A sane alternative to MAD

Paying people not to hate each other - or, at least, not to express their hatred militarily: that's a crude, but fairly accurate description of the workings of Peace Bonds, a term that encompasses World Peace Bonds, or more geographically limited applications of the Social Policy Bond concept, such as Middle East Peace Bonds.

Some commenters are reluctant to contemplate the financial transfers implicit in these bonds; shouldn't we be peaceful for more edifying motives? I agree, that would be ideal, but I think humanity is too far gone for that. (Readers unfamiliar with the Social Policy Bond concept should look first at a short overview.)

First, this disdain for paying people to bring about socially and environmentally beneficial outcomes needs some grounding. I am aware of, and agree with, the work of Professor Bruno Frey who found that monetary incentives can undermine our willingness to do the right things for ethical and moral reasons. People perform valuable social or environmental services not only for monetary gain, but also because they enjoy doing them for their own sake, because they believe them to be the morally right things to do, or because they believe that their actions will advance some cause to which they are committed. These ‘intrinsic’ motives are qualitatively different from external, monetary incentives, and offering monetary rewards might ‘crowd out’ or undermine these less mercenary and more civic-minded motivations. Crowding out internal motivation can occur, writes Professor Frey, because, monetary incentives can undermine people’s feelings of self-determination and self-esteem. Also, when external incentives are supplied, the ‘person acting on the basis of his or her intrinsic motivation is deprived of the chance to exhibit this intrinsic motivation to other persons.’

Not mentioned by Professor Frey, but also plausible is that financial incentives can undermine the cognitive outlook that sees socially and environmentally beneficial services as worthwhile in their own right, rather than as a cost for which compensation and payments must be paid by taxpayers.

When it comes to war and peace, though, I think there are valid arguments on the other side. First, is that fact that there is no moral reason not to pay people for pursuing goals that have society's well-being as their goal. We pay teachers and nurses a salary; we pay many people who work for charities a salary; and we pay people who work for peace organisations, including the United Nations, a salary. There is nothing inherently immoral about paying people to do things that have an idealistic underpinning. Peace Bonds would certainly see more funds going to people involved in anti-war activities. They'd probably benefit from higher salaries, at least in the short term. But not only would their renumeration rise; so too would their numbers: anti-war bodies would have more resources, including more personnel, with which to pursue their activities. 

Second is that much conflict is driven by monetary incentives. There would, for instance, be much less availability of destructive power if corporations didn't generate revenue by manufacturing it. Monetary incentives play a similar, though indirect, role in financing the spread of hatred and pro-war propaganda. Holders of Peace Bonds could, therefore, achieve results simply by paying corporations to cease production of weapons, or fomenters of conflict to change their rhetoric. It wouldn't, of course, be as simple as that, and bondholders would probably also have to follow more sophisticated approaches, but we should not underestimate what even unsubtle monetary payments could achieve. Even if bondholders did little more than match the monetary incentives of the pro-war complex, that would be an improvement on the current situation. This need not conflict with Professor Frey's findings: achieving world (or regional) peace is already the goal of many hard-working low-paid workers and volunteers, and the enhanced likelihood of achieving peace that a bond regime would confer would increase their intrinsic motivation - and encourage more people to join them.

And third: what is the alternative? War between the big nuclear powers has been unthinkable in recent decades only because of Mutually Assured Destruction. Are Peace Bonds any more outlandish than MAD? And while the number of nuclear warheads appears to have fallen, the number of nuclear powers has risen. In the future it's likely that more rogue powers, including non-state actors, will possess nuclear or biological weapons whose use, or threats of use, would have calamitous consequences. There are well-meaning hard-working organisations trying to restrain our capacity to destroy ourselves and our environment, but they don't have large budgets and, crucially, their financial rewards are independent of their success or otherwise in achieving peace.

Actually, Peace Bonds need not be an alternative: they can be issued in parallel with current efforts. Holders of Peace Bonds would probably increase the funding those bodies they deem to be most efficient at achieving and sustaining peace. 

