What drives policy? And what should drive policy? Two entirely separate questions. What actually drives policy today is largely emotion, which seems to be supplanting other policy drivers, and is easily manipulated by large private- and public-sector bodies. Society is growing ever more complex as are the relationships between cause and effect in social and environmental policy. Emotion is easier to communicate and exploit than a rigorous accounting of which policies work and which don't. But as a policy driver emotion has obvious faults. It's far too easy to subvert for mercenary and more sinister ends.
I'd much prefer to see meaningful
outcomes drive policy. These could bypass the complexities of our
economy and society, so they would berelatively easy for non-specialists to understand. It's far
simpler, say, to aim to reduce violent crime, or climate change, than it is to
make a case for (say) subsidising leisure centres for youths or urging
poor countries to stop building coal-fired power stations. These actions, at some point in time,
might be necessary and efficient, but that should be an open question: one to be answered by informed and motivated investors, rather than remote, cumbersome, corruptible and
monolithic central government.
Which is where Social Policy Bonds would enter the picture. One of the benefits of a bond regime is to bring transparency and stability into the policymaking process. Framing policy decisions
in terms of costed outcomes would be an inescapable first step. Currently
policymakers can - indeed must - express their decisions as vague, noble-sounding declarations of intent, backed up by funding programmes for favoured
bodies, be they government agencies or other interest groups. As Milton Friedman said: “one of the great mistakes is to judge policies and programs by
their intentions rather than their results”. (I would insert 'stated', before 'intentions' here.) Issuers of
Social Policy Bonds, would in contrast, have to be explicit about their
objectives: transparency and accountability are built into a bond
regime, as surely as they are excluded from the current policymaking
apparatus. as well as more efficient goal-achievement, formulating policy in terms of meaningful outcomes would generate more buy-in - something that we urgently need as the gap between citizens and the politicians they are supposed to represent is in danger of becoming unbridgeable.