27 December 2019

Politics as career drama

There's much that's worthy of quote in Greg Jackson's latest article in Harper's Magazine, but I will limit myself to this for now:
As things are, the job of politicians is to feed the emotional-entertainment industry that we call “news,” which is accomplished by grandstanding and self-promotion. Reporters and pundits cover politics by analyzing how politicians succeed and fail as spokespeople and media figures. Interest shifts, by turns, to how the game is played, how the media fits into this game, and, eventually, how journalists do their jobs. The news today, properly understood, is about the careers of politicians and journalists. It is career drama. (My italics) Vicious Cycles, Greg Jackson, 'Harper's Magazine', dated January 2020
In the absence of any more meaningful measure of politicians' competence, we focus on how they appear in the media. But what else can we do? The links between what politicians say, what they mean, and what actually happens are tenuous, obscure or non-existent. Only rarely can we say that this politician did something that led to that outcome. Society is just too complex to identify cause and effect with certainty. There are exceptions: decisions to go to war, for instance. But for the most part, when wondering whom to vote for we depend on the news or, as Mr Jackson accurately puts it, "news".

When seeing the wide, and widening, gap between politicians and ordinary citizens, we are right to draw attention to the baleful influence of the wealthy organisations - public- and private-sector - who, along with their lobbyists, are the only people that have the time and motivation to understand how policy is made and how they can manipulate it for their own benefit. If only there were a means by which we could make politicians enact policies that benefit the people they are supposed to represent.

Social Policy Bonds are one such means. You might have heard of Social Impact Bonds, which are the non-tradeable version of my original (long pdf, scroll to page 266) idea. There are several reasons why I think we need the bonds to be tradeable if they are going to make significant gains in policy effectiveness and efficiency. I write about those reasons here and here. The important point is that the bonds reward outcomes: outcomes, moreover, that are meaningful to ordinary people and which, in fact, ordinary people can help identify and prioritise. Because Social Policy Bonds are tradeable they can target long-term goals, whose pathway to achievement is unclear. We can therefore target remote goals, such as universal literacy or world peace, because we do not have to specify in advance how those goals shall be best achieved, nor whom we shall charge with achieving them. The market for the bonds would ensure that only the most efficient projects will be rewarded. The long-term nature of the bonds means that investors will have incentives to research a wide range or initiatives, and persist only with the most efficient.

Our biggest, most urgent challenges - such as climate change or conflict reduction - will require a mosaic of diverse, adaptive projects. These are exactly the sorts of projects that government at any level implement. The top-down approach is good for articulating society's wishes, and for raising the revenue for their achievement, but when it comes to actually achieving any but the most obvious goals - the ones with the clearest link between cause and effect - it fails. A Social Policy Bond regime would see politicians doing what they do well: helping society define its goals and raising taxes. But it would contract out the achievement of these goals to more motivated investors, who have a sustained interest in achieving their goals - which are exactly the same as those of society. Economic theory and all the evidence tell us that competitive markets are the most efficient way of allocating scarce resources to achieve prescribed ends. Under a Social Policy Bond regime it is society that would determine these ends, and market forces would channel the market's incentives and efficiencies into achieving them.

15 December 2019

Give up control over the 'how'

