13 June 2019

Climate change: do we care?

Do we care about climate change? We know that some do, passionately, and most of us, if asked, will say we do. But the evidence is clear that our collective, honest, answer to the question Do we care about the threat of climate change? is a resounding no, not really. Despite innumerable high-level conferences, apocalyptic rhetoric, doom-laden prognostications and worthy-sounding declarations, what have we actually achieved?

David Wallace-Wells tells it like it is:

The Kyoto Protocol achieved, practically, nothing; in the twenty years since, despite all of our climate advocacy and legislation and progress on green energy, we have produced more emissions than in the twenty years before.

Recent headlines confirm this:

·        Faking it on climate change;

·        UK is failing to meet almost all of its climate action targets;

·        Accept people don’t, and may never, give a toss about climate change.

Why, if climate change is likely to be as catastrophic as the scientific consensus paints it, are we so reluctant to do anything about it?

One answer is that the issue is so politicised that changing your mind on the issue is seen as a sign of weakness.

The other answer, though, is a bit more subtle. Science appears to tell us that it’s our emissions of carbon dioxide and other greenhouse gases that are causing changes in the climate, and accompanying changes like rising sea levels. Accordingly, these emissions have been the focus of our climate change policy, to minimal effect.

It’s not working, because:

1.   the science is not convincing,

2.   our goal is not really to stop the climate changing, so we have very little buy-in, and

3.   focusing on the alleged root cause might not be the best way of achieving what we actually want to achieve.

Not convincing

When I say the science isn’t convincing, that’s not my personal opinion. I mean that the science is literally unconvincing. It’s not convincing most of us to allocate our scarce resources into solving a problem that could well be catastrophic but, the way it’s formulated, requires big upfront costs for uncertain gains that that will probably be nugatory, slow to materialise, and whose provenance will never be able to be confidently attributed to past sacrifices.

No buy-in

The way it’s formulated. To solve this potentially calamitous problem, requiring spending huge sums now, we need buy-in. Saying that the problem is to do with the composition of the atmosphere might be accurate, but neither the proportion of greenhouse gases in the atmosphere, nor the average rise in our planet’s temperature have meaning for ordinary people; you know, the vast majority of the human population who have more pressing concerns, but whose backing for the huge task ahead is critical. Limiting the Earth’s rise in temperature to two degrees Celsius, or reducing the level of carbon dioxide to 350 parts per million: these are not goals with which ordinary people can identify. They are abstractions. They are means to ends, and we’d do better to decide exactly what ends we want to achieve and aim to achieve them.

Our problem is not the composition of the atmosphere nor the planetary temperature: it’s adverse climatic events, however they are caused, and their impact on human, animal and plant life. That is how the problem should be formulated to generate popular support for policies addressing climate change. There's no good scientific or moral reason for a policy that prioritises the adverse impacts possibly attributable to man over those caused by nature. It doesn’t matter whether the floods, hurricanes or rising sea levels that kill people or make them homeless are caused by man-made contributions to carbon dioxide levels in the atmosphere or anything else. We should aim to reduce the impacts of adverse climatic events on ourselves and our environment rather than what current - or rather, 1990s - science tells us is its most likely cause.

Tackle the symptoms as well as the cause

We waste a lot of energy trying to identify the root causes of social and environmental problems when it might be more efficient to address the symptoms. Even when we do know the root cause of a problem, getting rid of it isn’t always the best way to go. Take a weather-related example: people with vitamin D deficiency in northern latitudes. The root cause is readily identifiable: lack of exposure to the sun’s rays. But the solution isn’t to shoot laser beams upwards on overcast days to vaporise the cloud layer. In this instance, at least, we do the sensible thing and dispense vitamin D tablets. Often it’s best to tackle symptoms and causes simultaneously, which is how we approach most serious health problems. With climate change we think we know that greenhouse gas emissions are the culprit. It is scientifically plausible, but not certain. It is even less certain that we have correctly identified all the greenhouse gases, and correctly weighted the ones we can directly control according to their long-term impact on the climate. And it's not at all certain that reducing these emissions will stop the climate changing. We’ve staked so much on trying to identify and deal with greenhouse gas emissions that we have lost sight of what should be our priority, which is to look after our environment, rather than try to stop the climate changing. It’s a serious distraction. Our almost obsessional focus on greenhouse gases led the UK to cut the duty on diesel fuel, which emits less CO2 than petrol but more nitrogen oxides and particulates. This switch contributed to 12 000 premature deaths in the UK attributable to nitrogen dioxide emissions. We seem now to be considering a similarly indirect and demented approach – this time on a global scale – by taking geoengineering seriously.

Outcomes versus root causes

In summary: trying to identify and eradicate the root causes of adverse environmental impacts might not be the best way of preventing them. With climate change, it's (currently) impossible to persuade enough people that cutting back greenhouse gas emissions is going to make an appreciable difference to their quality of life or that of the environment. Focusing on the supposed root causes serves, at best, as an excuse for inaction; at worst, as a distraction from, or cause of, serious environmental problems. And we need to be clear that even if we can show that greenhouse gases are the root cause of adverse climatic events, cutting emissions might not be the best way of solving that problem. Scientists, politicians and bureaucrats talk endlessly about degrees Celsius, parts per million, climate models and scenarios. They should be talking instead about the actual, current impacts of adverse climatic events on human, animal and plant life.

