Target crime, not recidivism

I've done a short piece on my main website about why I think Social Policy Bonds must be tradeable. In this they differ crucially from Social Impact Bonds. Because they can't be traded, SIBs must target fairly narrow objectives, and ones with relatively short lead times. This makes them easier to try out and, unlike Social Policy Bonds, SIBs have actually been issued. In the US and the UK SIBs have been issued that target recidivism. There are numerous problems with this, most of which are discussed by Theodore Dalrymple, who also succinctly points out their most important flaw: 

The public wants to be protected against crime, not against recidivism... What Does It Mean To ‘Punish’ Syria?, Theodore Dalrymple, 'Library of Law and Liberty', 8 September

Tradeability sounds esoteric, but it's not. It's a fundamental distinction, and one with large consequences: under a Social Policy Bond regime we can target exactly what we want to achieve; under a SIB regime we can aim at solving only narrow problems that are short term in nature. This means that they fail to capture the public imagination and perhaps even more importantly, lend themselves far more readily to being gamed or manipulated. My hope is that they don't discredit the whole notion of channelling self-interest into the achievement of broad social and environmental goals.

Kludgeocracy

Steven M Teles writes eloquently of the complexity and incoherence of US policy:

A "kludge" is defined by the Oxford English Dictionary as "an ill-assorted collection of parts assembled to fulfill a particular purpose...a clumsy but temporarily effective solution to a particular fault or problem." The term comes out of the world of computer programming, where a kludge is an inelegant patch put in place to solve an unexpected problem and designed to be backward-compatible with the rest of an existing system. When you add up enough kludges, you get a very complicated program that has no clear organizing principle, is exceedingly difficult to understand, and is subject to crashes. Any user of Microsoft Windows will immediately grasp the concept. "Clumsy but temporarily effective" also describes much of American public policy today. Kludgeocracy in America, 'National Affairs', Fall 2013

And, indeed, much of the public policy of most countries, and of supernational agencies too. I won't summarise Professor Teles' excellent article, which is required reading, except to mention some of his suggested cures for kludgeocracy. These include procedural changes aimed at increasing the power of the congressional majority leadership at the expense of committees, shifting the 'micro-design' of policies away from Congress and towards the government agencies actually implementing the policies; and handing entire policy areas, such as health or eductaion to the states or to the federal government - but not to both. As Professor Teles writes:

Few of the reforms sketched out above have much of a chance of being enacted at the moment, since the institutions and practices they propose to alter are too deeply entrenched to remove quickly.

 ...and I share his pessimism about that. Of course, a Social Policy Bond regime would be even more radical and, if we are to depend on government to initiate it, even less probable. But we don't need to wait for government. Social Policy Bonds can be issued by anyone with enough funds to finance their redemption, or with sufficient ability to raise these funds from bodies such as non-governmental organizations, philanthropists or ordinary citizens.

If that were to happen, and the Social Policy Bond approach were to prove successful in achieving social goals, it's not that difficult to imagine government itself changing, along the lines that Professor Teles and most of the rest of us would like to follow: towards open, explicit, costed, efficient and effective solution of our social problems.

The curse of party politics

It lasts for generations. Helen Epstein writes about Dr Sara Josephine Baker of the New York City Health Department:

In her first year at the Bureau of Child Hygiene, Baker sent nurses to the most deadly ward on the Lower East Side. They were to visit every new mother within a day of delivery, encouraging exclusive breast-feeding, fresh air, and regular bathing, and discouraging hazardous practices such as feeding the baby beer or allowing him to play in the gutter. This advice was entirely conventional, but the results were extraordinary: that summer, 1,200 fewer children died in that district compared to the previous year; elsewhere in the city the death rate remained high. The home-visiting program was soon implemented citywide, and in 1910, a network of “milk stations” staffed by nurses and doctors began offering regular baby examinations and safe formula for older children and the infants of women who couldn’t breast-feed. In just three years, the infant death rate in New York City fell by 40 percent, and in December 1911, The New York Times hailed the city as the healthiest in the world. Articles about Baker’s lifesaving campaigns appeared in newspapers from Oklahoma to Michigan to California. In the late 1910s, she and other reformers drafted a bill to create a nationwide network of home-visiting programs and maternal and child health clinics modeled on the programs in New York. But the American Medical Association (AMA)—backed by powerful Republicans averse to spending money on social welfare—claimed the program was tantamount to Bolshevism. The Doctor Who Made a Revolution, Helen Epstein, 'New York Review of Books', 26 September

And three generations later?

Today, nearly every other industrialized nation on earth provides some form of guaranteed support to families with young children. That America still does not is considered by many to be a national disgrace.

