29 December 2017

What do we actually want?

One reason I don't watch tv programmes about wildlife is given by George Monbiot:
To be aware of the wonder and enchantment of the world, its astonishing creatures and complex interactions, and to be aware simultaneously of the remarkably rapid destruction of almost every living system, is to take on a burden of grief that is almost unbearable. The unseen world, George Monbiot, 28 December
Neither have I read all of Tipping point for planet Earth, which ends:
The world really is poised to roll in one of two different directions. One direction leads us right over an environmental tipping point....The other direction leads to the bright future that our children want, and that we all want. Ending up at that future requires building communication bridges, and enhancing our global awareness, to the point that a critical mass of the global society and world leaders recognises our current environmental problems as real, and begins fixing them before it’s too late. If we can get to that kind of tipping point we’re in good shape, because we’ve already got much of the technology we need, and people are incredibly clever when they’re motivated. Tipping point for planet Earth, Anthony Barnovsky, July 2016
We are all the beneficiaries of a degraded environment. I don't just mean those of us who fly or drive or buy supermarket food. I mean everyone on the planet. By destroying the environment we have allowed a massive increase in the quantity of life, and we ourselves, our lives, are the result. Without past environmental destruction the earth would be supporting far fewer people. Many of us are also beneficiaries in that we enjoy a life of abundant food, good health and material wealth. My point is that any campaign or reframing, must start with recognising that It's not us versus them. We are all 'us'. If we do actually want future generations to face brighter prospects we, the 'critical mass of global society' need to encourage our 'world leaders' to express that goal in some form that will motivate people to do something about it. Statements of intent aren't enough.

To be more pragmatic, I suggest reframing the discussion in terms of explicit, agreed, meaningful, environmental goals. Not, as at present, about rights, processes, activities, or funding of institutions. Broad goals that are meaningful to all of us, such as reductions in the levels of pollution of our air and water, or so that instead of trying to monitor and pin down polluters of our air and water, we'd agree on and target the quality of our air and water. Instead of trying to target the average planetary temperature, we'd target for reduction the harm done (to humans, animals and plants) by adverse climatic events. These are goals that mean something to everyone and there is more consensus over what we need than about how to get there. Talking about outcomes makes trade-offs clearer, and brings more participation and buy-in into environmental policy. My piece on Environmental Policy Bonds goes into more detail and discusses how we can use the market's incentives and efficiencies to achieve environmental goals. (I've also written about climate change.) Efficiency is part of it, but the first step, which we have not taken, is to articulate and reward the achievement of agreed, explicit and meaningful goals.

18 December 2017

Planet to government: humility required

Helena Bottemiller Evich writes about research done by Irakli Loladze on the effects of a changing atmosphere on the nutritional content of plants: 
“Every leaf and every grass blade on earth makes more and more sugars as CO2 levels keep rising,” Loladze said. “We are witnessing the greatest injection of carbohydrates into the biosphere in human history―[an] injection that dilutes other nutrients in our food supply.” ... Within the category of plants known as “C3”―which includes approximately 95 percent of plant species on earth, including ones we eat like wheat, rice, barley and potatoes―elevated CO2 has been shown to drive down important minerals like calcium, potassium, zinc and iron. The great nutrient collapse, Helena Bottemiller Evich, 'Politico' 13 September
The loss seems to be of the order of 8 percent or less, but the implications for humans and for the species that eat and pollinate these plants are uncertain. (See here for a spirited debate.) Policymakers prefer to focus on variables that they can influence or control. In agriculture, the focus has been on yields: that is, the mass of crops per unit of land area. Many governments have funded agricultural extension and research institutes with the main aim of maximising yields. Reasons for this are understandable; memories of wartime shortages, for instance. For yields, cause and effect are relatively easy to identify, as are the effects of time lags. There are costs, though, which take the form of depleted soil, polluted water (pdf), loss of wildlife habitat and, as we see, nutrient depletion.

What does this have to do with social policy, or with Social Policy Bonds? Simply this: Social Policy Bonds would change policymakers' focus from things that they can influence, to problems that society wants to solve. So, rather than simply aim to maximise food production, for instance, we'd focus on improving society's health, broadly defined. If nutrient depletion worsens society's health, its effects would be captured by components of our targeted health goal including, probably, Quality Adjusted Life Years, infant mortality and longevity. It would be up to bondholders, motivated to find the most efficient ways of achieving our health goal, to work out whether, and how, to deal with nutrient depletion. No government, no single organisation, the way policy is made now, has the incentive or the capacity to address problems that we do not fully understand, using science that is inescapably out of date. Our social and physical environments are too complicated for any government to understand. Instead, they should be looking at desirable social and environmental outcomes, and setting up a system that motivates people to achieve them. If they use Social Policy Bonds, they'd be doing that, and injecting the market's incentives and efficiencies into all the stages necessary to achieve those outcomes. Focusing on any particular variable, whether it be greenhouse gas emissions, numbers of smokers, or hospital waiting times - or crop yields - just isn't good enough any more.

