How to prevent crime

 Dr Elliott Barker asks how we can prevent crime:

There should be a clear recognition that the only meaningful measure of success in child rearing is an adult with highly developed capacities for trust, empathy, and affection. It follows that the current worship of child rearing practices that evoke the highest possible I.Q., or the child with the greatest possible number of factual crumbs by the lowest age, or the child who can play the cello best at the earliest age should be suspect. How Do We Prevent Crime?, Dr Elliott Barker, the Natural Child Project

The question is not whether we believe (as I do) that we can reduce crime and other social pathologies by taking Dr Barker seriously but whether people have sufficient incentive to investigate how valid his argument is and then to act on their research. I don't think they do. Crime is today largely seen as a matter for policing and punishment. There may or may not be academic research pointing the validity of Dr Barker's arguments. But even if there is, who has the incentive to examine this research, check its validity and act on the results? Very few, and almost nobody with the financial clout to influence the way we bring up our children. Of course, there is good work being done by people such as Dr Barker, and eventually some of their findings do percolate through to a few dedicated researchers and parents. But work on the scale necessary to see widespread changes? The bodies, including government, that could fund such work are far too focused on the short term. And who thinks long term these days?

Social Policy Bonds targeting crime could be one answer. Under a bond regime, we could target a long-term halving of crime rates, sustained for a period of, say, thirty years. A combination of government, NGOs and philanthropists could back these bonds, which could be swelled by public contributions. Once issued, bondholders would form a de facto coalition, whose composition would most probably change over time, but all of whose activities would be aimed at achieving the targeted reduction in crime rates at lowest cost to society.

Long-term thinking and the notion of a coherent society that persists over decades: any attempt to improve social welfare and the environment requires both these qualities. They're not at all prevalent but policies like Social Policy Bonds that need them to work can also create and encourage their proliferation.

Who thinks long term these days?

Social Policy Bonds haven't gone very far. It's true that their non-tradeable variant, Social Impact Bonds are being issued around the world and are the subject of much academic outpouring. (Academia.edu tells us that there are more than 190 000 papers mentioning 'Social Impact Bonds'.) But Social Policy Bonds? None have been issued that I'm aware of, and they generate little in the way of literature - apart from my own work, of course.

There are several reasons. One is that, while the tradeability of Social Policy Bonds sounds like a technical issue, in political terms it's a bit of a time-bomb. It means that whoever issues the bonds doesn't get to choose who will be rewarded for achieving the targeted goals. In this, Social Policy Bonds are quite different from the SIB model, under which only chosen service providers will benefit from investing in the bonds. These are generally existing service providers. This obviously limits the scope for innovation and the efficiencies it would bring about. Existing service providers have a vested interest in maintaining current ways of doing things. (Indeed, combined with the inherently short-term nature of SIBs, lack of tradeability creates a perverse incentive not to be too efficient, lest issuers of future SIBs targeting the same social problem consequently tighten their efficiency criteria.) In our current political systems there are few incentives to allow new, potentially much more efficient, operators into solving our social and environmental problems. The inherently short-term nature of SIBs mirrors too neatly the short-term goals of politicians and current service providers.

Other reasons for the absence of Social Policy Bonds? One that I've experienced is the disdain of those on the political left for anything that smacks of profit or capital gains, especially in the provision of benefits to the disadvantaged. A sentence from a recent post by Charles Hugh Smith sums it up: we substitute self-​righteousness for problem-​solving. The thinking is as simplistic as it is injurious to the disadvantaged: 'markets are right wing and therefore bad'. I am still hopeful though that there will come, in time, a government, a non-governmental organisation, or a group of philanthropists who will take a long-term view, forgo the pats on the back by established bodies in the public and private sectors, and put the interests of their country, our environment, or the world above their own.

For more about why I am skeptical of Social Impact Bonds see here and here.

How to make capital gains ethical

A conference nearly three years ago looked at the ethics and morality of Social Impact Bonds. A concise summary of some of the issues discussed raised the question of:

...moral dilemmas that can arise when we place a financial value on social outcomes, and begin to see interventions in the light of the money they can save rather than on their inherent public value. Will it lead to us prioritising certain policy areas simply because they can save us money? Are we giving away too many decisions to unaccountable consultants and investors – and do the service users themselves get a say in any of this? Is it right that investors can gamble on the fortunes, or misfortunes, of others? Social Impact Bonds: are they ethical?, James Ronicle, 28th September 2016