Joseph O'Neill looks at US politics and how wealthy left/'liberal' donors' support differs from their conservative counterparts' in the US:
[T]he liberal political apparatus is “largely guided by the moral whims of rich people.” ...Liberal megadonors with private foundations are reluctant to invest in uncharismatic, long-haul grassroots projects. They are typically afraid of appearing “political.” Instead, they favor ameliorating the plight of the visibly needy ... [whereas] right-wing donors have spent their money more productively. They have created and supported entities (the American Legislative Exchange Council, ... the State Policy Network, Americans for Prosperity, the Federalist Society, etc.) dedicated to developing durable structures of power and fanaticism. No More Nice Dems, Joseph O’Neill, 'The New York Review of Books', dated 19 December
I'm not sure about either strategy. Well, I am sure they work for the donors, and there's an argument that the left already has much of the media, schools and universities in their grip anyway, and not only in the US: it doesn't have to create new ones. To quote Thomas Sowell:
The most fundamental fact about the ideas of the political left is that they do not work. Therefore we should not be surprised to find the left concentrated in institutions where ideas do not have to work in order to survive. Thomas Sowell, 'The Survival of the Left', in The Thomas Sowell Reader, 2011
But the point is that the wealthy donors of neither the left nor right seem to care about outcomes. They fund glamorous, high-profile projects or buildings, foundations, think-tanks. They lobby government. They have in common that, even if they genuinely wish to improve the well-being of certain groups, they won't target the outcomes that those people most care about. Why not? Because, I think, in this respect donors resemble politicians and bureaucrats: they will not willingly relinquish control. They think they know how best to achieve results, or they want everyone to associate them with identifiable buildings, institutions or ideas - whether they do any long term good or not.


Social Policy Bonds are a means by which the wealthy could both articulate society's wishes and channel funds into satisfying those wishes, without actually doing the work themselves. Rich philanthropists 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 but, under a bond regime, they would have to relinquish the control over how these goals are to be achieved. That would be probably be difficult for billionaires to accept. But to address our most serious problems 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, unfortunately, 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. 'Letting go' of the need for acknowledgement and short-term results, could be as helpful to society as letting go of emotional hurts can be to the individual.

10 December 2019

Improve healh by spending less on health care

Richard Smith, the former editor of the British Medical Journal gets it:
Another common mistake is to confuse health care and health. Health care accounts for perhaps 10% of health. Income is the main determinant of health. Spending more on health care crowds out spending on things like housing, education, the environment and benefits, which are more important for health. The NHS doesn’t need more money, it needs a radical rethink. Richard Smith, Letters to the editor, the 'Economist', 7 December
Exactly. The best, most efficient way, of achieving our health goals is not necessarily to spend more on healthcare, just as the best way of reducing crime might not be to spend more on policing. In health, as in other policy areas, suffers from its inherently uniform, top-down approach, heavily influenced by large corporations. Government can also be short term in its thinking, reactive rather than proactive, and disdainful of innovation while favouring tried, tested but failed approaches. It has to make its resource allocation decisions on the basis of data that are necessarily incomplete. How can it know in detail the effect that spending on, say, sophisticated ultrasonic diagnostics will have on the overall health of the nation, as compared with nudging us to floss our teeth daily?

Health expenditure is influenced by groups of medical specialists with little incentive or capacity to see improvements in the overall health of a large population as an objective. Funding decisions are also heavily influenced by the public profile of a disease or its victims, rather than on what would best meet the needs of society. As Dr Smith says, health is also a function of housing, income, education and the environment, as well as more factors such as diet, and exercise. Research shows the beneficial effects on health of green spaces in our cities (see here (pdf) for instance). The way government is currently structured, with its discrete funding bodies all being lobbied by the medical industry, makes it unlikely that such difficult-to-quantify benefits will influence funding decisions.

We cannot expect a government nor any single organization to identify the huge numbers of variables, with all their time lags and interactions, that influence the nation’s health. We can, though, devise a system that rewards people who explore and implement the most cost-effective health solutions, even when circumstances and knowledge are changing continuously. I have tried to do this with my essay on Health Bonds, which would aim to distribute scarce government funds to where they would do most good, as measured by such indicators as Quality Adjusted Life Years.

By issuing Health Bonds, government would reward successful initiatives for improving health regardless of how these initiatives work or who implements them. Government would still articulate society's broad desired health outcomes, and still raise the revenue for their achievement. But it would contract out the achievement to motivated investors in a way that rewards success, and only success. Health Bonds, would stimulate diverse, adaptive ways of achieving goals, in ways that we cannot anticipate, and that could well entail dealing with problems such as those identified by Dr Smith.