Tony Blair admits Labour didn't fully understand complex financial sector source
Quite. Unfortunately his Government behaved as though it did understand the financial sector. Even more unfortunately, governments everywhere behave as though they understand everything: climate change, agriculture, education, housing, health, transport, crime, war and all the rest. Government so often doles out subsidies, regulates or deregulates, or otherwise tries to control complex systems that it does not, and cannot, understand. Some relationships between cause and effect are easy to understand and manage: that between paying for primary education and literacy, for example, or between organising rubbish collection and human health. But in so many other areas government is well out of its depth.
Social Policy Bonds would remove the need for government to identify in advance the extremely obscure relationships between cause and effect that are ever more a feature of our complex society. Instead of "picking winners" such as the financial sector and lavishing implicit subsidies on it, government could instead target outcomes that are meaningful to ordinary citizens - basic health, literacy, housing and health outcomes, say - and let others do the endless, and endlessly difficult, task of identifying the important links between activities and outcomes. A Social Policy Bond regime would enable government to do something that it's actually quite good at: articulating society's wishes and raising the revenue to achieve them. But the actual achievement is something that, as is becoming clearer, is best left to people who are paid according to their effectiveness and efficiency, rather than how well they can convince the politicians that they are doing something useful.