Social Impact Bonds (SIBs) are a non-tradeable version of my original conception: Social Policy Bonds. Tradeability matters more than you might think. As I've explained here and here, when the bonds become tradeable the range of goals that we can target expands greatly, and our time horizons stretch much further into the future. The qualitative effect of a bigger range means that our social and environmental targets can embrace outcomes that a narrower, shorter-term target will exclude. Take for example recidivism rates, targeted by SIBs in the UK and elsewhere. Whereas a SIB regime will reward their reduction, even a large number of such SIBs would do nothing for the long-term health of society as a whole. For a start, narrow, short-term goals increase the likelihood of effective manipulation - a simple example springs to mind: investors in the bonds could subsidise superior legal representation to an offender accused of a new crime. But, more importantly, when we embrace broad, long-term goals, there is no need to prioritise 'certain policy areas simply because they can save us money'. Under a Social Policy Regime there need be no conflict. The policy 'areas' we can prioritise are large enough to include everybody.
It's not so different in other policy areas. SIBs currently target, for instance, academic performance among at-risk three- and four-year olds in Utah, or the number of housing units for the homeless in Massachusetts. Very laudable but, again, apart from these narrow goals being susceptible to crude manipulation (by fiddling test results for instance), they also reward the shifting of resources from untargeted goals to those that will generate short-term gains for bondholders.

This is the key. Social Impact Bonds have to focus on narrow short-term goals that are easily measured. Social Policy Bonds, in contrast, can take a broader, long-term view. They can encompass the goals of society as a whole. Rewards to holders of carefully crafted Social Policy Bonds might still benefit wealthy investors, but only as a by-product of benefiting all of society.

There are bigger possibilities: one of the participants at the above conference asked:

...whether development bonds, where investment is made in developing countries, create a new form of colonialism, as the West profits from interventions in developing countries.

Again, there need be no conflict. Social Policy Bonds targeting, for instance, regional or global conflict, or disaster prevention could benefit both western investors and developing countries. Large capital gains, though widely and understandably viewed with disdain in today's society, don't have to be unethical.

 


For more on this last topic see my previous post. For more on the topic of rewarding people for performing the socially useful function of, for instance, teaching see my blog post here. All my essays on the bonds are accessible from the main Social Policy Bonds site.

Re-jigging the incentives

George Monbiot writes:

The largest fortunes are now made not through entrepreneurial brilliance but through inheritance, monopoly and rent-seeking: securing exclusive control of crucial assets, such as land and buildings, privatised utilities and intellectual property, and assembling service monopolies such as trading hubs, software and social media platforms, then charging user fees far higher than the costs of production and delivery. In Russia, people who enrich themselves this way are called oligarchs. But this is not a Russian phenomenon, it is a global one.  Corporate power still exists, but today it is overlain by – and is mutating into – oligarchic power. Killer clowns, George Monbiot, 'The Guardian', 26 July

Imagine a political system in which people became wealthy by helping to solve society's problems rather than by the anti-social activities about which Mr Monbiot writes. Human ingenuity and entrepreneurial skills, currently channelled into self-enrichment via destructive or frivolous activities, would be channelled instead into achieving society's goals.

Social Policy Bonds could usher in such a system. The bonds would reward the achievement of targeted goals that are inextricably linked to improved social and environmental well-being.There are many benefits to a Social Policy Bond regime. Efficiency is the main one, as the market for the bonds would ensure that the people who can do most to achieve society's goals do so at the lowest cost. The bonds will always be in the hands of the most cost-effective operators who can out-bid the less efficient investors. Another advantage of the bonds is stability: whereas the best ways of achieving our goals vary over time and according to geography, the goals themselves are consistent, and there is far more consensus about our goals than about the supposed means of achieving them. The bonds would create a stable policy environment, in which long-term goals, including very remote goals such as world peace, could be targeted. Another advantage of the bonds is transparency: clarity of goals should be a first, essential step in policymaking, but too often it's, perhaps deliberately, obscured by the arcane, legalistic tactics beloved by today's policymakers.

These are all valuable benefits. But there's another one, less obvious. Social Policy Bonds would constitute a way of making money that is inextricably bound up with achieving society's goals. A government could therefore choose to tax any gains from holding Social Policy Bonds more lightly than other, similarly lucrative but less socially beneficial, operations. It would then be explicitly recognising that not all profit-making ventures are equal. Some, though they might raise that very flawed indicator and de facto target - GDP -  contribute very little to social or environmental well-being, while others are destructive of both. This advantage of Social Policy Bonds might not seem important compared to the bonds' other pluses, but it could become increasingly significant as society grows more complex, resources more limited and we perforce become more concerned about meaningful outcomes than the short-term goals of big business and politicians.