Complexity provides cover for inefficiency and corruption

Robert Bryce testifies on electric vehicles before the US Congress, House Select Committee on the Climate Crisis. Two brief points from his testimony of 30 June (pdf):

• The average household income for EV [electric vehicle] buyers is about $140,000. That’s roughly two times the U.S. average. And yet, federal EV tax credits force low- and middle-income taxpayers to subsidize the Benz and Beemer crowd.

• Lower-income Americans are facing huge electric rate increases for grid upgrades to accommodate EVs even though they will probably never own one. 

It's a familiar story. Government sees a problem (climate change) and thinks it knows best how to solve it (emission controls, electric vehicles) - or perhaps that's not cynical enough. Maybe the reasoning goes: government identifies a possible problem, then is told how to appear to be solving it by vested interests (big corporations) in exchange for favours (directorships, cash). The problem isn't solved, but the rich do get richer. 

Here's another idea. If the problem is, say, climate change, let's reward people who prevent climate change. If the problem is too much crime let's reward the people who reduce crime. Government doesn't have to take a view on how to solve these problems, or which people are best placed to do so. When it does take such views government adds to the confusion, creating a cover behind which favours can be disbursed without public scrutiny. 

I am suggesting that society's complexity can be, and is, used to disguise inefficiency at best and corruption at worst. The explicit targeting of verifiable outcomes that are meaningful to ordinary people, in the way that Social Policy Bonds do, would be one way in which we could ensure that taxpayer funds are used to benefit everyone, not just an already wealthy elite. When it comes to climate change we need to be very clear what we want to achieve. Most importantly, are we more concerned about the climate, or about the impacts of climate change on human, animal and plant life? Once we are clear about our goals, we can issue Climate Stability Bonds, that reward the achievement of our explicit, verifiable goals. 

As well as clarifying and targeting society's actual goals, rather than the supposed means of achieving them, the Social Policy Bond concept injects the market's incentives into every stage of the processes necessary for their achievement, meaning that more can be done with society's scarce resources.

Self-interest can help the environment

Patrick J. Buchanan points out the similarity of the current COP26 talks, supposedly aimed at addressing climate change, to the Kellogg-Briand Pact of 1928:

On Aug. 27, 1928, 15 High Contracting Parties signed on to renounce war as an instrument of national policy. The signatories that day were the United States, Britain, Germany, Italy, Japan, France, Poland, Belgium, Czechoslovakia, Canada, South Africa, Australia, New Zealand, Ireland and India. Within 15 years, all 15 nations, Ireland alone excepted, were ensnared in the greatest war in history. Like the pledges at the climate summit, the Kellogg-Briand Pact provided for no means of enforcement or sanctions against nations that failed to live up to their commitment.

'No means of enforcement' - true - and no incentives either. It is unfortunate to some degree that money is such a critical driver of behaviour but, if we recognise that climate change and other environmental problems are largely caused by financial incentives, then we can make efforts to withdraw those incentives or, if that's too difficult, offer countervailing incentives that would help offset our environmental depredations. We can do this only when there is an over-arching, inextricable link between the financial incentives we offer and the outcomes we wish to see. It is not simply a case of rewarding behaviour that directly improves the environment. Environmental Policy Bonds, globally backed, would reward such indirect approaches as lobbying governments or paying bad actors to cease their destructive activities. Just as big corporations can manipulate regulations to achieve their ends (including stifling competition), so could bondholders encourage government to strengthen environmental legislation. The alternative - the current approach, frankly - is to say nice things in the full knowledge that our destruction of the environment will continue unimpeded.