03 June 2019

Kicking the (nuclear) can down the road

Sometimes we can achieve a short-term goal only by worsening prospects for the long term. Kicking the can down the road, in other words. It's something we may be doing when it comes to peace:
[I]t’s the same with [Steven] Pinker and war. 2011’s Better Angels of Our Nature argued that violence had been in decline steadily and we are now living in an unprecedented era of peace and prosperity. It was an absurd book, because it required readers to treat our own era, when thousands of nuclear weapons are stationed around the world ready to be fired, as “peaceful.” This is like saying that if somebody puts a gun to your head, they are being “nonviolent” until they actually fire it. A “Mexican standoff” is “peace” in the Pinker sense. The world's most annoying man, Nathan J Robinson, 'Current Affairs', 29 May
We can't say whether the nuclear weapons deployed over recent decades have increased or decreased the probability of a catastrophic nuclear exchange. But for me the more important question is how do we best ensure nuclear peace now and in the future? At first glance, current trends are encouraging:
The good news is that, as poverty has receded worldwide, the proportion of humankind who die in wars and civil strife has fallen sharply, from nearly four per 100,000 each year in the 1980s to less than one in the past decade. How to think about global warming and war, the 'Economist', 23 May
I wouldn't link poverty with war so unambiguously: there's no proof that poverty leads to war, and we don't really know why war and civil strife have declined, nor anything about whether it will continue to decline, whatever happens to poverty. Again, though, the question is how to ensure that the benign trend continues. It's quite possible that some proportion of the world's nuclear weapons stockpile will be used any time now, and the potential for catastrophic war doesn't seem to have diminished. It's quite possible, as many believe, that piling up nuclear weapons did ensure the peace (for a while). It's also quite possible that these weapons will be used, to catastrophic effect, some time soon. Indeed, the period of 'peace' might in future be seen as nothing more than a period of re-armanent or proliferation: a period during which a future war became more likely and more deadly. We simply don't know.

Conflict reduction makes an ideal application for the Social Policy Bond idea because ending war is one of those complex social goals whose causes (1) cannot be reliably identified, (2) vary considerably according to region, and (3) change with time. But the holders of Conflict Reduction Bonds wouldn't need to go about trying to find and address war's supposed root causes. Their goal would be to keep the peace, by whatever means are most cost-effective. Sometimes, in some places, it might be most efficient to try to identify root causes. Sometimes, in some places, it might be best to reduce the number of weapons in the protagonists' arsenals; in other circumstances it might be better to increase the number of weapons. As with many of our social and environmental ills, we need a mix of diverse, adaptive solutions: exactly the sort of solutions that don't come easily to governments or supra-national bodies like the United Nations. It doesn't help that the employees of these bodies aren't rewarded in ways that encourage long-term success in their peace-keeping mission. We need to be rewarding a sustained period of peace, so that short-term peace is not achieved by kicking the can down the road.

The past few decades have seen a heartening reduction in conflict. But have they merely been the prelude to a catastrophic global conflict? Conflict Reduction Bonds that reward a period of nuclear peace sustained for several decades would put in place a system of incentives that would channel our resources and ingenuity into achieving what must surely be one of our most important goals: the removal of the threat of nuclear catastrophe. 

27 May 2019

Buy-in vs big government

Making policy is very much like thinking, in that it’s limited by the way it abstracts from reality the finite range of facts available to it. For makers of policy whose remit covers more than a family, clan, tribe or village, this should be a lesson in humility, because policymaking for large numbers of people inevitably entails the use of quantifiable data. Such data are equivalent, at the level of the individual, to our thoughts. Either way, they are extremely limited; what our minds can grasp, articulate and work on do not describe reality. They are individual facts, selectively taken from memory or, when making policy, aggregated, quantifiable information. Unfortunately, as the saying has it, ‘if the only tool you’ve got is a hammer, you’re going to see every problem as a nail’. And the only policymaking tool we have is our intellect backed up, sometimes, by statistics, themselves often contentious.

In the individual our thoughts have not (yet) completely crowded out our insight. We know, most of us, at some level, that our well-being is not defined by a set of discrete quantifiable circumstances, but is rather a state of mind, which we’d find very difficult to describe using the limited vocabulary of whatever language we speak.

Policymaking though is in a more parlous state; at the national and super-national levels anyway. For a start, it cannot interpret unprecedented threats, such as climate change or nuclear proliferation, in any but its own terms: that is, things to be negotiated, dealt with through the political process by existing institutional structures or new ones modelled on them. It cannot see social well-being as anything other than aggregated targets, with maximum Gross Domestic Product (or GDP per capita) as the target above all others. But GDP is grotesquely flawed for that purpose, and most other numerical goals are hardly more reliable indicators of social welfare. There are quantifiable measures that do correlate fairly strongly with meaningful social goals, but these tend to be at the lower levels of wealth, income, nutrition or education. At these levels, quantifiable increases do generate real, meaningful rises in opportunity and welfare.

