26 June 2011

Subsidising planetary destruction

The International Energy Agency does valuable work in quantifying the subsidies to fossil fuel production and consumption.
We estimated that consumer subsidies [for fossil fuels] were worth US$ 312 billion in 2009. In the current economic climate, this is a significant amount of money which could be used to more directly tackle priorities such as poverty alleviation, health or education. Our modelling also showed that if subsidies are reformed by 2020, global energy demand could be reduced by 5%. This has significant implications for energy markets and efforts to combat climate change. International Energy Agency’s Senior Energy Analyst Amos Bromhead in conversation with 'Subsidy Watch', April 2011
It's scandalous that these subsidies continue. They transfer funds from the poor to the rich. They do nothing to help the poor that could not be better done by more-targeted assistance. And they subsidise environmental depredation. In this, energy subsidies have much in common with agricultural subsidies, still continuing decades after their lunacy was exposed and quantified. One example from last year:
What could be more outrageous than the hefty subsidies the U.S. government lavishes on rich American cotton farmers? How about the hefty subsidies the U.S. government is about to start lavishing on rich Brazilian cotton farmers? If that sounds implausible or insane, well, welcome to U.S. agricultural policy, where the implausible and the insane are the routine. Our perplexing $147.3 million–a-year handout to Brazilian agribusiness, part of a last-minute deal to head off an arcane trade dispute, barely even qualified as news .... If you're perplexed, here's the short explanation: We're shoveling our taxpayer dollars to Brazilian farmers to make sure we can keep shoveling our taxpayer dollars to American farmers — which is, after all, the overriding purpose of U.S. agricultural policy. Why the US Is Also Giving Brazilians Farm Subsidies, by Michael Grunwald 9 April 2010
The gap between the governments we have and the people they are supposed to represent hardly looks like closing. Ordinary people, along with planet Earth, are left behind in the policymaking process. We have to put up with whatever comes out of the bargaining between interest groups, be they large corporations, government agencies, trade unions or (so-called) religious bodies. For reasons social, financial and environmental, such a policymaking process cannot last much longer. If we are lucky, there might be time to turn towards making policy as if outcomes mattered.

17 June 2011

Government by the rich, for the rich

House keeps farm subsidies, cuts food aid as it passes food and farm spending bill 'Washington Post', 16 June
This should be no surprise. We have known for decades that farm subsidies are insane; that they transfer income from the poor to the rich and that they do much to destroy the natural environment and animal welfare. But our corrupt political systems are incapable of stopping them. Much easier to cut food aid to those who count for nothing under the current regime: the poor at home and overseas. This is government for the rich by the rich. It makes a mockery of democracy.

If we made policy as if outcomes mattered, such lunacy would not survive. The tiny number of people who benefit from it can do so only because policymaking is an arcane process focused on procedure, funding, structural and institutional arrangements and other concerns entirely removed from those of ordinary people.

That's where Social Policy Bonds would differ: under a bond regime, projects, funding, and activities would all be orientated towards achieving specified social goals. The connection between policy and targeted outcomes would be explicit and inextricable. The public could engage with policymaking, so goals would have greater buy-in. The current farm subsidy regime is a symptom of a much bigger problem: that of the disconnect between policymakers and the people they represent. Social Policy Bonds, with their focus on meaningful outcomes, could re-connect policy with the public.

11 June 2011

Government: picking winners, picking losers; who cares?

But progressive government -- as demonstrated by the Obama administration -- flunks any real test of fairness. It clearly favors unionized workers over non-unionized workers, just as it routinely favors the biggest and most politically connected corporations over smaller and more entrepreneurial enterprises. Crony capitalism and the practice of kowtowing to the biggest and most politically assertive unions are joined at the hip in this administration. Gambling Man, Andrew B Wilson, 'The American Spectator', 6 June
True, but if we simply change "unions" in the last sentence to "organizations" this would apply not only to the current US administration, but to virtually every other administration in every country in the world. It's convenient, at every level, for government to act as though the success of big organizations, including its own departments, implies the success of an economy, a society and the government itself. Not so. All organizations, whether they be government agencies, business of any size, religious and education bodies, and - yes - unions, have as their over-arching goal that of self-perpetuation. Even when that goal diverges from or conflicts with the wishes and well-being of society.

There's little to keep bigger organizations honest, especially when they are so big that they can work on other organizations, including government agencies, to manipulate trade, legislation, the market, and the regulatory environment with the goal of preserving their privileges. Government itself is folded into this process, such that unravelling the mess is going to be extremely difficult. A widespread sense of crisis might help, but there are no guarantees that that would lead to anything better, at least in the medium term.

Setting some broad, long-term goals might help. Government, with all its powers and influence, would, I think, be better advised to consult with the public about what's really wanted. Under a Social Policy Bond regime it could target, not only global goals such as dealing with the threat of man-made or natural catastrophe, or minimising the risk of nuclear conflict, but national goals such as improved health and education outcomes.

Instead, for its own petty reasons, it wastes time and scarce resources by, for example and as Mr Wilson points out, acting as an investment managers with taxpayers' money. Investment managers, or gamblers, moreover, who are paid however badly they perform.

07 June 2011

We need to target long-term goals

Democratic governments these days devote much of their energy to kicking problems down the road, for solving at some time in the future that's uncertain, but beyond the lifetime of their administration. It's a pattern. Nuclear weapons pile up; budget deficits rise; environmental challenges are evaded.

On reflection, it's not so surprising. The very idea of a stable society, one that can identify with its future members, has been undermined by the pace of technological change and porous borders. We vote for short-term fixes. Young people can't vote, and nor can threatened non-human species.

But we do have moments of clarity and rationality. We know that certain broad outcomes are desirable. Number one, most likely, is the survival of the human race in the face of natural or man-made catastrophe. Others would include the maintenance of a decent financial and physical environment for future generations. Sadly, our political campaigns are focused almost exclusively on who shall govern us for the next few years. We can choose one person over another (or one party over another), on the basis of what they claim to believe and the activities they promise to carry out over their few years in power. The link between politicians' promises and their activities is tenuous. That between their promises and short- or medium-term outcomes even more so. And long-term outcomes - the sort that will profoundly affect the lives of future generations - are rarely anything other than a by-product of the accumulated decisions. Distracted by the short term, we fatalistically surrender discussion of the long term to the religious, the chiliasts and the cultists; few of whom care dispassionately about the well-being of the entire planet, or the whole of humanity.

That's where Social Policy Bonds could enter the picture. Existing political activities could be subsumed within a set commitments to achieve society's broad, long-term goals. Under a bond regime, we could explicitly target such objectives as the survival of human beings and the avoidance of catastrophe. The bonds, because they allow the explicit targeting of such very long-term goals, would shift the focus of politics towards the well-being of future generations. We all know that such a shift is essential, but it's also clear that current politics is rigidly, almost obsessively, concerned with the short term.