The evolutionary approach to policymaking

In today's polarised political climate Social Policy Bonds suffer by being seen as a 'right-wing' way of achieving 'left-wing' goals, in that they use markets to achieve social and environmental objectives. Rather than appealing to both political ideologies, they appeal to neither. They are also quite unconventional in that they stipulate desirable outcomes and reward people for achieving them. This differs from the usual approach of governments - even those that care about their citizens - which is to take existing bodies (public- or private-sector) as a given, and try to negotiate their competing demands. I think Social Policy Bonds can improve on this approach for two main reasons:

Society is so complex, ever-changing and beset by time lags that it is more efficient to reward evolutionary solutions to our social problems than it is for any single body to try, using current knowledge, to develop solutions that will necessarily be top-down and once-size-fits-all. Just as evolution in nature leads to diverse, adaptive solutions to the problem of surviving in a complex, changing environment, so would an evolutionary approach lead to diverse, adaptive solutions to our social problems. Such approaches are unlikely to be conceived by any single conventional organisation, which is why I expect issuing Social Policy Bonds would generate a new type of organisation, one whose structure, composition and activities would be solely dedicated to achieving society's social and environmental goals at least cost to the taxpayer. 

A Social Policy Bond regime would encourage long-term thinking because (unlike Social Impact Bonds) they would be tradeable, so that the time-till-redemption of the bonds could be much longer than any investor's time horizon. There would be time for bondholders to try an array of innovative approaches, and the incentives would be there for them to refine and implement the most efficient of these approaches - and, importantly, to terminate those that are unpromising. Once the Social Policy Bond concept has been used at the national level, lessons learned could be applied to solution of global problems, including those often thought to be intractable, such as regional or global conflict.

Electric vehicles and nappies

Will replacing vehicles powered by internal combustion engines (ICEs) by those powered by renewable electricity reduce greenhouse gas emissions? It depends on too many variables to justify the actios taken by governments worldwide. A researcher for Jefferies, an investment bank, pointed out that: 

To gain the environmental dividend that governments are looking for, users are going to have to keep them [ie EVs] longer, drive them further than they may have done with a conventional internal combustion energy vehicle.

When they leave the factory, these [electric vehicles] are at a disadvantage. They contain more steel. The brakes are bigger. The battery packs are certainly heavier. Source

Goehring & Rozencwajg, a research firm focusing on contrarian natural resource investments posted a blog in which they call into question a comparison of ICEs and EVs conducted by the Wall Street Journal and, citing the work performed by Jefferies, argue that there could literally be 'no reduction in CO2 output' in some EV vs. ICE comparisons. 

 

I have no opinion as to whether EVs are worse for the environment than ICEs. Even if they are, currently, technology is rapidly changing. As well, brake dust and pollution from tire wear are probably as toxic as engine emissions. These facts point to the need to stipulate the environmental outcomes that we want to achieve, rather than the supposed ways of achieving them. The next step would be to reward those who bring about those outcomes, however they do so. 

  

The problem, and solution, are similar to those concerning nappies. The seemingly simple question of disposable versus cloth embodies in microcosm the inescapable difficulty of making policy about bigger concerns. There are always angles that we cannot foresee. Cleo Mussi, for instance, writes to the New Scientist:

.... I wonder whether the research comparing [cloth] to disposables took into account the fact that babies using cloth nappies tend to be toilet-trained day and night at a much earlier age – there is little more uncomfortable than a wet cloth nappy. A difference of six months to a year would lead to a child using 1100 to 2200 extra disposable diapers or nappies – a lot of extra landfill. Cleo Mussi, Letter to the editor of 'New Scientist', 12 December

Our environment and society are too complex and changing too rapidly for us to favour even one of two types of nappy, just as we cannot say whether EVs or ICEs are preferable. Yet the way we make policy makes little allowance for such difficulties. Typically, a government (heavily influenced by corporate interests or ideological baggage) makes a top-down, one-size-fits-all decision, ostensibly based on fossilised science, and then moves onto something else, rarely revisiting or even monitoring (pdf) its performance.

When bigger challenges than nappies loom, this way of doing things generates commensurately bigger problems. Whether it's climate change or health or global conflict, neither government nor any single conventional organisation can know all about the relevant human and scientific relationships, let alone keep up with them. Nor can they anticipate the diverse effects their policies will have over both time and space. The complexities are too great, and any single body is going to be too pre-occupied with its image, the latest events, or its members' individual goals to care much about outcomes.
 

Only people who are continuously motivated to achieve our goals, to look at the effects of their initiatives, and to adjust their ideas accordingly, can develop the diverse, adaptive approaches that we need to solve our social and environmental problems. Social Policy Bonds are one way in which we could stimulate such initiatives. They have other benefits: most significant here is that issuers of the bonds do not need to specify how a problem is to be solved in order to get people started on solving it. Our goals are stable: the optimal ways of achieving them, especially when complicated by time lags, feedback loops, a multitude of known, unknown and unknowable variables, are not. We can and, in my view, should, issue Social Policy Bonds targeting such goals as solving huge, urgent problems such as climate change even though the ways in which they are to be solved lie are beyond the purview and time horizons of policymakers.