28 October 2015

Loyalty ... to what?

My previous post mentioned the climate change bureaucracy. Underpinning that bureaucracy are two assumptions: that it's better to deal with climate change than with its effects; and that cutting back greenhouse gas emissions is the best way of dealing with climate change. But what if those assumptions wrong?  Would the climate change bureaucracy reform itself?

Freeman Dyson reviews a biography of Max Planck:
My Princeton colleague Albert Hirschman published in 1970 a little book with the title Exit, Voice, and Loyalty ...., exploring these issues in a different perspective. Hirschman was writing as an economist about large-scale enterprises that he had seen in many countries, beginning with the railroads in Nigeria and ending with the American war in Vietnam. In each of these enterprises, gross failures were manifest, and the individuals occupying positions of responsibility had to choose between three alternative responses. Exit meant to quit the enterprise. Voice meant to stay on the job but speak out publicly for change of direction. Loyalty meant to stay on the job and give support to the continuation of failing policies. Hirschman observed that in the majority of enterprises, voice is sadly lacking. Most people choose loyalty and very few choose voice. Those who choose exit have only a small effect on the enterprise. If gross errors and injustices are to be corrected, voice must be fearless and fierce, loud enough to be heard. Max Planck: the tragic choices (subscription), Freeman Dyson, 'New York Review of Books', 22 October
"Most people choose loyalty": with existing organizations this means loyalty to the people in control and their way of doing things. It's perfectly understandable: most organizations have worthy-sounding goals and are staffed by ethical, hard-working people. I have met such people who work to ensure compliance with the Kyoto agreement's climate commitments. Their loyalty - naturally, understandably, but regrettably - is to the climate change bureaucracy. Though they may express private doubts about the value of their work, they feel they are in no position to question the bureaucracy that employs them or its underlying assumptions. The bureaucracy has an inertia of its own; it continues living and breathing and trying to grow, even when its goals conflict with those of society.

That is what conventional organizations do. Under a Social Policy Bond regime though, things would be different. A bond regime would lead to new kinds of organizations: ones whose composition, structure and range of activities would be subject to continuous change. Their entire purpose would be to achieve society's goals, as expressed in the redemption terms for Social Policy Bonds. Their composition and activities would depend entirely on how efficient its members and projects are in helping to achieve that goal. Assumptions as to who is best placed to achieve society's goals or how they will go about achieving those goals would be subject to continuous questioning by would-be investors in the market for the bonds. These investors would have interests exactly congruent with those of society as a whole: to achieve our social and environmental goals as efficiently as possible. They would, in short, be loyal to society's goals rather than, as at present, to a hierarchy, ideology or dubious assumptions.

26 October 2015

Climate change: the fundamental question

Social Policy Bonds impose a useful discipline on policymakers. They oblige us to be very clear about what we want to achieve. Nowhere is this more necessary than with climate change. The fundamental question, which I don't see posed in policymaking circles or indeed anywhere else is:

Are we more concerned about climate change, or about the impacts of climate change on human, animal and plant life?

There seems to be a pervasive assumption that the most efficient way of mitigating the negative impacts of climate change is to reduce that which current science suggests (but does not know for certain) are one of its major causes: greenhouse gas emissions.

A Social Policy Bond regime would not make that assumption. Instead we would specify very clearly what we want to achieve. We would express our policy goal as a combination of physical, social, biological and financial measures that must fall within specified ranges for a sustained period. Only then would holders of Climate Stability Bonds be paid out.

In fact, there's a strong case for ensuring that policy be independent of our views about what's happening to the climate. For instance: a family made homeless by an earthquake or a missile is just as homeless as one made homeless by rising sea levels. Perhaps we should target for reduction the human cost of all disasters, whether caused by adverse climatic events, other acts of God, or by man. Impacts on animal and plant life could be targeted by other bond issues.

Unfortunately an entire bureaucracy has grown around climate change as a discrete problem. It seems to me that the existence and activities of this bureaucracy embody the assumption that our trying to influence the climate is the most efficient way of dealing with problems caused by unfavourable changes in the climate. I think that assumption needs to be challenged.

16 October 2015

How to avoid societal collapse

We haven't evolved to think long term and globally, according to Joseph Tainter, author of The Collapse of Complex Societies. In a recent and fascinating podcast interview Dr Tainter sees the collapse of the Roman empire as a template for societal collapse: 
Everything the Roman government did in the short term was rational. Everything they did made sense at the time they did it. It's the long-term consequences that they couldn't foresee. ... It's the long-term cumulative effects that do the damage, and these are unforeseeable. Societal Complexity and Collapse, 'Omega Tau', 13 October

It is this lack of an over-arching objective that is (and, I suspect, always has been) missing from policy. At almost every level of policymaking we do not explicitly target the crucial goal of societal survival. We cannot anticipate and so we cannot, with our conventional policymaking process, forearm ourselves against all possible threats to society. That's because conventional policymaking relies on some body (usually, at the national level, government) trying to anticipate threats and then work out the best ways of dealing with them. But the most potent threats are those likely to be long term in nature and to arise from outside the purview of the policymakers - precisely the qualities that evolution has not equipped us to tackle.