But government has expanded far beyond helping the disadvantaged. It’s expanded into areas where its reliance on aggregated data is not only leading it awry, but into activities that crowd out the more adaptive, responsive and responsible instincts of real people. At the same time, the planet is confronted with challenges, such as climate change and nuclear proliferation, that government cannot meet. Most of the population is now so used to handing over responsibility to a large and remote public sector that we think that government will solve such problems. Or we think that if government cannot solve them, they cannot be solved. The remarkable ability of humans to adapt and survive, our prodigious energy and ingenuity, is stunted, or channelled into cynicism, despair or such flippant, but lucrative, pursuits such as the marketing of dog food, where the goals are immediate, identifiable and no threat to the existing order.

There is a widening gap between government and the people it’s supposed to represent. It wouldn’t matter very much of the public sector were small, and satisfied to remain so, and if real people controlled their own destiny. But the public sector is none of those things. It’s big, remote and intrusive, and it’s failing to meet our most urgent challenges. This combination could mean calamity, not just for millions, or hundreds of millions of human beings, but for the entire planet. 

Social Policy Bonds could help close the ever widening gap between politicians and people. By targeting social and environmental goals, rather than the supposed means of achieving them, they could bring ordinary people into the policymaking process. Ends are meaningful; means are not, especially when they are (deliberately?) obscured by complex, arcane and protracted policymaking processes. By focusing on ends we should be clarifying exactly what we want to achieves. But perhaps more important than clarity and even their advantages of greater efficiency, transparency and policy stability over time, Social Policy Bonds would generate buy-in. By participating in making policy, people would be more readily accepting of the trade-offs that are inescapable when choosing which social and environmental goals should have priority.

15 May 2019

Transcending narrative

We waste a lot of energy trying to identify the root causes of social and environmental problems; energy that would be better spent trying to solve those problems. With climate change we think we know that greenhouse gas emissions are the culprit: it's scientifically plausible, but not certain. It is even less certain that we have correctly identified all the greenhouse gases, and correctly weighted them according to their long-term impact on the climate. And it's even less certain that reducing these emissions will stop climate change or reduce its negative impacts. (And which of those options do we actually want?) This uncertainty, or the appearance of uncertainty, is probably the reason that, despite years of apocalyptic rhetoric, high-profile conferences, celebrity calls to action and all the rest, nothing has been done to curb greenhouse gas emissions. I quote myself:
We can, though, be more certain about whether we really care about the threat of climate change. And the answer is a resounding: not really. Lots of conferences, exhortations, subsidies for renewables (though not as many as for fossil fuels - see below), stirring rhetoric and doom-laden prognostications. Some change? Sure, at the margins. But meaningful results? No, no, no.
We'd get more traction, I believe if, instead of focusing on what probably are, but might not be the causes of climate change, we clarify exactly what we want to achieve in regards to the climate and its effects, and then reward people who achieve it.

Trying to identify root causes is at least as dangerous when we're talking about human conflict. After a several chapters on the structure of the mammalian brain, Professor Alex Rosenberg sums up:
If the historical record is anything more than a chronology, it’s not verifiable. It’s wrong. And wrong in the most dangerous way, the way pretty much guaranteed to ensure that the mayhem of the last 5,000 years of recorded history will continue into the future. Narrative history is not verifiable because it attributes causal responsibility for the historical record to factors inaccessible to the historian. And they’re inaccessible because they don’t exist. The causal factors narrative history invokes—the contentful beliefs and desires that are supposed to drive human actions—have all the reality of phlogiston or epicycles. So narrative history, even at its best, is just wrong about almost everything besides the chronologies it reports. How History Gets Things Wrong, Alex Rosenberg, October 2018
More succinctly: 
By and large, the historian will get the kind of facts he wants. History means interpretation. EH Carr, quoted in History according to EH Carr, Helen Carr, 'New Statesman', 8 May
So what does all this mean? This: trying to identify the root causes of a social or environmental problem might not be helpful. With climate change, it's (currently) impossible to identify the root causes sufficiently to convince enough people to solve the problem. The lack of obvious root causes serves as an excuse for inaction. It's possible also that even if we can correctly and apodictically remove root causes, doing so might not be the best way of solving a problem.

In the social sphere the real or spurious identification of root causes is even more dangerous. The debates never end. Clair Wills writes about Northern Ireland:
Who began the killing? At root, arguments about the genesis of the Troubles are arguments about responsibility for murder, and that’s one reason it has proved so hard to disentangle history from blame in accounts of Northern Ireland since the late 1960s. No Waverers Allowed, Clair Wills, 'London Review of Books', dated 23 May
How about we take another seemingly intractable goal - Middle East Peace - and let a coalition of motivated investors decide whether or not trying to identify root causes is the most efficient way of achieving it. Our current political systems fail to do that, but Social Policy Bonds could succeed where they fail

Issuers of Social Policy Bonds targeting peace in the Middle East would first have to define what they mean by peace. They could do this in consultation with politicians, technical experts and, crucially, ordinary people. Once achieved, peace should be sustained for a period of, say thirty years. Because Social Policy Bonds are tradeable, holders would benefit by doing what they can to achieve such a long-term goal, then selling their bonds  once they have seen their value rise as a result of their efforts. The investors in the bonds would all be animated by the fact that the important thing is to solve the problem of conflict in the Middle East - and not to try to work out how it started.

