11 January 2012

The system is rigged

David Brooks asks Where are the liberals?:
Americans...don't trust the federal government. A few decades ago they did, but now they don't. Why don't Americans trust their government? It's not because they dislike individual programs like Medicare. It's more likely because they think the whole system is rigged. .... [R]ent seeking groups are dispersed across the political spectrum. The tax code has been tweaked 4428 times in the past 10 years, to the benefit of interests of left, right and center. 'International Herald Tribune', Asia Edition, 11 January
This malaise is common to all the western democracies. Interestingly, Mr Brooks mentions sugar subsidies, which benefit just a few wealthy individuals, while "imposing costs on millions of consumers". It's the persistence of such subsidies, in the face of decades of evidence pointing out their disastrous economic, distributional and environmental impacts, that makes one despair about whether our governments can ever reform themselves. And, if they can't, then where is the initiative going to come from?

Perhaps the most benign impetus for reform would come from a shift toward rewarding outcomes, rather than, as now, the specific interest groups - public or private sector - that currently seem to run government. Social Policy Bonds would subordinate all government funding to meaningful results. Under a bond regime only the most efficient achievers of social and environmental goals would receive taxpayer funding.

Clearly the current system is losing the consent of the majority of the people it's supposed to serve. Perhaps it's time to try Social Policy Bonds. My book suggests how a transition to a bond regime need not be too drastic, but could be gradually managed.

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