Overcoming institutional sclerosis

The disenchantment we see with western governments, the European Union, and some United Nations bodies is almost inevitable. But it's not particular to government bodies; it is a feature of almost any large institution, be it a trade union, church, university, or political party. It's also a feature of the largest private-sector corporations: those whose survival doesn't depend on customers buying the products in something more competitive than a monopolistic or oligopolistic market. These are the large corporations that can manipulate or subvert the policy environment to their ends at the expense of consumers. Institutional sclerosis can also afflict the military, where it remains untested. So I'd expand a bit on this quote from Thomas Sowell;

The most fundamental fact about the ideas of the political left is that they do not work. Therefore we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive. Thomas Sowell, 'The Survival of the Left', in The Thomas Sowell Reader, 2011

Big businesses that are close to government, lobbyists for farmers (for example), right-wing political parties, and other bodies not linked to the political left are subject to exactly the same sclerosis that Mr Sowell describes. It's not about 'left' or 'right'; it's about being responsive to changing circumstances. Many big organizations, not just those on the left, are institutions 'where ideas do not have to work to survive'. The long-term result of this is alienation from ordinary people and a culture of insiders against outsiders. And the result of that is something we are seeing now: a disenchantment with conventional politics and a willingness to embrace anything that promises radical change. This could turn out to be positive; it could also be calamitous.

Which is why I have suggested we think about policy not in terms of institutions, with their limited capacity to think in the very long term or to prioritize, when it comes to the crunch, anything other than their own survival. I suggest that we encourage instead the creation of new types of organization whose funding, composition, structure and activities are entirely a function of how well they achieve society's goals. This would happen under a Social Policy Bonds. As well as channelling society's scarce resources with optimal efficiency, a bond regime would, by rewarding people for achieving society's goals, close the gap between policymakers and the people they are supposed to represent.

Society as a dynamic system

James Lovelock writes:

Cause-and-effect thinking, so often the basis of teaching, fails to provide understandable explanations of real dynamic systems. It fails in physiology, quantum physics and engineering. A rough ride to the future, James Lovelock, 2014

And, I'd say, in policymaking. This links in to my previous post about root causes. Our society and environment are too complex for linear, cause-and-effect thinking to work. That doesn't mean we should give up when faced with supposedly intractable national or global problems as crime, terrorism, war, or poor health. Within each of these problems there will be occasions when cause-and-effect thinking will work well: for instance, improving basic sanitation will probably greatly improve the health of people living in urban slums. But the over-arching policy environment within which decisions such as whether to improve basic sanitation or allocate health funding elsewhere must be one that takes account of the dynamic nature of human society. In other words, it must be adaptive.

A Social Policy Bond regime targeting an array of broad health goals for a population would be adaptive. Under a bond regime government (most probably) would still do what it does best; indeed, what only government can do: articulate society's health goals and raise the revenue for their achievement. But rather than dictate how those goals shall be achieved it would, by issuing (say) Health Bonds, contract out the achievement of those goals to a motivated coalition of bondholders (or people paid by bondholders). The structure and composition of this coalition would probably change over the time period during which the goal are to be achieved - which could be several decades. But at every point in time, bondholders or their agents will have incentives to look for the most efficient ways of raising the population's health. To maximise their returns they will have to respond to changing circumstances, including our rapidly expanding scientific and technical knowledge, and the effects their own activities have on the social and physical environment. By maximising their returns, of course, they would also be maximising society's return on our limited resources.

In short, Social Policy Bonds would take account of the complexities inherent in the dynamic systems that characterise our large societies. They would encourage diverse, adaptive solutions to our social and environmental problems, as articulated by society itself through government. The would inject the market's incentives into the allocation of society's scarce resources at every stage necessary to achieve our goals. By so doing they would maximise the returns on society's investment in our future.

