[E]conomics in the 20th Century “lost the desire to articulate its goals.” It aspired to be a science of human behaviour: a science based on a deeply flawed portrait of humanity. The dominant model – “rational economic man”, self-interested, isolated, calculating – says more about the nature of economists than it does about other humans. The loss of an explicit objective allowed the discipline to be captured by a proxy goal: endless growth. Circle of life, George Monbiot, 13 AprilI've inveighed for years against the de facto goal of governments everywhere which, in the absence of clear, explicit goals, has become economic growth, expressed as the rate of increase of Gross Domestic Product, or GDP per capita. The grievous effects of this mistargeting on income and wealth distribution, the environment, and much else, are now becoming apparent. More recently, I've asked What are economists for? Governments as well as economists have lost their way. As Raworth says, they do not think in terms of explicit goals that are meaningful to ordinary people. They are pre-occupied with process and complexity:
The Dodd-Frank bill, like Obamacare, is tyranny by complexity. Consider the Glass-Steagall Act, at 37 pages in length, and the 2,319-page monstrosity of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Charles Hugh Smith, 6 AprilThe only people who follow and understand our policymaking system are those politicians, bureaucrats, academics, lawyers and lobbyists who receive monetary rewards, sometimes vast, for doing so. The 'rational economic man' just happens to be the person who, in our sad attempts to purchase things that used to be supplied by the commons, maximises economic activity: that is, GDP. I think most people now see the flaws in targeting GDP as if it were an end in itself, but we are less united over what to do about it. My suggestion is that we start to express our policy goals in terms of broad, verifiable, explicit outcomes that are meaningful to ordinary people. Social Policy Bonds could do this, and inject the market's incentives and efficiencies into the achievement of those outcomes.
Under a Social Policy Bond regime, governments could still do what they are good at: raising revenue to achieve our social and environmental goals. And, though it would be a departure for most of them, they could learn to articulate these goals, as expressed and debated by the people they are supposed to represent. They could even, through government-financed bodies, help achieve these goals, but only if, through the Social Policy Bond mechanism, bondholders have confidence in their ability to do so more efficiently than other investors in the bonds. The current model which as Raworth points out, is dominant - that of 'rational economic man' - assumes and entrenches a paradigm that undervalues and often conflicts with community, the environment, small enterprises, and ordinary people's mental well-being. The short-term interests, as measured by accountants, of large organisations, both public- and private-sector, are privileged at the expense of the the rest of us. Social Policy Bonds would change that, right from the start, by posing the question that we cannot continue to evade: what are governments for?