Environmental goals need diverse, adaptive approaches

David Lauterwasser writes:

Free energy is nowhere around the corner, neither is truly sustainable energy.  Solar panels are made from sand, which is running out. The production of photovoltaic plates for solar panels requires tremendous amounts of energy, involves the excessive use of highly toxic chemicals and creates vast amounts of waste products such as silicon tetrachloride (three to four tons of which are produced for every ton of the desired polysilicon), which forms hydrochloric acid upon contact with water, is often casually dumped somewhere and already devastated landscapes in China. The Collapse of Global Civilization Has Begun, David B Lauterwasser, 'Medium', 14 November 2017

The life-cycle assessments required to establish the environmental benefits or otherwise of shifts in our behaviour are bedevilled by boundary issues, measurement difficulties, and the difficulty of weighing one type of environmental impact against another. They are better than blandly assuming that rail is ‘better’ than air travel, that solar power is better than coal-fired power stations but, for the making of robust policy, they would need to be continually reassessed in the light of our ever-expanding knowledge of the environment and our ever-changing environmental priorities. Government policy cannot be so responsive: if government did use life-cycle analyses with the aim of altering our behaviour, it would probably do so on the basis of one-time, necessarily limited, and possibly quite subjective assessments of environmental costs and benefits. It wouldn't be good enough, but even worse would be what we have now: environmental policy largely dicated by corporate interests, with attempts to mitigate disasters that are fast-moving and visual enough to make the television news.

Social Policy Bonds would take a different approach. They would subordinate environmental policy to targeted environmental outcomes. It might be, for instance, that society wishes to reduce its use of fossil fuels. A Social Policy Bond issue that rewarded achievement of such a reduction would generate incentives for bondholders to bring it about at least cost. They might well carry out life-cycle analyses in their attempt to do so. But there is an important difference between the way do they would conduct their research and the way government would do so: bondholders have incentives to achieve their goal efficiently. This is likely to mean responding to and stimulating: increased knowledge of scientific relationships, and technical advances.

A single environmental goal, such as reduction in fossil fuel use, entails diverse, adaptive responses. These are precisely the sort of responses that government does very badly. Government can and should articulate society’s environmental goals, and can raise the revenue required to pay for their achievement: in the democratic countries it performs these functions quite well. But actually achieving these goals requires continuous, well-informed and impartial decisions to be made about the allocation of scarce resources. These, government does badly. For that purpose, the Social Policy Bond principle as applied to the environment, with their incentives to achieve targeted outcomes efficiently would, I believe, be far better than the current haphazard, one-size-fits-all approach.

Wanted: humble billionaires

Most of our chronic social and environmental problems don't have simple solutions. Governments, though, are reluctant to relinquish power and therefore keen to control the funds and institutions whose ostensible purpose is to solve our problems - even when these bodies are manifestly overwhelmed, incompetent, or corrupt. It shouldn't be surprising that politicians, whose lifetime ambition has been to accumulate power, behave like this. It's a bit more surprising that billionaires are subject to the same conceit: 

Tech billionaires from Mark Zuckerberg to Bill Gates have done impressive philanthropic work, but they have both applied their hubris and their cash to failed efforts to try to reform education in America. It turns out that being great at computer software doesn't necessarily make you great in other areas. ...

Memo to tech billionaires: Just because you solved one problem with a simple solution doesn't mean all problems have simple solutions. Let's continue to register our displeasure with tech titans when they show their arrogance, and let's be a little more skeptical when they want to reinvent everything from food to space travel. Stop worshipping guys like Elon Musk, David R Wheeler, CNN, 17 July

So it seems that those who have power or money, having achieved their personal goals, think they are the people best placed to achieve society's goals. Social Policy Bonds are a means by which government or billionaires could both articulate society's wishes and channel funds into satisfying those wishes, without actually doing the work themselves. They could, instead, reward the achievement of our goals, without dictating who shall achieve them nor how they shall be achieved. They would still have the power to articulate these goals and to raise, or spend, the revenue required for their achievement - things that they are good at. But, under a bond regime, they would relinquish the control over how these goals are to be achieved. That would be difficult for politicians or billionaires to accept. But the stakes are high: our social and environmental challenges are too big and too urgent to be left to to those whose expertise lies solely, it seems, in the accumulation of power or money.

