17 August 2012

Should teachers be paid?

Charles Ferguson, discussing the activities of people gaming the US financial system, writes:
we seem to have reached an unhappy position in which a substantial fraction of our most intelligent and articulate citizens either sit at Bloomberg terminals or jet around the world in very expensive tailor-made suits “ding deals” that, judging by the recent record, have no purpose except to put more money in their own pockets, and that on a net basis are economically detrimental to the rest of the population.  Charles H Ferguson, Predator Nation, May 2012
Surely we can do better than that? People sometimes argue that Social Policy Bonds are a means by which investors make money out by doing what they should be doing anyway. It is true that some wealthy bondholders could become even more wealthy by first buying Social Policy Bonds, then doing something to achieve the targeted objective, then selling the bonds. If that seems reprehensible, it is far better than the reality that Mr Ferguson describes above. 

It might not even be that individuals will amass huge fortunes under a bond regime, even if they do successfully achieve society’s goals and profit from their bondholding. The way the market for Social Policy Bonds works would mean that excess profits could be bid away by competitive would-be investors. The market would convey a huge amount of information, openly, that will indicate the constantly varying estimated costs of moving towards a targeted goal. 

The sums of money at stake might be huge, particularly for Social Policy Bonds that target apparently remote, national or global goals, but there’s no particular reason to assume that, in the long run, it would be shared out any less equitably than, say, teachers’ salaries. Those are other examples of people making money by undertaking a socially useful activity. There are perfectly logical arguments against paying for teaching or nursing services but they don’t sound very convincing these days.

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