What we can do though is this: target societal survival, whichever threats to it might arise, and reward people for achieving it, however they do so. We don't know what these threats will be and we don't know who will be best at nullifying them nor how they will go about doing so. But, under a Social Policy Bond regime, we don't need to know any of those things. We issue bonds, at the national or global level, that target the avoidance of such calamities as violent political conflict (war or civil war) or other disasters, natural or man-made. These bonds, floated on the open market, become redeemable for large sums, after a long period of societal survival. Policymakers don't need to identify specific threats, nor debate about their significance or relative priority. Investors or would-be investors in the bonds would do all that, and would be motivated to do so continuously, throughout the targeted time period: which could be two or three decades in length (after which, similar bonds could be issued for a further period).

Social survival is perhaps our most important goal: it's worth targeting it explicitly and motivating people to find the most efficient ways of ensuring it. We cannot and should not look to government to take care of threats to our survival. But we can - and should - set in place a regime that explicitly targets our long-term survival and rewards its achievement. With Social Policy Bonds we can do that.

09 October 2015

Media news



Greg Bearup has written about the genesis of the Social Policy Bond idea, and applications of the non-tradeable version of it in Australia, in the cover article in the Weekend Australian Magazine, dated 10 October. If you cannot see the story on the WAM site, a pdf of the article (missing a picture or two) can be downloaded here.

05 October 2015

Environmental policies that hurt the environment

As cities move beyond recycling paper and metals, and into glass, food scraps and assorted plastics, the costs rise sharply while the environmental benefits decline and sometimes vanish. “If you believe recycling is good for the planet and that we need to do more of it, then there’s a crisis to confront,” says David P. Steiner, the chief executive officer of Waste Management, the largest recycler of household trash in the United States. “Trying to turn garbage into gold costs a lot more than expected. We need to ask ourselves: What is the goal here?” The reign of recycling, John Tierney, 3 October
Say no more. Or rather, say it again and again: what is the goal? Recycling is not a goal: it is an alleged means to ends that remain unspecified. We'd do better to think about those ends, specify them, and then encourage people to achieve them. Recycling can and does play a role, but not always, as the article excerpted above shows.

We see something of the same lack of clarity about environmental goals in the recent Volkswagen debacle. A recent article title sums it up: The Volkswagen diesel scandal was driven by carbon obsession

From 2001, punitive rates of up to £500 were applied to cars [in the UK] which emit carbon emissions of more than 225g/km, while cars below 120 g/km were treated to token road-tax rates. As manufacturers quickly discovered, the only way to get many vehicles below these thresholds was to make them diesel.It was well known that diesel engines produced large amounts of tiny carcinogenic soot particles, but this was brushed over. Particulate emissions were meant to be dealt with by filters, yet these are known to become blocked if engines spend too much time idling, as they do on urban roads. Diesels also produce far higher levels of nitrogen oxides, the subject of the VW scandal. Ross Clark, 3 October
A Social Policy Bond regime would improve on this sort of  random policymaking. Certainly, the first steps would be difficult, but they are essential: defining the environmental goals we want to achieve. Most likely, we'd target for reduction pollutants that adversely affect human, animal and plant life. The bonds are sufficiently versatile that other objectives could be simultaneously targeted. The important thing is that, under a bond regime, we'd be targeting meaningful goals according to their lethality, rather than their media profile.

For more about application of the Social Policy Bond concept to the environment start here. There are also numerous posts about the environment on this blog.



01 October 2015

Biology, engineering, and Social Policy Bonds

An academic paper about the use of the Precautionary Principle says:
Significantly, the failure of traditional engineering to address complex challenges has led to the adoption of innovation strategies that mirror evolutionary processes, creating platforms and rules that can serve as a basis for safely introducing small incremental changes that are extensively tested in their real world context. This strategy underlies the approach used by highly- successful, modern, engineered-evolved, complex systems ranging from the Internet, to Wikipedia, to iPhone App communities. Source (pdf)
The paper justifies the application of the Precautionary Principle where 'ruin', defined as low-probability, infinite cost policy outcomes, is a nonzero possibility.
Importantly, it also recognises the positive role that evolutionary processes play in engineering. As the authors say, this mirrors biological evolution. It results in more robust outcomes. I suggest we adopt the same mechanism for society's broad, long-term goals: create a policy environment within which diverse, adaptive approaches are tried, and only the most successful (in their place and time) are given the funds necessary to continue and proliferate. There's very little of this in today's policy world. The necessary first step, self-evaluation, is rare. Even less frequent are learning from failed policies and applying those lessons to current policymaking.
Explicit acknowledgement of the need for failed approaches is probably rare in engineering; it's equally unusual in the world of policy. But, society is approaching the complexity of that of biology. For those broad, long-term goals that we have failed to achieve (ending violent political conflict, for instance), it's clear that no single, top-down approach is going to work - especially one based on relationships that apply in only one part of society or at only one point in time.

That's where Social Policy Bonds can play a role. A bond regime would target society's long-term problems: problems that no single approach can ever solve. Investors in the bonds would have incentives to try many different approaches, and to continue to fund only those that are working efficiently at achieving society's goals. Unlike in today's world, failing projects would be terminated: bondholders would be motivated to end them swiftly, rather than, as today, lobby for government funds to keep them going. A Social Policy Bond regime would create new types of organization, whose activities would be entirely subordinated to achieving social goals efficiently. The bodies that currently are charged with achieving social goals are rarely paid in ways that encourage better performance. (Indeed, very successful organizations might even be punished by seeing their funding reduced.)

In policy, as in biology and engineering, we should let evolution do what it does efficiently: encourage a wide array of approaches and reward only those that are most successful for their time and place. Social Policy Bonds would do exactly that.

For more about Social Policy Bonds, please go to my main website. For examples of previous posts about the bonds and evolution see here and here.