We need the freedom and incentives to experiment with policy approaches

Stephen Bush writes about the difficulties the UK's New Labour Government faced when conducting trials of different policy initiatives:

In the early years of New Labour... the literacy and numeracy hours ... were initially trialled only in a handful of areas, while the “London challenge”, a bid to improve the capital’s state schools, provided a test bed for a number of policies since rolled out nationwide. But this can create problems of its own: when a policy programme doesn’t work, it is often politically painful for a government to abandon it, so all that a “pilot scheme” really does is expose one part of the country to a bad policy slightly earlier than the rest. When, as with the London challenge, the policy works, other parts of the country can quickly come to resent not feeling the benefit earlier. [Such a trial] is difficult in a democracy because it leaves governments either facing the embarrassment of abandoning an expensive, sometimes high-profile scheme, or resentment from voters at not rolling out an effective one earlier. A-B or not A-B? Why democracies struggle to innovate, Stephen Bush, Financial Times, 10 May

Exactly: these trials are difficult for governments to perform, for the reasons Mr Bush cites. What we should be doing is providing incentives for any number of bodies; first to conduct their own trials; and second to terminate those that fail, and refine, implement and replicate those that are most promising. Efficiency in achieving the policy goal should be the main criterion determining which initiatives should be dropped, and which should be promoted.

Incremental adaptation and historical accident have left us with the decision-making bodies of today. These include not only government and its myriad agencies, but private sector corporations, religious bodies, interest groups, non-governmental organisations and individuals. The way they operate gives them no financial incentive to try different approaches and prioritise and adapt the most promising. It is not simply a matter of giving more money to the people working for those bodies that conduct the most promising trials: it is - possibly more importantly - a matter of making sure that more resources are channelled into the most promising approaches and away from those that show signs of failing.

The current policymaking world has little scope for the competition that sees an end to unfortunate mutations. As well as the public relations problems cited by Mr Bush, governments find it difficult to terminate failing iniatives. The vested interests are so deeply entrenched that the Darwinian method of allowing optimal solutions to emerge from a range of possibilities isn't given a chance to work. 

Social Policy Bonds could be the solution. Under a bond regime people have incentives to explore, refine and try out new ways of doing things, and to exploit only the most successful approaches. There would be more trials conducted of more diverse possible policy initiatives, and the bonds would give incentives for the mix of promising approaches to change over time, in pursuit of long-term goals that are considered so remote as to be unachievable in today's policymaking environment. Such goals, as for instance, world peace. 

Mr Bush concludes:

Democracies will never be able to move fast and break things in the way businesses can — but giving different players freedom to experiment can help share out the benefits.

I would slightly alter that sentence: '...giving different players freedom and incentives to experiment...' 

For another post about the need for experiments in policymaking see here. For a piece on applying the Social Policy Bond principle to world peace, see here.