We need diverse, adaptive solutions, with time horizons longer than those of individual lifetimes. As a species, we now have massive potential to solve those problems that have bedevilled mankind for millennia: war, for instance, poverty, illiteracy, disease. Social Policy Bonds are a means by which we could motivate people toward solving these problems. Governments aren't likely to be the first to issue them. They owe too much to existing career paths, methods, and institutions. But billionaires? They could be more amenable to persuasion. They want to see the right thing done. All it would take is a bit of humility on their part so that they don't feel they have to be the ones doing it.

Solitudinem fecerunt consilium canis cibum*

Douglas Rushkoff, after chatting to 'five super-wealthy guys — yes, all men — from the upper echelon of the hedge fund world', fills us in on their priorities:

they were preparing for a digital future that had a whole lot less to do with making the world a better place than it did with transcending the human condition altogether and insulating themselves from a very real and present danger of climate change, rising sea levels, mass migrations, global pandemics, nativist panic, and resource depletion. For them, the future of technology is really about just one thing: escape. Survival of the Richest, Douglas Rushkoff, 5 July

It's an unedifying picture. Would it look any different if a coalition of governments, non-governmental organisations, philanthropists, and the public backed Social Policy Bonds, aimed at solving our global problems?  It might just be that our current policymaking systems are so obviously inadequate that even those of us not wealthy enough to contemplate escape are so resigned or distracted that we remain passive when confronted by an array of potentially calamitous social and environmental problems. Perhaps a more coherent, well-financed, range of policy goals would encourage the super-rich to solve our problems rather than attempt to escape them, and enable more of the rest of us to be employed in such solutions, rather than in devising ingenious ways of advertising dog food. Possibly not, but isn't it worth a try?

*The Latin, according to Google Translate, for They make a desert and advertise dog food

Target world peace actively, explicitly

John Lanchester quotes Adam Smith:

‘Commerce and manufactures gradually introduced order and good government, and with them, the liberty and security of individuals, among the inhabitants of the country, who had before lived almost in a continual state of war with their neighbours and of servile dependency on their superiors. This, though that has been the least observed, is by far the most important of all their effects.’ After the Fall, John Lanchester, 'London Review of Books', dated 5 July

Mr Lanchester doubts that this still applies: 'elites seem to have moved from defending capitalism on moral grounds to defending it on the grounds of realism. They say: this is just the way the world works,' and then writes cogently and readably about the crash of 2008, subsequent policy changes, and inequality. My focus here though is on the Adam Smith's point: "So according to the godfather of economics, ‘by far the most important of all the effects’ of commerce is its benign impact on wider society."

Francis Fukuyama pointed out that, once you have a common agreement to engage in voluntary, good-faith transactions, people engaging in market transactions can be highly individualistic and do not even need to like each other. It's hard to disagree, but trade, and especially international trade, can be disrupted by politics, with rancorous results. So here's my question: instead of relying on a highly politicised world trading system to achieve peace between countries, why not reward people directly for achieving peace? Perhaps it's because we believe at some level, like the ancient Greeks, that war is part of the natural order of things, so there's no point trying to do anything about it. Or perhaps it's because we think that bodies like the United Nations will succeed in bringing about world peace. Or it could be because our politicians and bureaucrats, and many of the rest of us, don't think there's much point looking too far ahead; and achieving a sustained period of world peace, by any definition, is going to be a long-term undertaking.

Which is where the Social Policy Bond principle applied to violent political conflict, can play a role. No single way of stopping war will work. We therefore need to encourage diverse, adaptive solutions, including feedback mechanisms that ensure that promising approaches are encouraged and, crucially, that failing approaches are terminated. It's unlikely that existing organisations, however well resourced, however well meaning, could do this, even if they had proper incentives. Organisations have their own objectives, of which the over-riding one is self-perpetuation; they have few incentives to be imaginative in their approaches to social problems. What is needed are highly motivated new organisations, whose goals are exactly congruent with society’s. Under a Conflict Reduction Bond regime these organisations might not have a stable structure, nor a stable composition, but their societally defined goal would be stable: a sustained period of peace would be the raison d’etre of such organisations. Their rewards would be inextricably tied to their achieving it. Conflict Reduction Bonds would be redeemable only when absence of conflict had been sustained for a defined period. These bonds would contract the achievement of peace to the market, instead of to the inevitably poorly-resourced, distracted or corrupted bureaucracies that are currently charged with the task. Peace, then, would not be an incidental side-effect of commerce and an ever more rickety world trading system, but the direct, targeted, explicitly rewarded a goal for highly motivated coalitions and their agents.