We have freed ourselves of the mid-twentieth century assumption—never universal but certainly widespread—that the state is likely to be the best solution to any given problem. We now need to liberate ourselves from the opposite notion: that the state is—by definition and always—the worst possible option. quoted by Zadie Smith in The North West London Blues, 'New York Review of Books', June 2012The state does do some things very well. Democratic states are good at articulating society's social and environmental goals, and at raising the revenue necessary to achieve them. Where it often fails is in achieving these goals efficiently. Partly this is because government employees are rarely paid according to how successful or efficient they are in achieving social outcomes. Social Policy Bonds could transcend this limitation. They would allow government to contract out the achievement of society's goals to the private sector, while still defining these goals, targeting them, and paying for them. The state would be relinquishing some of its power, particularly its often-abused power of patronage, in issuing Social Policy Bonds, but it would be doing so in the service of better outcomes for all.
A bond regime could also encourage the efficient targeting of global problems; something that is rarely done effectively under the current system. We could look to governments or supra-national bodies to target such universally desired goals as an end to war, the mitigation of natural or man-made disasters, including climate change. It is probably governments - and only governments - that could raise the funds necessary to solve such huge and urgent problems. They are trying, but largely failing, to achieve our goals deploying the tools currently available. But, if they collectively backed Social Policy Bonds targeting our global problems, they might be much more successful.