For more about Social Policy Bonds see here. For more about how the Social Policy Bond concept can be applied to health see here. For my views on agricultural policy see here and here.

16 December 2017

The Collapse of Complex Societies

Clay Shirky writes about Joseph Tainter's 1988 book The Collapse of Complex Societies
One of the interesting questions about Tainter’s thesis is whether markets and democracy, the core mechanisms of the modern world, will let us avoid complexity-driven collapse, by keeping any one group of elites from seizing unbroken control. This is, as Tainter notes in his book, an open question. There is, however, one element of complex society into which neither markets nor democracy reach—bureaucracy.even when moderate adjustments could be made, they tend to be resisted, because any simplification discomfits elites. Clay Shirky, The Collapse of Complex Business Models, April 2010 (?)
In my view, these elites include the bureaucrats themselves. As Mr Shirky writes: "In a bureaucracy, it’s easier to make a process more complex than to make it simpler, and easier to create a new burden than kill an old one." There are too many powerful people with an interest in maintaining the complex way we do things. This includes policymaking. It suits vested interests to keep it complex and arcane, so that only they or, more likely, their paid agents, can follow and influence it.

Social Policy Bonds would simplify policymaking because policy goals would be expressed in terms that ordinary people can understand. Goals would be explicit, transparent and meaningful to ordinary citizens, who could then engage in the policymaking process. If Trainter's thesis is correct, it might well be the complexity of our politics that precipitates societal collapse: too few of us understand it, so we have very little buy-in to the process and its institutions. In the west we are seeing the result of this lack of buy-in: extreme polarisation, whereby different views are barely tolerated. Yet buy-in is going to be essential if we are to face up to urgent, huge challenges facing all of us: climate change for instance, or nuclear proliferation.

Social Policy Bonds could help remove unnecessary complexity further down the track, when it comes to solving our social problems. Under a bond regime, inefficient operators would be penalised - whoever they are - and only efficient approaches would receive funds. It would be the self-interest of bondholders that would ensure this: their goal would be exactly congruent with those of society: to achieve our social goals as efficiently as possible. There might still be complexity in achieving these goals, but only if it boosted efficiency. The contrast with today's system, in which complexity is almost a deliberate ploy to deter scrutiny, would be total.

07 December 2017

Free market? Don't believe it

There's a lot of lip service paid to the notion of the free market, as if competition, at least over the long run, will lead to economic efficiency. There are many problems with this. The biggest, in my view, is that we now have political systems that not only entrench wealth and income inequalities, they extend them. This seems to be an almost worldwide phenomenon. Our governments and big business now act as a coalition, very often acting against the interests of ordinary people and small businesses. Inequality on a staggering scale is both the result of policies favouring the rich, and the stimulus to more of them.
Take this excerpt from a review of The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality, by Brink Lindsey and Steven Teles, discussing the US economy:
Of the firms that enjoyed returns on invested capital of 25% or more in 2003, 85% were still earning returns that high a decade later. The authors put forward four case studies to illustrate the choking spread of rent-seeking behaviour. Implicit and explicit government subsidies to the financial industry enrich bankers and sow the seeds of crisis, for example, but have done little to boost growth. Increasingly strong intellectual-property protections have not unleashed a torrent of new ideas, but have instead swelled the earnings of top firms, which wield their patents and copyrights menacingly at would-be innovators. The cost to negotiate reams of licence agreements, and the risk of lawsuits, can stymie the most determined of entrepreneurs. Analyses of occupational licensing and land-use rules turn up similarly skewed policies: they benefit those already on top at the expense of society as a whole. How America’s economy is rigged by special interests, the 'Economist', 2 December
Having been involved in agriculture, I have seen how corrupt, insane policies can persist for decades. More important than their benefiting bureaucrats and fraudsters, is that they enrich people and corporations sufficiently to finance opposition to their being withdrawn. No trick is too low. I think much of the reason for the persistence of profligate policies like agricultural subsidy programmes, and those competition-stifling regulatory barriers described above, is that our policymaking process is too protracted and complex for ordinary people to follow unless, of course, they are paid to do so.

One of the benefits of Social Policy Bonds is that they would define explicit, transparent policy goals that are meaningful to ordinary people. This would make the policymaking process itself more accessible. And when people understand what a policy is all about, we can participate more in its development, refinement, and implementation. We should also better understand the limitations and trade-offs that are intrinsic to public policymaking when resources are limited – as they always are. A hugely important benefit arising from this will be buy-in: having been consulted when our social goals are being formulated, we are more likely to participate in achieving them. The widening gap between politicians and the citizens they are supposed to represent would begin to close. Bondholders and their paid agents would experiment with different approaches to solving our social and environmental problems and, no doubt, they will try some that are useless or worse. But - unlike in today's policymaking world, with its entrenched interests - they will have every incentive to terminate their failures. We'd still need regulation and licensing, but they would be means to ends that are wanted by ordinary people, not corporations and other powerful interests.