23 July 2011

Complexity used to favour the rich

Government and big business have interests that often conflict with ordinary people and smaller businesses. They habitually use complexity to benefit themselves, at the expense of small, local enterprises and natural persons.

...leading members of the [US] Senate are seriously considering giving the most profitable companies in the world a total tax holiday as a reward for their last seven years of systematic tax avoidance. Hundreds of billions of potential tax dollars would disappear from the Treasury. And there isn’t a peep from anyone, anywhere, on this issue. We’re seriously talking about defaulting on our debt, and cutting Medicare and Social Security, so that Google can keep paying its current 2.4 percent effective tax rate and GE, a company that received a $140 billion bailout en route to worldwide 2010 profits of $14 billion, can not only keep paying no taxes at all, but receive a $3.2 billion tax credit from the federal government. And nobody appears to give a ****. What the hell is wrong with people? Have we all lost our minds? Corporate tax holiday in debt ceiling deal: where's the uproar? Matt Taibbi, 22 July

Complexity, obscurity, and just the plain boredom of the policymaking process are being exploited by powerful interests. They can get away with this, because policy is expressed in terms that are so incomprehensible or vague that they deter outsiders - that's those of us who should be in uproar - from getting involved.

Social Policy Bonds would be different. They would target explicit goals that are meaningful to ordinary people: cutting the crime rate, reducing unemployment, reducing pollution, for instance. The public would take an interest because it can understand outcomes. The bonds could close the gap between the public and the policymakers, which is now not only wide, but widening. Perhaps disastrously so.

20 July 2011

The EU: a top-down, one-size-fits-all institution

Frank Furedi writes:
From its inception, the EU was an elitist managerial project that was able to construct and promote its agenda without having to respond directly to popular pressure. Decisions are never arrived at through public debate, and the majority of EU laws are formulated by the hundreds of secret working groups set up by the Council of the EU. Most of the sessions of the Council of Ministers are held in private, and the EU’s unelected European Commission has the sole right to put forward legislation. Why the EU is so clueless about the Euro crisis, 20 July
It's arguable that global crises require global solutions, and EU-wide crises require EU-wide solutions. But I would argue that solutions need to arise from below, rather than imposed from above. They need to be diverse and adaptive. Big government, while necessary to articulate our goals and to raise the revenue for achievement, is rarely best placed to achieve them. The decision-making bodies of big government, such as those that Mr Furedi writes about, might be well meaning and hard-working, and they might even perform adequately when a crisis requires a big, one-size-fits-all, top-down solution. But they tend to be remote, and unresponsive to local circumstances and changing events. The entire EU exercise and, in particular, the Euro, are the apotheosis of big, remote government. They might well be neither responsive nor diverse enough to go on for much longer.

It's too late for the EU, but a Social Policy Bond regime would distinguish between the (1) the articulation and revenue-raising part of government, and (2) the achievement of social and environmental goals.

17 July 2011

Targeting GNP: the logical conclusion

Gross National Product, in the absence of any other explicit indicator, is often targeted implicitly; as if GNP, or GNP per head, indicate anything meaningful to ordinary people. This is one example of what happens when governments insist on targeting GNP.

05 July 2011

Taking command of the long term

Greece has 800,000 civil servants, of whom 150,000 are on course to lose their jobs. The very existence of those jobs may well be a symptom of the three c’s, ‘corruption, cronyism, clientelism’, but that’s not how it feels to the person in the job, who was supposed to do what? Turn down the job offer, in the absence of alternative employment, because it was somehow bad for Greece to have so many public sector workers earning an OK living? Where is the agency in that person’s life, the meaningful space for political-economic action? She is made the scapegoat, the victim, of decisions made at altitudes far above her daily life – and the same goes for all the people undergoing ‘austerity’, not just in Greece. Once Greece Goes..., John Lanchester, 'London Review of Books' online, 30 June
We live and work within a policy framework decided by people at high altitude. Or perhaps 'decided' is too purposeful. Policymakers are only a little less victims of the system within which they operate than ordinary workers. They have few definite, long-term objectives to work for. Perhaps the maximisation of economic growth (or growth per head) which, if it considered at all is assumed to generate enough resources to solve every sort of problem - even those it creates. Other guidelines are even more vague or rarely articulated. The avoidance of social upheaval; the avoidance of 'too much' pollution, or unemployment, or crime, or whatever. Because these guidelines are vague, or seldom made explicit, they have the status of declarations of intent. All this means that society's actual long-term guidelines are either decided by default, or subject to the manipulation of the powerful; including large corporations, government agencies, and the largest trade unions.

So we find, and not only in Greece, explosions in public sector employment, and public debt. We'd all be better off society's longer-term goals, including debt levels, were openly debated and made explicit. They need not be absolute, but there would be incentives for people to achieve them.

Social Policy Bonds, because they are tradeable, could be used to target long-term goals, including guidelines within which, say, debt, or crime, or pollutions must lie. Societal goals, such as limited debt levels, are more stable over time than the supposed ways of achieving them, and we could all benefit if they were targeted explicitly. Outcomes targeted under a bond regime could include those whose origins are uncertain or contested. Just because policymakers don't know all the causes of crime, or climate change, say, does not mean that they cannot explicitly target them and, in effect, contract out the work of identifying cause and effect to a motivated private sector.