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.