In general, it might be a good idea to look for root causes of social or environmental problems, but it might be more efficient - and generate more buy-in - instead to aim directly for the outcome. Trying to understand fully the relationships between cause and effect may be a waste of time, or actually delay and impede the achievement of our social and environmental goals. Outcomes are more important and less inflammatory than history, whether we are talking about dealing with climate change or ending war. Social Policy Bonds would focus all of our attention and ingenuity on achieving our goals and less on what policymaking today seems to be all about: blaming the other side.

06 May 2019

Make them tradeable

I've explained why I don't like Social Impact Bonds and it turns out that, ten years after the issue of the first SIB - Peterborough Social Impact Bond - others don't either.
Professor James W Williams, in a report he summarises here, looks at the record of SIBs in Canada, the UK, and the US. 
[A]lthough SIBs promise a win-win-win scenario in which providers, government, and investors all benefit, in practice the circumstances in which this alignment of interests is possible (what respondents described as the “SIB sweet spot”) are much more limited than is often acknowledged. In practice, the interests of these groups have been difficult to align with many prospective projects foundering between feasibility and execution. From visions of promise to signs of struggle: social impact bonds in Canada, the US, and UK, James W Williams, 2 May
The key, I think, is that the issuers of SIBs nominate the providers, who are generally the current providers, and whose identity will not change during the lifetime of the bonds. Crucially, SIBs aren't tradeable, so the set goals are short term, and providers can profit only if they become more efficient during the short time period before the bonds' term expires. They cannot profit by realising any appreciation in the value of their SIBs before the bonds expire. Making the bonds tradeable, as I have argued here, would greatly enhance the range of social problems that we can solve, and would do so partly because it would allow new providers, who think they will be more efficient than current providers, to buy the bonds and benefit from their greater efficiency. Competition for the bonds in an open market would ensure that all providers would be kept on their toes: would-be investors in the bonds who think they can be more efficient would bid more for the bonds than they are worth to current holders, and get a chance to prove, and benefit from, their greater efficiency.

Social Policy Bonds are, essentially, tradeable SIBs. A Social Policy Bond regime would not assume that the best achievers of social goals are the current providers - a fatal assumption, in my view and one that, as well as restricting the value of the bonds, makes them liable to gaming and manipulation.

Professor Williams allows that "SIBs could be reserved for testing programs that are truly innovative and preventative in nature with an emphasis on systems-level change." They could, in other words, be a way of rewarding successful innovative approaches that can scale up. I would say, though, that the scope for innovation would still be constrained by the short time horizons built into the SIB mechanism. So I agree with Professor Williams' conclusion that "SIBs are, and are likely to remain, a relatively small, niche market."

Another recent paper for, as far as I can tell, different reasons, is even less enthusiastic. It concludes:
We do not think that [SIBs] can facilitate the maintenance and development of public services that meet society’s needs, particularly the needs of its vulnerable members. In Finance and the Good Society, Nobel laureate Robert Shiller (2012) argues that “we need more financial innovation not less.” We disagree. We have had quite enough financial innovation. Nor do we agree with [his] contention that we can “reclaim finance for the common good.” A quarter-century after first making its appearance, the Private Finance Initiative, a previous example of financial innovation—once popular among policymakers but derided by critics—has at last fallen from favor....  We do not want to wait a similar period to witness the popular discrediting of SIBs: our policy recommendation is that the experiment ends now. S Lilley et al, Using derivative logic to speculate on the future of the social investment market, Journal of Urban Affairs, 18 April
Despite my reservations, I do see pluses in the Social Impact Bond experiment. The first is that they compel us to think in terms of outcomes; the second, that they reward more efficient achievement of these outcomes. These qualities, a commonplace in the private sector, are revolutionary when applied to our social and environmental goals, where 'more efficient' applies to the improved well-being for ordinary citizens, rather than the narrow, short-term, accountancy goals of corporations.

The danger, from my point of view, is that SIBs' failings will discredit, in the public eye, all approaches that reward efficiency in the public sector. But it could go the other way, and I hope that it will: policymakers might come to see SIBs as a step towards Social Policy Bonds and, though it would involve ceding their power to choose service providers, make them tradeable.

