10 September 2019

Government+big business+judges vs. the people

Christopher Caldwell writes:
Once the judiciary rules politics, all politicians are just talkers....The transfer of competences from legislatures to courts is a superb thing for the rich, because of the way the [British] constitution interacts with occupational sociology. Where the judiciary is drawn from the legal profession, and where the legal profession is credentialed by expensive and elite professional schools, judicialization always means a transfer of power from the country at large to the richest sliver of it. Why hasn't Brexit happened?, Christopher Caldwell, claremont.org, 15 August
Mr Caldwell is writing in the context of Brexit, but this insight applies more broadly. I've often railed against the widening gap between politicians and the people they are supposed to represent. The gap between ordinary citizens and the judiciary is at least as wide. We, the public, have even less buy-in when decisions are made by judges rather than politicians. What happens with contentious issues on which ordinary people have no say? Here, the Economist writes about the abortion debate in the US:
Why did the two sides become so polarised? The main reason is the way abortion was legalised. In many countries, abortion laws were voted for by elected politicians or in referendums. In America, a seven-to-two majority of justices declared abortion a constitutional right. Anti-abortionists question the interpretation of the constitution that produced that ruling and are furious their voices were not heard. Abortion advocates remain fired up by the knowledge that Roe could yet be overturned. What explains Donald Trump’s war on late-term abortions?, the 'Economist', 24 August
Buy-in is important and, with big government, complex societies, and our emphasis on how policy is made and who makes it rather than outcomes, there's very little buy-in remaining at the national level. Corporations, politicians and, increasingly, the judiciary define the economic and social environment in which we live.

Social Policy Bonds, by targeting outcomes with which people can identify could bring about more public participation in the policymaking process. That is an end in itself (see here (pdf) for example), as well as a means by which decisions become acceptable even to those who opposed them. Importantly too, there's more consensus about outcomes than about the supposed means of achieving them. A bond regime would focus policy debate on our social and environmental goals, and which ones shall be prioritised. The process itself would generate more mutual understanding and less of the anger and contempt that are such a feature of today's policymaking.

As well, a bond regime would encourage us to think long term: our goals are far more stable than the ways in which we think we can best achieve them. They are also more transparent as, with Social Policy Bonds, would be their funding. Corporations, their lobbyists and the people in power whom they influence all have an interest in obscuring how funds are allocated, and in failing to monitor whether policies succeed or fail (see Why States Believe Foolish Ideas: Non-Self Evaluation by States and Societies, by Stephen Van Evera (pdf)). It's even more difficult to believe that our new policymakers - the judiciary - will be any more responsive to the needs and wishes of ordinary citizens. With government, big business and now the judiciary determining our economic and social environment, what hope is there for the rest of us? The gap between ruler and ruled is becoming ever wider. Social Policy Bonds could help close it.

For general information about Social Policy Bonds see here. For more about Social Policy Bonds and buy-in see here.

02 September 2019

It's not just dog-food

There is probably more human ingenuity going into devising new ways of selling dog-food than avoiding nuclear war or eradicating poverty or achieving universal literacy. But it's not just dog-food:
For decades, increasingly large numbers of America’s smartest and hardest-​working businesspeople have toiled in extractive pursuits, and the result is an economy that benefits an increasingly smaller percentage of its participants. Many structural reforms are necessary to change this. With regard to education, it is time to reform the top MBA programs. These schools shape our business culture, and, in so doing, exert an outsized influence on the business practices and the career pursuits of some of our most talented young people. The schools should begin with an explicit renunciation of shareholder capitalism. The Financialization of the American Elite, Sam Long, 'American Affairs', Fall 2019
By 'extractive pursuits' Mr Long means 'value extraction and short-term financial speculation'. There's nothing wrong with people choosing to make a career of financial shenanigans (see here for another example) or advertising dog-food. They're not greedy. They have children to bring up, elderly parents to look after.... These intellectual giants are simply reacting rationally to the incentives on offer. But it's a shame for the society that a high proportion of the smartest people on the planet their goals cannot meet their individual goals by helping to solve our huge, urgent social and environmental problems.

Social Policy Bonds are a way of aligning the incentives smart individuals face with those of society. They work by channelling our self-interest into the solution of our social problems. They do so by injecting market incentives into the solution of these problems. In economic theory, and on all the evidence, markets are the best way of allocating society’s scarce resources. So it is unfortunate that, largely for historical reasons, we leave the achievement of national and global social and environmental goals to a command-and-control mechanism that is often inefficient and open to abuse.

Sure, a Social Policy Bond regime would probably see some enrichment of wealthy corporations or individuals, but only as a side-effect of their achieving society's agreed social and environmental goals. The incentives of the people owning Social Policy Bonds and the people they employ would exactly align with those of society. All their activities would be aimed at achieving society's goals as efficiently as possible.
 
A Social Policy Bond regime represents a new departure. It would not reward people merely for undertaking activities that sound worthy, nor for belonging to organisations whose ostensible aims are to help people but are, in reality, less edifying. Rather, a bond regime would reward the achievement of society's goals. Yes, it would divert some of society's scarce resources, including brainpower, away from marketing pet-food or maximising short-term share prices or other super-sophisticated, zero-sum financial manipulation. But we are talking about the potential solution to some of mankind's biggest and most urgent problems: poverty, climate change; even the ending of war. I think it's a worthwhile trade-off.