Mickey Mouse micro-targets are everywhere

Social Policy Bonds are about setting coherent, broad, explicit and meaningful quantifiable targets, and injecting market incentives into the reaching them. They are not to be confused with the current system, which is increasingly about setting incoherent, narrow targets that are also meaningless in that they do not represent what society actually wants to achieve. I've blogged before about these; here and here, for instance. "Teaching-to-the-test" is another woeful example of the same thinking, driven as it is by politics and conflict between interest groups. Here, the interests  of schoolchildren and society at large are over-ridden. Diane Ravitch writing about the US "No Child Left Behind Policy" says:

NCLB has compelled schools everywhere to focus solely on reading and mathematics, the only subjects that count in deciding whether a school is labeled a success or a failure. NCLB has turned schooling into a joyless experience for most American children, especially in grades three through eight, who must spend weeks of each year preparing to take standardized tests.... NCLB and Race to the Top have imposed on American education a dreary and punitive testing regime that ... demoralizes the great majority of teachers, who would prefer the autonomy to challenge their students to think critically and creatively. This dull testing regime crushes the ingenuity, wit, playfulness, and imagination that our students and our society most urgently need to spur new inventions and new thinking in the future. Do Our Public Schools Threaten National Security?, 'New York Review of Books', dated 7 June

So what goals would I want to see a Social Policy Bond regime establish for education? Nothing more than a goal of universal literacy and numeracy at age 15, say - something that appears to be beyond the current regime. And a bond regime wouldn't stipulate which institution or people would achieve that goal nor how they would achieve it. In literacy, in education and in so many other areas of public policy we need to explore diverse approaches that can adapt themselves to changing circumstances. Teaching-to-the-test does exactly the opposite.

Social Policy Bonds: an alternative to fatalism

Discussing climate change Malcolm Bull writes:

Perhaps we should just acknowledge the problem, try not to exacerbate it too much and hope for the best. That, after all, is what most people have decided to do about the nightmare of the previous generation, nuclear weapons, and there is no reliable means of quantifying whether nuclear war is more or less likely than severe climate change, or whether its effects would be more or less destructive.The real question is whether such fatalism is ethically defensible. What is the rational response? Malcolm Bull, 'London Review of Books', dated 24 May

I disagree. I think we can and should do more than be fatalistic about climate change and indeed nuclear conflict. Yes, there are huge uncertainties about what is going on; and yes the political difficulties of particular causes of action appear insurmountable: Al Gore, quoted in the same article, says ‘the minimum that is scientifically necessary’ to combat global warming ‘far exceeds the maximum that is politically feasible’. But just to sit back and watch what happens? We can do better than that. We could, for example, issue Climate Stability Bonds, which would reward the achievement of a stable climate, however we define it and however our goal is achieved. We don't need to know in advance how people will go about preventing climate change or dealing with its effects. We can't know, because our scientific knowledge of what's happening and of potential solutions is expanding rapidly. But we can give people incentives to explore these possibilities and to put resources into the most promising ones, and that is what a Climate Stability Bond regime would do. 

Climate change is a huge and urgent challenge, whose scale, uncertainties and implications, as Mr Bull indicates, overwhelm our existing policy mechanisms. But rather than simply wait passively for whatever will be, we could be raising funds to back Climate Stability Bonds and so give incentives for people actively to address the problem. And, in fact, the same applies to nuclear conflict.

Self-entrenching corruption

Our current political systems are quite simple to understand. Corporations, government agencies and, indeed, any organisation, have as their over-riding goal that of self-perpetuation. With government at all levels looming so large, the bigger organisations find that trying to influence government in their favour is one of the most effective ways of achieving their prime goal. Most often this happens at the expense of society or, via borrowing, the next generation, or the environment. Everybody's doing it, it seems, so it would actually be a dereliction of duty for any leaders of these organisations not to do it. Unfortunately, this system is self-entrenching. Only a really big shake-out can do anything about it - and such shake-outs bring their own problems.

A Social Policy Bond regime would be different. New organisations would come into being that would be entirely subordinated to society's explicit social and environmental goals. They would survive and thrive only by being efficient at achieving these goals. Their structure, composition and activities would all be secondary issues: subordinate to their goal-achieving initiatives. In short, we shall have a new type of organisation. And that's exactly what we need. Here is one tiny but typical of the current system subverts has corruption built into it:

The claim that it would be cheaper for Greece to send every rail passenger to their destination by taxi was ... first made by Stefanos Manos, the former Greek finance minister, in 1992. Manos used the railway system to illustrate what he saw as gross public sector waste. ... He says it was an off-the-cuff remark but about right. "I knew the number of passengers and I made a brief estimate of what it would cost to send them from Athens to the north of Greece and I decided it was quite obvious it would be cheaper to send them there by taxi rather than train."

The conclusion?

... Mr Manos is correct if there are more than two passengers in each taxi. Source

What happens when targets aren't transparent?

Social Policy Bonds rely on the targeting of the use of robust, quantifiable, broad indicators of social and environmental well-being. But there is another criterion: transparency. Our targets must be made explicit and broadly acceptable. If not agreed on by everybody, they must at least be meaningful enough for the public to understand what they mean, and participate in their formulation. The alternative, as with any other policy instrument, is that they will be corrupted, which means they will benefit one interest group at the expense of society as a whole. A particularly pernicious example of what happens when targets aren't made explicit is given in the the China section of the current Economist:

[U]nder the Communist Party’s system of cadre evaluations, local officials are graded on the basis of a series of internal targets that have little to do with the rule of law. The targets are meant for internal use, but local governments have sometimes published them on websites, and foreign scholars have also seen copies. The most important measures are maintaining social stability, achieving economic growth and, in many areas, enforcing population controls. Cadres sign contracts that spell out their responsibilities. Failure to meet targets can end a cadre’s career. Fulfilling them, even if it means trampling laws to do so, can mean career advancement and financial bonuses. Suppressing dissent, 'the Economist', 11 May

There's probably little alternative to the growing use of numerical targets in today's society's with all their complexities and time lags. While I'd prefer to channel market forces into the achievement of our social goals we can, failing that, at least strive to make sure that these targets are consistent with the rule of law and visible to all of us.