23 June 2012

Bypassing governments

It's unfortunate that most of us think the default agency for solving society-wide problems is government. In the west, we are lucky to have (for the most part) well-meaning people behaving ethically and in society's best interests. Even then, they often get it wrong, nor do they have powerful incentives to be efficient. But most people live under much worse governments, and bypassing them is not only more efficient: it's the only way things will ever get done.

Malaria is a global, devastating disease that adversely impacts both the health and economic productivity of numerous countries, especially those in sub-Saharan Africa.....However, [owing] to various interventions, such as insecticide-treated bed nets, residual indoor insecticide spraying, and effective medications, the toll of malaria deaths has somewhat declined in the last decade. This turnaround is in part due [to] initiatives undertaken in the private sector, since governmental programs in that region are fraught with disorganization and a lack of a public health infrastructure. Private sector helps in fight against malaria, American Council on Science and Health, 22 June
Just because we look to governments to improve health outcomes doesn't mean they will be good at doing so. In many countries, tragically, they will stand in the way. The backers of Social Policy Bonds that target the health of people in developing countries wouldn't need to form a judgement as to whether governments are likely to be helpful or otherwise: the way the market for the bonds works would ensure that only the most efficient operators, whomever they may be, will be rewarded for doing so. If bypassing inefficient or corrupt governments is the best way of improving the health, then that is what bondholders will do.

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