Social Policy Bonds have their most marked advantage over conventional policy when trying to solve complex solutions for which there is no single, knowable, solution. Climate change (or some of its impacts), crime, or infant mortality in the poorest countries are examples of such problems, as too is violent political conflict: war or civil war.
For issuers of World Peace Bonds, or Middle East Peace Bonds the challenge is not how to achieve peace - that will be left to bondholders - but how to define it in such a way that its achievement will robustly and verifiably have brought about societies in which most of us would be happy to live.
A start would be to issue bonds that would become redeemable when there has been no nuclear explosion that kills more than, say 100 people before 1 January 2050. We could of course issue bonds targeting nuclear peace for decades beyond that date. Similarly, we could target sustained periods of peace relative to today's world: bonds that would become redeemable if the annual numbers of people killed in conflict fall below 50 percent of the average levels from 2007-2012, say, for a period of 10 years.
But a ruthless and powerful dictator could impose those sorts of peace by simple blackmail. We could perhaps therefore combine our main peace goal with other conditions that will have to be satisfied for the bonds to be redeemed. These could include broad quality of life indicators, including the well-being of all communities in a population. It might also be worthwhile to classify as outcomes such essentials for war as weapons, or the sums spent on them, or the number of men and women under arms, and target these for reduction too. We might also want to target attitudes of people towards people of different countries, ethnicities or religions, in ways that will discourage politicians and others from provoking conflict.
Feeding into such attitudes, or possibly as another target to be considered by bond issuers might be to encourage intermarriage between communities that are currently antogonistic. For most governments, advocating or even discussing such an idea would be political suicide. But for holders of Middle East Peace Bonds, for example, it would merely be another tool that can choose to use or not, depending on their view of how effective it will be. Under a bond regime targeting the end of violence between communities in conflict, no official programme of sponsored intermarriage need be contemplated. Bondholders, though, could do, or cause to be done, things that governments cannot do. There would be no sinister motives underlying their actions; their motive, clear and comprehensible to all, would be explicitly mercenary with no sinister overtones: to raise the value of their bond holdings. As human beings, most of us agree that anything that resolves conflict peacefully and at a bearable cost should be encouraged. Apart from fanatics, even the devout on both sides of most conflicts, away from public fora and in their cooler moments, would put human survival above ethnic purity or identity politics. Even a little intermarriage between two warring factions could go a long way.
Most likely, under an enlightened Peace Bond regime, intermarriage, rather than being directly encouraged, would be the happy outcome of a range of projects aimed at increasing informal contacts between two sides of a conflict, including such trustbuilding measures as lower barriers to trade, school exchange visits, or mixed sports teams. One of the benefits of the Social Policy Bond concept is that it can stimulate actions like these including, if necessary, the direct sponsoring of intermarriage, or the birth of mixed-ethnicity children which, if governments were to undertake them directly, would be met by near universal disdain and opposition.