22 January 2013

Kyoto is doomed

From the Economist:
On January 15th ... the most comprehensive study of black carbon yet conducted was published in the Journal of Geophysical Research: Atmospheres. It concluded that the stuff was the second-most-damaging greenhouse agent after CO2 and about twice as bad for the climate as had been thought until now. The implications are profound. Global warming: the new black, the 'Economist', 19 January, [my emphasis]
Indeed. If we are serious about tackling climate change, we should reward people for tackling climate change, not for taking steps that, based on science stuck in the 1990s, might do something about climate change.

The climate, like many social concerns, is too hard for anyone fully to understand. Making policy on the basis of limited knowledge is what we do all the time. It's unavoidable. But, when we trying to solve huge, urgent problems and when our knowledge of the important scientific relationships is almost negligible, it is idiotic to waste resources on initiatives - like cutting greenhouse gas emissions (or, rather, pretending to) - that are just as likely to be irrelevant as helpful.

Which is why I advocate targeting outcomes, rather than the supposed means of achieving them. If climate change is seen as an urgent problem, and if we genuinely want to do something about it, we should acknowledge that our scientific knowledge is seriously deficient and instead of rewarding people for undertaking government-improved activities we should reward them for, yes, actually reducing climate change. Under a Climate Stability Bond regime, we could define our climate goals as an array of physical, social, and financial conditions, all of which have to be satisfied for a sustained period before the bonds are redeemed. We'd be rewarding people for achieving society's targeted outcome, however they did so. Crucially, these people would have incentives to investigate, start, adapt or terminate their initiatives, or those they finance, in line with our rapidly expanding knowledge of the myriad variables that influence the climate. The entire Kyoto process, as the quote above shows, is spectacularly inadequate in this. It is doomed to fail.

15 January 2013

'It's me or the puppy': the importance of buy-in

Dear Virginia, My six-year-old son nagged me so much for the past year I gave him a puppy for Christmas. He loves it and so do I but my partner (not his dad) hates it. ... Yours sincerely, Esther

Virginia says, Obviously, if you just inflicted this puppy on the household at Christmas without giving your partner a say in the matter, I can understand why he might be pissed off. If nothing else, it would make him feel small and out of control, in the same way as if you’d moved your mother, say, into the spare room to live there for 10 years, without prior discussion. To bring in an animal – which is like a member of the family, or should be – without consulting all family members first is an incredibly thoughtless thing to do. ... Virginia Ironside's dilemmas: it's me or the puppy, 'The Independent' [London], 15 January
Buy-in is important, whether it's the politics of the household or the country. Democracies, when the function well, secure buy-in by allowing people to vote for different parties. The supporters of the losers know they have been consulted and, ideally, accept with good grace that they were given the chance to influence the outcome but were outvoted. Unfortunately, nowadays there isn't much linkage between what a ruling party says and what it does, and there are extremely obscure relationships between what it does and what actually happens. The result? We don't have buy-in; the gap between politicians and people widens, giving rise to cynicism and despair.

Social Policy Bonds could close that gap. Instead of politics and electioneering being about personalities, sound-bites, stated intentions, or vague notions of a messianic future, they would focus exclusively on outcomes. Outcomes, that is, that are meaningful to ordinary people, the voters. 'Growing the economy' is not an end in itself, nor is per capita Gross Domestic Product a reliable indicator of well-being. Another example: spending more on prisons or police is not the same as rewarding people for cutting the crime rate. Signing up to the Kyoto process is not the same as helping people cope with adverse climatic conditions.

In these cases, and many others, we see the interests of the political class - politicians and bureaucrats alike - diverging from those of ordinary citizens, or even conflicting with them. Under a Social Policy Bond regime, however, people would vote for comprehensible, meaningful outcomes, rather than who will control insufferably arcane processes of interest only to powerful vested interests and their lobbyists. As such, we'd be more inclined to participate in the policy-making process. We'd have a role, if we wanted it, in setting costs and priorities. In short, even if policies hardly changed at all and were opposed by the same numbers of people, we'd have more buy-in than at present. When we face such urgent and complex challenges the additional buy-in that we can get by consulting people about meaningful social and environmental targets, might prove crucial. It makes for happier people in both households and nations. Puppies would be better off too.

10 January 2013

Fund goals, not research bodies

One of the problems with the current ways we go about solving social problems is the uniform way in which we approach them. This is largely because we have handed over to government the responsibility for dealing with an ever larger number of them. As scientific research funding becomes increasingly dominated by government there is a growing danger that it too will suffer from the same approach, wherein there's little room for dissidence, for questioning the consensus.

But science - real science - isn't a consensual process. Government is inherently uniform, top-down and one-size-fits-all in its approach. It stifles diversity. In the private sector, diversity and creative destruction are essential for generating wealth. Similarly in science: failed hypotheses must be seen to fail and allowed to die, not kept on life support with funding supplied by politicians who depend on vested interests, the status quo, for their tax revenue or campaign funding.

Perhaps research funding needs to be determined by, and integrated into, our broad, long-term, social goals. So instead of funding research into, say, cutting back carbon dioxide emissions with the aim of preventing climate change, we should fund the prevention of climate change. If we issued Climate Stability Bonds, then people would have incentives to find the most cost-effective ways of stabilizing the climate. That could mean funding scientific research into cutting back carbon emissions, but that decision would be made by people motivated to find the most efficient ways of achieving the overall goal. Not, as at present, by bureaucracies, academic, national and international, whose interests appear to range from, at best, securing more funding for themselves to, at worst and in the time-honoured way of most global aid, transferring funds from the poor in the rich countries to the rich in the poor countries.

Under a Social Policy Bond regime, where activities are entirely subordinate to society's desired outcomes, people would have incentives to investigate hypotheses that at first sight seem far-fetched (see here for one example), even if they would prove unpopular if proven. And once they are proven they would have incentives to act on that knowledge ...  rather than conceal it