25 January 2016

Health screwups

The evidence is necessarily scanty, but the (US) Institute of Medicine in 1999 estimated (pdf) that at least 44 000 and perhaps as many as 98 000 citizens died each year in US hospitals and 1 million patients were injured from a range of mistakes. Since then, according to Joe and Teresa Graedon, there has been little, if any, improvement.
If medical mistakes and misadventures were a disease, there would be a great deal of hand wringing. We would have an organization comparable to the American Heart Association or the American Cancer Society to publicize the problem, and huge sums of tax dollars would be spent researching the causes and seeking solutions to all these screwups. Instead, the medical establishment mostly acts as if this problem were invisible. Top Screwups Doctors Make and How to Avoid Them, Joe Graedon and Teresa Graedon, 2011
My own view is that resources for health care are rarely allocated in ways that optimize returns. It might be that, as I suspect, efficiency counts for little against the charisma or leverage of top specialists, interest groups and celebrities when it comes to deciding which diseases, for instance, shall receive most funding. Or whether preventive medicine should receive more funding. Or, indeed, whether the most efficient ways of improving a population's health have less to do with medicine, and more to do with, as the Graedons persuasively suggest, introducing check lists and rigorous procedures in healthcare facilities. It's only a suspicion, but the point is that there are no incentives in place for people to find out whether it's true.

Applying the Social Policy Bond principle to health might be the solution. To 'health', note, not 'health care'. Why? Because health is not something that arises mainly, or even primarily, from the decisions made by institutions devoted to health care. It may well be the case that relatively costless changes in diet, exercise, tobacco consumption or (one of my pet hates) the frequency and volume at which emergency vehicle sirens are played would do more for health than, say, investments in statins or new technology. As with exposing and tackling the 'screwups' identified by the Graedons, there are no incentives for anyone to find all this out. Instead we have organizations, such as hospitals, health services, charities, interest groups, and corporations which all have their own agendas which might at times coincide with improving the health of the population, but might not, and even if they did, would not necessarily be doing so efficiently. The human and financial costs of such resource misallocation are huge. The Social Policy Bond concept applied to health, by targeting and rewarding improvements in the population's health, however achieved, might be the solution.

17 January 2016

Insiders, outsiders, and world peace

The Economist describes the French labour market as...:
 ...divided into “insiders”, those with permanent, protected, full-time jobs, and “outsiders”, whose work is insecure and temporary. .... And France’s biggest unions, for all their revolutionary rhetoric, have become talented and conservative defenders of insider privileges, at the price of shutting too many young people out of decent jobs altogether. Fighting French unemployment: mode d'emploi, 'The Economist', 16 January
It seems to be the way of all big organizations, be they trade unions, religious institutions, government bodies, large corporations or political parties. They start out well intentioned but at some point their interests diverge from those of the people they purport to represent, and their over-arching goal becomes self-perpetuation. Sometimes, especially during their early years, these bodies have interests that coincide with those of their members. Later, institutional growth or survival becomes an end in itself. Even when they do represent their members, large organizations do so only in their members' capacity as members - as distinct from human beings with interests that are longer term and broader than those encompassed by their membership. People outside these bodies suffer, either directly, because the organizations' rules benefit insiders at the expense of outsiders, or less directly, in that people expend a great deal of time and energy trying to become insiders because, largely thanks to big organizations' ways of working, that's the only way to improve one's quality of life. So, for instance, we see large corporations manipulating the regulatory environment to keep out smaller companies.

My own thinking is that of course there must be large organizations - including countries with borders - but they must be made to keep to their principles and so have broader goals than self-perpetuation. Many of our social and environmental goals are the responsibility of the large bureaucracies that, in common with other other large bodies, have self-perpetuation as their ultimate goal. That is why I think Social Policy Bonds could help. Under a bond regime the structure and composition of organizations responsible for achieving our social goals would be constantly changing. The market for the bonds would see to it that the people working for these organizations would be paid according to their efficiency in achieving our goals - which coincide exactly with society's goals. The market for would ensure that only the most efficient approaches to solving our social problems would flourish, and that unsuccessful approaches would be terminated. 

The organizations' structure, composition and all their activities, would be subordinated to the outcomes that we, as a society, want to see achieved. These new types of organization, because of the way the market for Social Policy Bonds work, would always have powerful incentives to achieve our social goals. For all these reasons, Social Policy Bonds mean that we could meaningfully target long-term, urgent, but  hitherto idealistic-sounding goals such as the achievement of world peace.

10 January 2016

No one is in charge

'The Economist' writes:
Global problems are not tackled[,] because governments fail to co-operate; voters get angrier and push their leaders into more nationalistic positions. And it is hard to see things changing this year, with no country likely to take the lead. America will be consumed by its presidential election, Europe by refugees and fear of terrorism, China by its adjustment to slower growth. No one is in charge. Loathe thy neigbour, 'The Economist', 9 January
The column excerpted above is concerned mainly with the refugee crisis and economic problems. But other global concerns come to mind: the impacts of climate change, nuclear proliferation, or military tensions in south-east Asia and elsewhere. These are potentially serious problems that could lead to the death, injury or homelessness of millions of people and have devastating effects on the environnment. Our current political system ensures that those whose lives would be shattered by, say, nuclear war have little sway over how policy is made. There is a huge and widening gap between the concerns of ordinary people and those who make policy. It's not the policymakers who are at fault: it's the system.

Nobody is in charge, as the column says. That's bad enough. But worse is that nobody has an incentive to stop what they're doing at the moment and look for solutions to these global problems. Under the current regime the costs of giving up an income are upfront and certain. The benefits of helping solve global problems are remote and nebulous. International bodies like the United Nations agencies or non-governmental bodies do tackle some large-scale problems, but their efforts are haphazard and the people who work for them are not paid in ways that reward success. Some are corrupt.

Many of us, sensing the inadequacy of humanity's attempts to think globally, fall prey to some ideology that imposes meaning on our predicament. Such ideology can take the form of wishful thinking, at best, or a sort of revenge psychology, at worst. All ideologies, though, are insufficient to solve our global problems, in that they see one or other top-down, uniform and unresponsive mechanism as the solution. These ideologies are mutually incompatible and their leaders mostly corrupt, incompetent or insane. But helpless people facing huge uncertainties will seek reassurance from anybody who promises salvation in this world or the next.

A better policymaking system would help. Social Policy Bonds, issued with the backing of all governments, supplemented by contributions from philanthropists and ordinary people, would articulate people's wishes for a world of peace, reduced poverty, and environmental health, to take three of our most urgent and serious challenges. It would separate the articulation of our wishes from their achievement. People - all people - would be in charge of specifying our broad, global goals. But the achievement of our goals would be in the hands of new types of organization: coalitions of people, government or not, who at any one time would have incentives to find the most efficient solutions to our global problems. These new organizations would take a long-term view, targeting goals that might seem remote and unachievable, but that are necessary for humanity. Goals such as a thirty-year period of nuclear peace, or the reduction of adverse climatic events. The organizations would probably have changing compositions and structures, and would have incentives to co-operate with each other. Their goals would be exactly the same as humanity's. The bond regime would reward them in ways that correlate directly with their efficiency.

The Social Policy Bond mechanism would see to it that market forces would serve humanity as a whole, by allocating our resources - all our resources - where they can do most good. The world needs diverse, adaptive approaches to our global problems. The current system does not and cannot supply them. Social Policy Bonds can.