We all have political systems that have figured out how to promise far more than can be repaid, and how to work with the financial sector to opaquely transfer resources to powerful groups—at a cost, it is often said, to be paid by future generations. Increasingly, however, it appears that future generations will not be the only ones harmed by our decisions; we are already feeling the negative impact. ....The era of large-scale, uncontrolled financial booms and busts—last seen in the 1930s—is back. The next panic, 'The Atlantic', OctoberThe key word here is 'opaquely'. I often talk about the efficiency and effectiveness of Social Policy Bonds. But perhaps just as important is the bonds' transparency. Currently policymakers can - indeed must - express their decisions as vague declarations of intent, backed up by funding programmes for favoured bodies, be they government agencies or other interest groups. Often these bodies have edifying names, which makes the disinterested non-specialist think that there is some causal, positive relationship between, say, funds given to a government department for 'Development' or 'Overseas Aid' and the well-being of ordinary people in the poor countries. Or that funds disbursed by ministries of agriculture do something to help struggling farmers. It's nonsense of course, but it continues because it's opaque. If our governments openly stated that, for instance, the big beneficiaries of their agricultural support programmes would be wealthy landowners and massive agri-business corporates, even the least politically engaged citizen would have to take note.
Issuers of Social Policy Bonds couldn't get away with this subterfuge or the sort that Messrs Boone and Johnson describe. Transparency and accountability are built into a bond regime, as surely as they are excluded from the current policymaking apparatus. The financial, economic, social and environmental crises we face today are largely a result of scaled-up gaming of the system by powerful interest groups including, again, government itself. The losers are the vast majority of ordinary citizens and future generations.
We need something like a Social Policy Bond regime, which would target meaningful outcomes: outcomes that ordinary people can understand and in whose development they can participate. If outcomes were built into policymaking, as they are with Social Policy Bonds, the corrupt policies of recent decades would never have been discussed, let alone implemented. Instead of focusing on arcane legislative processes, esoteric structural arrangements and hidden funding arrangements - which appear designed to turn off all who aren't paid to follow them - a bond regime would encourage public participation in the policymaking process. This is an end in itself (pdf), as well as a means of bringing about the buy-in that will become increasingly necessary as our social and environmental challenges become more urgent.