stability and public participation and buy-in.
That's where Social Policy Bonds can enter the picture. They explicitly targeting ends, rather than means. Their ends are costed and minimised by a competitive market. The bonds generate a cascade of incentives for all involved in achieving social and environmental goals to be efficient. One way they do this is by stimulating the exploration, investigation and implementation of diverse, adaptive approaches to our social problems, rather than the top-down, one-size-fits-all, centrally planned, uniform approach so favoured by our current policymaking system. That system, as we see, is extremely fragile. Unfortunately, it might take us all down with it.