01 May 2019

A Mickey Mouse micro-objective from Mexico

Why we need to target broad indicators that either actually are, or are inextricably linked to, the goals we actually want to achieve: 
A 2014 law compelling parties to nominate equal numbers of men and women for elections has led to a phenomenon known as Juanitas—women who participate as candidates, only to resign after their election to give way to men. The Mexico tragedy, Shephard Barbash, 'City Journal', Spring 2019
I don't myself think that diversity is necessarily a helpful goal but, if people genuinely value it, they need to be explicit about what their diversity goal actually is. This emphatically applies to a Social Policy Bond regime, where there would be direct financial rewards to people who successfully manipulate or game targeted indicators. But it also applies to our current policymaking systems in which where the relationship between a policy and the beneficiaries of its perverse effects can be more readily obfuscated. 

To be useful then, indicators and targets should be inextricably correlated with well-being – and it is the well-being of natural persons that we should be targeting, not that of corporations or institutions, which have entirely different goals; nor that of abstract entities like 'the economy'. With national governments being the size they are, and with global social and environmental depredations bound to assume greater importance, poorly thought out global policies could be a lot more serious than Mexico's Juanita phenomenon. Some years ago, George Monbiot wrote about the rush to subsidise biofuel production:
It used to be a matter of good intentions gone awry. Now it is plain fraud. … The reason governments are so enthusiastic about biofuels is that they don't upset drivers. They appear to reduce the amount of carbon from our cars, without requiring new taxes. It's an illusion sustained by the fact that only the emissions produced at home count towards our national total. The forest clearance in Malaysia doesn't increase our official impact by a gram. If we want to save the planet, we need a five-year freeze on biofuels, George Monbiot, ‘The Guardian’, 27 March 2007
I was inclined to think insanity rather than dishonesty but Mr Monbiot may well be right. The implications for the planet are the same either way. Unfortunately, big government is far more concerned with adhering to its own agenda than it is about actually achieving worthwhile outcomes. And what is this agenda? What animates all this perverse policymaking, the targeting of meaningless micro-objectives, of means rather than ends, and the persistent, destructive subsidies to vested interests? Confusion, certainly, but there is also what I consider to be the ultimate goal of government, or indeed that of any big organisation, private- or public-sector, once they are old enough for their founding principles to be forgotten: self-perpetuation. Policymakers and their paymasters can get away with ineffective or - let's be frank - corrupt policies (see for instance, this more recent Monbiot piece) because ordinary people haven't the time, energy, resources or legal expertise to master the arcane and protracted policymaking process.

A Social Policy Bond regime would change that. Policymaking would focus on meaningful outcomes, rather than the supposed means of achieving them. We can all understand outcomes, so we can all take an interest, if we want to, in which ones should be given priority. A policymaking process centred on outcomes would, in my view, be far more enlightening and generate far more - essential - buy-in, than the current political circus, which is failing the non-millionaires amongst use quite spectacularly.

22 April 2019

Disaster in the antiobiotics market

Jeremy Farrar writes: 
There is no viable route to market for new antibiotics, however valuable they may be to society. A disaster is unfolding in the antibiotics market, Jeremy Farrar, 'Financial Times, 21 April
Incentives matter, which is why we urgently need to overhaul the ways in which healthcare is currently managed. Typically, the rewards to companies developing a drug are directly proportional to sales of that drug. Antibiotics are typically prescribed only for short periods: days and weeks,
Private investors backing such [drug development] companies counted on revenues being buoyed either by growing need for their products or by governments responding to calls to fix the market. 
What would it take to 'fix the market'? My suggestion, more radical than it should be, is that we reward anybody who improves society's health, including drug companies, in ways that correlate to their success in improving society's well-being. This could be done by (1) explicitly targeting 'improved societal well-being', and (2) setting up a system that supplies incentives for people and companies to do just that. We are getting to the stage where step 1 is a possibility. Quality Adjusted Life Years are one attempt to measure well-being. Step 2 is more difficult. My suggestion is that we apply the Social Policy Bond concept to health and that, at a national level, governments issue Health Bonds, which would reward those who bring about improvements in the long-term health of a country's citizens. For less developed countries, funds for the backing of Health Bonds could come from philanthropists, NGOs or rich countries.

'Anybody who improves society's health', I say above, because worthwhile improvements can originate in people and companies whose remit does not explicitly extend to health. A factory opening in a region of high unemployment, for example, might do a lot to improve the well-being of people living nearby. Under our current system, the factory would reap little reward for such a positive externality. Under a Health Bond regime, though, investors in the bonds would have an incentive to help an otherwise hesitant company to get their factory up and running. At all times, Health Bonds would encourage people to focus on the outcome we want to achieve - improved health - rather than the fortunes of drug companies, doctors, hospitals or other surrogate endpoints.

16 April 2019

Make votes matter

Make Votes Matter, is the title of a leaflet being distributed in the streets of the UK. It is the name of a 'cross-party campaign to introduce Proportional Representation to the House of Commons'. Currently, UK General Elections use the First Past the Post voting system, which has the merit of being immediately comprehensible, but the apparent disadvantage of under-representing small parties whose votes are widely distributed, and wasting the votes of people who oppose the occupiers of  'safe' constituencies. There's a lot more to be said for and against PR and FPTP. I suppose it's understandable, though regrettable that, in today's politics, people think their Member of Parliament cannot be expected to represent them if s/he is from a party they oppose. There's little magnanimity in party politics these days.