The 'root causes' fallacy

The 'root causes' fallacy is my explanation for why we don't really do much to solve such seemingly intractable problems as violent political conflict (war and civil war) or other complex social and environmental problems, such as crime or drug abuse. For historical reasons, policymaking is almost entirely a top-down activity. Politicians and public servants see a problem, then decide what needs to be done about it. If they aren't certain what needs to be done, either they guess at the root causes, or they ignore the problem. What they are not comfortable doing (yet) is to contract out the finding of solutions to the private sector. And finding solutions to a problem does not necessarily mean that we have to find its root causes - which can take decades or, indeed, be impossible. This, from the Economist, writing about data-based models:

Too many things tend to happen at once to isolate cause and effect: liberalised trade might boost growth, or liberalisation might be the sort of thing that governments do when growth is rising, or both liberalisation and growth might follow from some third factor. And there are too many potential influences on growth for economists to know whether a seemingly strong relationship between variables is real or would disappear if they factored in some other relevant titbit, such as the wages of Canadian lumberjacks. A mean feat, 'The Economist', 9 January

When it doesn't supply an easy excuse for inaction, this supposed need to identify root causes before doing anything can be catastrophically costly when mistakes are made: policies are put in place that cannot easily be reversed. Take climate change: our governments have decided that they know the cause of climate change is anthropogenic greenhouse gas emissions. They know, or act as if they know, exactly the relative contributions of each of these gases to climate change. But there are at least as many variables affecting the climate as there are 'potential influences on growth', and that makes a nonsense of trying to implement policies whose success depends entirely on their correct identification. But the juggernaut has begun its downhill movement: climate change policy has led to the creation of organizations powerful enough to oppose removal of their funding and even to distort facts that might threaten their existence.

My solution: target outcomes, rather than the alleged means of achieving them. Instead of targeting climate change, target for reduction the negative impacts of adverse climate events on human, animal and plant life. Instead of trying (or pretending to try) to stop the civil war in Syria, target for reduction the numbers of people killed and made homeless in that country. Complex social and environnmental problems require diverse, adaptive approaches for their solution. They don't require that we identify their real or mythical 'root causes' before doing anything. By contracting out the achievement of solutions to a motivated coalition of holders of Social Policy Bonds, we could bypass the supposed need to identify root causes and instead concentrate on finding solutions to the problems they create.

For more about my approach to climate change see other posts on this blog, or this essay. For more about my approach to achieving peace, follow this link. 

The importance of buy-in

The American Interest writes about the European immigration crisis:

However much the idea appeals to cosmopolitan utopians, it is not possible for such human communities to accommodate levels of migration beyond some ceiling. That ceiling is variable, and when there are large cultural and religious differences between the native population and newcomers, the ceiling drops. Europe's waning welcome, 'The American Interest', 1 February

'Such human communities' refers to 'polities that were relatively ethnically homogenous'. I agree that the 'ceiling is variable', but think the authors should have mentioned the importance of buy-in. It's unfortunate that hugely important issues, like immigration, are influenced less by ordinary people than by the usual benefactors and manipulators of an inaccessible policymaking environment. Especially when it is ordinary people who will experience most of the disadvantages of mass immigration, and it is ordinary people whose attitude to immigrants will do much to determine immigrants' loyalty to their new home. The usual benefactors and manipulators? Politicians, lobbyists, billionaires and ideologues.

It wouldn't be hard to involve the public in policymaking if we were to focus on outcomes rather than institutional funding and structures, legal processes, slogans and the celebrity status of policy proponents. Immigration is a relatively accessible issue, and the public should be consulted about it. I am certain the reception accorded to immigrants described in the article excerpted above would be less hostile if our leaders had thought to consult us on the issue.

So too with other policies: consultation generates buy-in, and our democracies face many urgent, big challenges for which buy-in from ordinary citizens will be crucial but is almost entirely absent. Climate change, for instance, health care, nuclear weaponry, or disaster prevention or, not least, the nature of the policymaking process itself. Expressing our policy goals in terms of outcomes, rather than impossible-to-follow procedures, would allow public consultation and with that, buy-in. Without buy-in, we're going to see continuing public disengagement from the policy process, which could express itself in ways that are dangerous to us all.

Social Policy Bonds are a means by which policymaking would be focused on outcomes rather than process. Under a bond regime, government would articulate society's goals and could back bonds that would reward their efficient achievement. By emphasising outcomes, rather than the supposed means of achieving them, policymaking would  become comprehensible to ordinary people. Buy-in would be one happy result: efficiency, brought about by market forces, would be another.