In summary: Peace Bonds could complement and strengthen the most promising current approaches to securing and sustaining peace. As with all Social Policy Bonds, they'd encourage diverse, adaptive solutions to what now appears to be our species' most urgent, most dangerous problem.

Why organisations fail to work for the public good

The Economist reviews For Profit by William Magnuson: 

[Mr Magnuson]draws sensible conclusions .... Corporations cannot hope to put public interest above all else for long; what the public wants is far too complicated for them to fathom. When businesses wade into politics, they play an outsize role in shaping it. Yet the belief that the pursuit of profit will always benefit society as a whole is also sadly erroneous, the author says.“For Profit” offers thrilling tales of commercial endeavour:Corporations often start out with the public good in mind. It doesn’t last, the 'Economist', 10 November

The same, in my view, applies to organisations whose mission statements explicitly say they will put aspects of the public interest first, including charities, universities, religious bodies, trade unions and government agencies. At some point their original purpose becomes subordinated to the goal of self-perpetuation. As organisations grow in size, ownership or governance becomes more diffuse, and society becomes more complex, there are fewer incentives for managers to stick to their organisation's founding remit. 

Which is why I believe that, when it comes to social and environmental policy, the way forward is to reward only the actual achievement of explicit, verifiable and meaningful social outcomes. Issuing Social Policy Bonds would do that and would be likely to lead to the creation of a new type of organisation: ones whose structure, composition and every activity would be subordinated to achieving society's targeted social goals as cost-effectively as possible.

How broad?

Though this discussion is unlikely to have practical application in the next few years (or decades), I will pose the question anyway: should a single Social Policy Bond issue target one social ill, or more than one? Say that we are aiming to reduce climate change and its impacts. Doing so, we could issue Climate Stability Bonds that target a range a physical, biological, social and financial indicators. Because targeting climate change makes sense only at a global level, and because of the wide range of indicator variables necessarily targeted, I am inclined to think that, yes, it would be better to issue Climate Stability Bonds independently of measures to target other disasters. By this I mean that Disaster Prevention Bonds, which could encompass a range of natural or man-made disasters, could or should be issued separately from Climate Stability Bonds. 

Then again, should political violence (wars and civil wars) be targeted by Disaster Prevention Bonds, or should they be the subject of a more narrowly targeted bond issue, such as Conflict Reduction Bonds?

The answers depend partly, as I've suggested, on the range of indicators to be targeted. It would be simpler to keep track of a smaller number of variables, which makes monitoring and verification easier and would focus the minds of bondholders and their agents more effectively. Much would also depend on who would be paying for the bonds' redemption: a global problem like climate change is more likely attract funds from a wider range of governments than a more general bond issue that folds climate change in with other disasters to which some countries are less prone. Since taxpayers would supply the public-sector funding, popular support is relevant here too. 

Against this argument, is that it could be more efficient to target the broadest possible goal, so that bondholders would have incentives, depending on events, say, to shift resources away from targeting climate change and towards conflict reduction, if they believe that doing so would minimise human suffering at least cost. They would be more likely to do this if there were no mismatch between the time horizon of the bond issues; for example, if Climate Stability Bonds required an array of indicators to fall within approved ranges for thirty years, and Conflict Reduction Bonds likewise stipulated a thirty-year period of sustained peace before they could be redeemed. My thinking, though, is that any such efficiency gains would be outweighed by the lack of focus that a very broad targeting implies, and the enhanced difficulty of monitoring a very wide range of targeted indicators. 

For these reasons, and for the funding reason, even Conflict Reduction Bonds might be too broad to attract much interest, which is why I have also written about Middle East Peace Bonds, though any region could of course be the subject of bonds aimed at conflict reduction. 

To summarise, I would think that at a national level, broader is generally better when considering the targets of a Social Policy Bond issue. At the global level, I think that the broadest possible bond issue might be suboptimal. However, I'm open to discussion.