I actually don't think the differences between PR and FPTP are worth bothering about. We'd still be voting about things that don't really matter: for Members for Parliament, for their party, for what they say in their manifesto. For people, parties, promises, image, ideology, sound-bites and slogans, rather than meaningful goals. About those goals, I believe, there's far more scope for consensus than about all the paraphernalia that characterise current election campaigns. Politicians rarely do what they say they will do; still more rarely can they be held to account for what transpires to our economy, society or environment. But their campaigning and subsequent activities, as well as consuming great gouts of brainpower, sow the seeds of division: the 'narcissism of small differences'.

I advocate refocusing our attention on goals, and the inevitable trade-offs between them, rather than political parties or the voting systems. I think we should be choosing between outcomes that are verifiable and meaningful to all of us, rather than allow our policymaking to be steered by interest groups - be they billionaires, corporations or government agencies - which are the only bodies that have the resources and motivation to understand our arcane, protracted, policymaking mechanisms. You might almost think that the obscurantism of our political systems is a ploy to keep ordinary people away from positions of power. A political system focused on social and environmental outcomes would represent a threat to the political hierarchy but, I believe, it's necessary for reasons of both efficiency and buy-in.

What would such a system look like? A Social Policy Bond regime would be one such system. It would set broad, long-range targets about which there is almost universal agreement. At the national level it could target better health, universal literacy, a cleaner environment. At the global level it could target conflict reduction, and the prevention and alleviation of disasters, whether natural or man made. Political debate would be about the exact definition of these goals rather than, as now, the supposed means of achieving them or peripheral issues such as institutional structures and funding arrangements. There would be healthy debate, under a bond regime, about priorities and time frames, but the way the bonds work would mean that there need be little discussion of who shall achieve society's goals or how those goals shall be achieved. The market for the bonds would ensure that they are always be held by the most efficient operators. And efficiency is a moving target: what is efficient today or in one part of the world today might be highly inefficient in future years or in a different region. Long-term goals will most probably require an array of diverse, adaptive approaches for their achievement - exactly the sort of approaches that government, or any single ordinary organisation, is incapable of encouraging, but that a Social Policy Bonds regime would stimulate. The bonds would lead to the creation of a new type of organisation, whose structure, composition and activities would be entirely subordinate to its goal, which would be exactly the same as that of the society that set it; a stark contrast with today's organisations, which have their own goals, independent of, and sometimes in direct conflict with, those of ordinary citizens.

09 April 2019

What should we target?

Policymakers rarely use explicit targets and still more rarely do they use them in a coherent manner. Take two high-level targets: the inflation rate, targeted by the UK, and the less-than-two degrees Celsius warming targeted by the Paris Agreement. Near explicit and implicit targets – de facto targets – are more common. National governments routinely target economic growth. As well as these macro-targets, there is a proliferation of  micro-targets: in the UK, waiting times at hospital Accident and Emergency departments, for instance. 
What do all these targets have in common? One is that they are set by people who are not charged with achieving them, and will be little affected whether they are achieved or not. Another is that they have little directly to do with social or environmental well-being. There might be a strong correlation between, for instance, GDP and material prosperity; there is likely to be a strong correlation between the two-degrees Celsius target and plant, animal and human well-being. But it's my view that, because there is no direct link, these targets fail to achieve societal buy-in. The two degrees target is too abstract. If more than two degrees leads to unacceptable depredations, why not aim directly to reduce the severity of those depredations? That would be a goal with which people other than scientists and policymakers could identify.

The implicit GDP target is also rapidly becoming discredited. It says nothing about the distribution of the gains from economic growth, and with the dramatic divergence between incomes of those at the top of the scale from all others, risks becoming as detached from social well-being as are indices of share prices – and for much the same reason.

If anything, the micro-targets are worse. Again, they are set by people who have little direct interest in seeing them achieved. As well, they are very easily manipulated or gamed, leading to perverse outcomes, none of which benefit people, and some of which worsen well-being.

Where does that lead us? Most components of social well-being are not explicily targeted. Sadly, as society grows more complex and diverse, unless things are explicitly targeted they tend to fall through the cracks. The environment has throughout recent history has suffered this fate, as have other essential, but similarly unquantifiable determinants of well-being such as social cohesion. In smaller societies, these elements of The Commons would be the subject of informal arrangements, often arrived at after a long evolutionary process.

That won’t work in today’s highly aggregated and increasingly diverse societies. People in positions of power are increasingly detached from everyday concerns – the things that microtargets or, more importantly, the market, fail to capture. Unlike in traditional societies, when things are neglected by the people who lead today’s societies they are ignored. Political discourse and resources get channelled into the few things that are targeted, including economic growth, and away from those elements that escape the market or some other form of quantification. As well as the environment, and these include some important components of mental and physical health. They aren’t targeted directly, so attract fewer resources than they should.