Once ideologues grab the reins of government, any notions of doing the best for society or even of rationality, are liable to be lost for ever. There's no inevitable reason why the aggregated interests of ideologues, corporations or powerful organizations of any kind are going to add up to a society that cares about the well-being of the majority of the population. Perhaps the next stop for the US is a banana republic?

Here's another idea. Instead of making policy on the basis of ideology, or the short-term interests of powerful organizations, why not target outcomes? Outcomes that are meaningful to ordinary people - as people, rather than members of one interest group or another. Explicit, transparent outcomes that we can all understand and all participate in formulating and so buying into. That could be done with Social Policy Bonds, which could target broad, long-term social goals about which we could all be consulted and with much most of us would agree. How these goals were to be achieved would be a matter for motivated investors in the bonds, rather than politicians and their corporate or ideological paymasters. People would be rewarded for achieving social goals, rather than siphoning off government funds for their own narrow, short-term interests at the expense of everyone else.

It's a long way from where we are now, summed up by George Monbiot:

Our elected representatives look increasingly marginalised. Unable or unwilling to assert themselves against corporate power, media magnates and spies, they have been reduced to a class of managers, doing as they are told by their sponsors and lobbyists, seeking to persuade their constituents that what is good for big business and unelected agencies is good for everyone. Law of the landed, 19 September

Policy as if party politics is the only thing that matters

Elizabeth Drew writes about US politics:

In 2009, for the first time, defeat of the incoming president in the next election became the opposition party’s explicit governing principle. If that meant blocking measures to improve the economy, or preventing the filling of important federal offices to keep the government running, so be it. Wrecking became the order of the day. Confrontation became the goal in itself. Now the rightward trend in Republican politics is feeding on itself, becoming even more extreme until the preposterous becomes conceivable. The stranglehold on our politics, Elizabeth Drew, 'New York Review of Books' dated 26 September

It's the logical outcome of a political system subordinated entirely to existing institutions. Every organization - political, religious, educational or whatever - has as its over-riding aim that of self-perpetuation. In their resistance to reform the biggest and most powerful of these organizations do great damage. Sadly, the record of the sort of revolution needed to release the stranglehold of organizations as dominant as the two US political parties is not encouraging.

Here's another approach: instead of organizing our policymaking around the whims and caprices of political parties and their principal funders, why not focus on society's needs? And reward people who help achieve them? That is the underlying principle of Social Policy Bonds. Under a bond regime, organizations would no doubt come into being, but their structure, composition and all their activities would be entirely subordinated to the social and environmental outcomes that people want to see. The current system is broken. Party politics has taken over, at the expense of society. I have no doubt that change will occur; let's hope it's along the lines of a Social Policy Bond regime, which would channel market incentives into the achievement of society's goals, rather than those of the political party dinosaurs.

Surveillance

It's a familiar, but disastrous, train of thought: government perceives a problem, government thinks it knows the cause of the problem, government pumps resources into the agencies that allegedly deal with the alleged cause of the problem. So we have, for instance, not-very-effective overseas aid agencies, bloated militaries, corrupt farm support policies and, now, Stalinist surveillance bodies on which the US spends $80 billion a year. These agencies are self-entrenching. They have in common the power to resist reform that lavish government funding gives them. But the security industry has another weapon it can deploy to keep enriching itself: fear.

Only forty years removed from the blackmail-tinged reign of J. Edgar Hoover, the NSA [US National Security Agency] has developed an image which implies the agency is vacuuming up more than enough incriminating phone records, emails and text/sext messages to politically torpedo any rank-and-file congressman, should that congressman step out of line. And here's the thing: for all the agita intelligence officials express about new disclosures, those disclosures illustrate the sheer size and scope of governement surveillance. That doesn't weaken the NSA - on the contrary, it serves to politically strengthen the agency by constantly reminding lawmakers that the NSA 1) probably has absolutely everything on them and 2) could use that stuff against them. Saying Boo To A Ghost: It's No Secret Why Congress Fears Crossing The NSA, David Sirota, NSFWCORP, 22 August (link expires in 48 hours)

Here's another idea: why not decide what we really want to achieve - not as a government, but as a society - and target that? If we want to reduce the number of people killed by random acts of violence, why not issue Social Policy Bonds that target such a metric and reward people for working within the law to reduce terrorist acts. Perhaps we might think more broadly, and decide that we want to reduce all premature deaths, however caused. In which case, we could issue Health Bonds. Either way, we'd have a debate about exactly what we want to achieve, without having every aspect of our behaviour surveilled and recorded by government and its private sector contractors. Something which is quite possibly illegal, and which no ordinary people actually want.