But, given that a return to traditional societies is not going to happen, targets based on aggregate numbers are essential. So: what should we target? My thinking is that we need to target broad social and environmental goals whose achievement would be inextricably linked to improved social well-being and generate buy-in. Economic growth doesn’t cut it; nor does the two degrees target. So what would qualify? Alleviation of poverty, improved physical and mental health, reduced impact of adverse climatic events on human, animal and plant life: these are all broad, meaningful goals, whose achievement would be both meaningful to all, and generate the buy-in sadly lacking when we target GDP, two degrees, or hospital waiting times. I am more ambitious even than such targets would indicate though. If, as I hope, we begin to target genuine, verifiable, meaningful outcomes, why stop at national goals? A Social Policy Bond regime, not having to specify how our goals shall be achieved, or who shall achieve them, could and should aim for global goals. I suggest that we explicitly target for reduction the adverse effects of both natural disasters and violent political conflict.

22 March 2019

Perverse incentives in healthcare

The perverse incentives in healthcare are pervasive, worrying and unsustainable. Joseph Jarvis speaks eloquently about those that afflict the American healthcare system here. One example: he points out that investment in urgently needed new antibiotics is too low because the pharmaceutical industry prefers to develop drugs that will be taken for a lifetime, rather than a couple of weeks.

What the US and many countries have is a market not for health, but for treatment. It's nothing like a free, competitive market, being subject to the usual distortions and inefficiencies that ensue when big business manipulates the government and regulators. It's called a market, because much of it's run, nominally, by the private sector. But we are seeing worldwide a convergence of the interests of the public sector and big business, which often takes the form of policies that conflict with the goals of ordinary people. 

The 'market' is often evoked rhetorically, and that unfortunately discredits the whole notion of the market as the most efficient way we have of allocating society's scarce resources. There is a market in the US for healthcare, in the sense that the industry reacts rationally to the incentives on offer. But the incentives have little to do with the well-being of citizens, and a lot more to do with the short-term, narrowly measured, goals of doctors, insurance companies, hospitals and pharmaceutical companies. The perversity is that the healthier the citizenry, the more parlous the state of the medical industry.

Where does the Social Policy Bond idea come in? My starting point would be to define and reward the achievement of society's health goal, so that the structures and activities of the sectors that support that goal would be entirely subordinated to that goal rather than, as now, the other way round.

On a national level, physical health could be defined as a range of targets, all of which would have to be reached and sustained before we can say we have achieved our goal, at which point Social Policy Bonds targeting health could be redeemed. My suggestion is that our goal would include such targets as: longevity, Quality Adjusted Life Years, and infant mortality. There would be others, to be decided by experts in consultation with ordinary citizens.
Where does this get us? It puts in place a system whereby people are rewarded for bringing about actual improvements in health. Not for screening, or curing or treating disease, nor for selling drugs or health insurance. Those are indirect means to an end, rather than ends in themselves and the results are lamentable: pills that are no better than placebo (see here and here). Or incentives to over-diagnose and over-treat. Or to falsify or otherwise manipulate the results of drug trials.

Health Bonds would change all that. All the activity they stimulate and reward would be entirely subordinate to society's health goal. There would be a market - for the bonds - but it would be society's servant, not its master. The Social Policy Bond principle uses the market as a means to society's goals. It doesn't view the market as an end in itself. Under a Health Bond regime, the the end that the market serves under a bond regime will be society's health, as defined and targeted by society itself. The goals of those working in any field impinging on society's health would be exactly congruent with those of ordinary citizens: to improve society's health as quickly and efficiently as possible.

16 March 2019

Link to essay on Environmental Policy Bonds and climate change

My previous post described how we might fold the effects of climate change into goals for Environmental Policy Bonds, so that we could tackle all our urgent, big, environmental challenges, regardless of their cause, in ways that are more likely to generate buy-in than the current intense focus mainly on greenhouse gas emissions. I've written a longer essay on that theme, which is more suitable for people unfamiliar with the Social Policy Bond principle, here.

08 March 2019

Climate change and the environment

Climate change could be tackled in various ways. We could aim to throttle its causes. We could aim to keep the climate, as measured by a wide range of physical, biological and financial indicators stable. Or we could aim instead to target for improvement all aspects of the environment, whether or not their degradation has been caused by climate change.

Policymakers have mostly gone for the first option: to try to reduce greenhouse gas emissions, believing that they are the main driver of climate change. Myself, I've advocated in the past the targeting of an array of indicators, including the impacts of adverse climatic events, but also physical, social and financial measures of climate change.

I'm now more inclined to the third option, and think we should try to solve our environmental problems however they are caused, rather than focus on trying to prevent climate change. My thinking is partly a result of humanity's having done almost nothing actually to stop the climate changing.

 For buy-in we need meaningful outcomes

What’s wrong with targeting greenhouse gas emissions?

  • We don’t really know what’s happening to the climate;
  • We don’t really know why it's happening;
  • We don’t know whether trying to reduce greenhouse gas emissions will solve whatever the problem might be;
  • We do know that targeting greenhouse gas emissions will have large upfront costs, and that any benefits will be way into the future, uncertain and, even on the best advice of the experts, tiny.

Admittedly the science appears to say that greenhouse gas emissions are changing the climate in ways that adversely affect human, plant and animal life, though it’s less convincing about the effects of reducing these emissions. But that’s not really relevant. There’ll be no action taken, and indeed there have been no significant actions taken (see here, here and here), because, in my view, the relationship between greenhouse gas emissions and adverse impacts is too tenuous and abstract to generate buy-in. And buy-in is what we urgently need.

Note that I am not suggesting we don’t target greenhouse gas emissions: only that any decision to do so needs to be made on the basis of whether it’s the most efficient way of achieving our environmental goals.  Professor Jem Bendell paints a cataclysmic picture:
The evidence before us suggests that we are set for disruptive and uncontrollable levels of climate change, bringing starvation, destruction, migration, disease, and war…
>My suggestion is that planetary well-being would be better enhanced by aiming explicitly to reduce such scourges -  starvation, destruction, disease and war, than by targeting, or pretending to target, greenhouse gas emissions. Reduced starvation, disease and war are goals that are less abstract and more meaningful to ordinary people than climate change. By targeting them we’re more likely to generate the buy-in that is essential to bring about changes that will create, at least in the short term, losers. All the evidence tells us that, after many years of exhortation, dire warnings, and extreme climatic events, there’s very little buy-in to the goal of reducing greenhouse gas emissions.

As well as aiming to reduce starvation, disease and war, we could explicitly target also environmental goals that mean something to the non-experts whose buy-in is necessary. These could include reduced air and water pollution, less noise, reduced impacts of adverse climatic events, and reduced loss of biodiversity.

It’s not so difficult: we re-frame and, if necessary, re-orientate policy to meet these goals, rather than a target level of greenhouse gas emissions which is, at best, only a putative means of achieving some of them.

Environmental Policy Bonds

I propose that we reward the sustained achievement of our environmental goals. Further, I propose that we do so in ways that channel market forces – the most efficient way we yet know of allocating society’s scarce resources – into the achievement of our environmental goals. I further suggest that we do this is by nationally or globally backed Environmental Policy Bonds. These could target our biggest environmental challenges, regardless of their supposed source. A bond regime would allow us to target long-term goals, and stimulate research into diverse approaches to solving our problems.

Importantly, the bonds wouldn't dictate how our environmental goals shall be reached. It's quite possible that investors in the bonds will find that targeting greenhouse gas emissions for reduction is the most cost-effective way of solving some of our environmental problems. The crucial distinction between such targeting, and the way emissions are being targeted today, is that bondholders will target emissions only if doing so - at the time and in the areas they decide to do so - is the best way of achieving our goals. They will be making their decisions on the basis of the science (and economics) of the relevant time and place, rather on the fossilised science of today. Their solutions, unlike today's non-solution, will be diverse and adaptive. And - another important difference - the people who look for and implement them will be rewarded only if they are actually successful in improving our environment.

05 March 2019

The metrics of tyranny

In our complex, populous societies we're not going to escape the use of metrics as indicators of social well-being. Social Policy Bonds aim to target targets that are meaningful to ordinary people. They therefore need metrics that are carefully devised, robust, verifiable and, preferably, easy and cheap to monitor. A Social Policy Bond regime, ideally, would use reliable metrics in a considered, coherent manner. There are dangers in taking metrics as ends in themselves, in using them incoherently, and in ways that conflict with people's well-being. Unfortunately, that's the direction in which we're moving. Having read The tyranny of metrics by Jerry Muller I've written about the limitations of metrics. I've also mentioned Campbell's Law. An article in the Economist does much to justify Mr Muller's and my skepticism:
Take the World Bank’s annual comparison of business regulations around the world. One country stood out in its latest ranking: China, which had languished in 78th place the previous year, jumped to 46th. India seemed to have improved, too, rising 23 spots, to 77th. Those remarkable ascents have less to do with the ease of doing business in those places than with their governments’ determination to achieve good grades. Some 40 people work in a Chinese government unit dedicated to improving its World Bank score; perhaps 200 toil in India’s. At least 60 countries have teams that focus on the index. (My emphasis)  Life and society are increasingly governed by numbers, 'The Economist', 23 February
Our societies aren't going to return to the times when policy is made for groups of 150 (see Dunbar's number). It follows that metrics will be the means to determining how well society is doing. Currently our governments rely on a motley array of narrow, short-term, Mickey Mouse micro-targets, including the de facto target of Gross Domestic Product, with their many flaws, some of great consequence. A Social Policy Bond regime, by contrast, would channel people's goals and expertise into answering fundamental questions: what should we target? What are the essential elements of social and environmental well-being? Where do we, as a society, want to be heading? Our obscurantist political systems allow our rulers to duck these questions and distract us all with spurious arguments about ideology, personality, image and sound bites.

The tyranny of metrics metrics of tyranny

It gets worse. In some societies metrics are already explicitly weaponised (from the same article):

In China, for example, Zhima Credit, a popular private service, measures “personal characteristics”, “online behaviour” and “interpersonal relationships”, among other things. A high rating entitles people to a fast-track visa for Singapore.