Nobody wants nuclear war. So why is it increasingly likely?

Some recent reporting:lurk

South Korea is again considering developing and manufacturing its own nuclear weapons. The cause is the growing instability of North Korea and South Korean fears that the United States won’t fulfill its pledge to attack North Korea with nuclear weapons if the North attacks South Korea with nukes. source

Of the total global inventory of an estimated 12 512 warheads in January 2023, about 9576 were in military stockpiles for potential use—86 more than in January 2022. source

China, India, North Korea, Pakistan and the United Kingdom, as well as possibly Russia, are all thought to be increasing their stockpiles. source

There are two things that we can be almost certain about:

1. Very few people want to see a nuclear conflict, and
2.  the chances of a nuclear conflict are rising.

Why the disconnect between what most people want, and what we are very likely to get? In the nuclear policy arena, there is the self-entrenching idea of deterrence. 'If they were ever used they'd be failing in their purpose,' went the caption to a picture of UK nuclear-armed submarines lurking deep in the sea, in an advertisement for naval recruitment. Other countries have them, so we need them too. The logic is persuasive; the cost of not following it incalculably great - possibly. The problem is that very few of us have sufficient incentive to question this logic and to think of alternatives. There are organisations of all sorts, staffed by well-intentioned, hard-working people who do what they can, with their scanty resources, to minimise conflict. But they are institutionally bound to think and act along conventional lines. 

What I propose is that we offer incentives for people to think of alternative approaches, all of which would have as their aim to reduce the likelihood of nuclear conflict as efficiently as possible. I have no idea how to halt the drift towards nuclear conflict, but I can suggest that we put in place a system that encourages and rewards people for researching, refining and implementing the most promising of such alternative approaches. 

Nuclear Peace Bonds would be an ideal application of the Social Policy Bond concept, which is a way of rewarding verifiable outcomes that we are currently failing to achieve. In this instance, the targeted outcome could be nuclear peace sustained for thirty years. 'Nuclear peace' could be defined as something like 'the number of people killed within 24 hours by the detonation of a nuclear device is less than 500'. The bonds would reward those who achieve such a sustained period of nuclear peace, whoever they are and however they do so: only the outcome would be stipulated. For a short piece on how Nuclear Peace Bonds would work, please click here. For essays about applying the bonds to conflict in general, click here.

As well as pursuing activities the exact nature of which we cannot anticipate, investors in Nuclear Peace Bonds could do things that cannot be done by existing organisations, constrained as they are by precedent, and their perceived need to maintain their existence and so satisfy the bodies that fund them. So, for example, in today's world, nobody would have any incentive to bribe people close to decision makers in politics or the military to advocate nuclear disarmament. Likewise, an existing body is unlikely to try to get religious extremists to tone down their rhetoric, even if it believed that were the most efficient way of reducing the probability of nuclear conflict. The risk and consequences of exposure and backlash are too great for current institutions to bear. Holders of Nuclear Peace Bonds, however, would not be deterred from whatever actions they think most effective: funds to redeem their bonds could be held in escrow. Once nuclear peace had been achieved and sustained, their reward would be guaranteed.

Make saving the planet profitable

"Making oil is more profitable than saving the planet ..."

...says the headline, accurately. There are many other activities that are more profitable than saving the planet: fomenting conflict, manufacturing, office work, mining...etc. We try to curb some of their most obvious environmentally destructive by-products with taxes and regulation, but we also support activities that destroy the environment - to the tune of $1.8 trillion, annually.

I don't know whether making oil will destroy the planet: there are many negative externalities that accompany oil production and consumption, but there are also many positive externalities. Thus, Alex Epstein writes:

There are many other positive externalities of fossil fuels that are almost never discussed—including ... clear benefits [arising from] warmer temperatures in many places where cold-related deaths far, far exceed heat-related deaths. To not consider these is pure benefit denial, regardless of whether you use a word like “externalities.” Fossil Future, Alex Epstein, 2022

Whether the benefits of oil production and consumption outweigh all its costs to society, to the environment and to the long-term future of the planet can never be calculated in a meaningful way. With such urgent, hugely important and complex issues, I suggest that we set in place a range of acceptable outcomes and reward people for achieving them. These outcomes could be expressed, to take those relevant to oil, in terms of atmospheric composition and human, animal and plant well-being. That means that we should target reductions in polluting gases (not only greenhouse gases) while maintaining acceptable levels of human welfare and indicators of environmental well-being.

Doing that would recognise that there are trade-offs; that rapidly reducing oil production and consumption could drastically reduce the quality of life for millions of people. That is one reason why there's been no discernible progress in actually cutting greenhouse gas emissions:

'Climate activism became a big public cause about halfway along this graph. Notice any effect?' From Riding the Climate Toboggan, John Michael Greer, 6 September

Targeting atmospheric composition and, simultaneously, indicators of planetary well-being would, I think, be less unpopular and more attainable than the current efforts supposedly aimed at reducing climate change. My suggestion is that we achieve our aims by issuing bonds that would be redeemed only when all our targets have been achieved and sustained for some decades. This we could do by applying the Social Policy Bond concept to our targets. We do need, though, some clarity about what we are trying to achieve: do we want to target the Earth's climate, or the impacts of adverse climatic events or  - to take the current focus - the concentration of greenhouse gases in the atmosphere? At this late stage it's probably best to aim for more immediately verifiable goals, so I suggest that it might be preferable to target atmospheric composition rather than the stability of the climate, which has been the focus of my previous work. If such an application of the Social Policy Bond concept were ever implemented then we'd go some way to making saving the planet more profitable than activities that have, as a by-product, accelerating its destruction.

To be frank, I don't think anything like this will happen. Our political systems are incapable of solving global problems, even if our leaders had the will to do so. The Social Policy Bond concept has, to my knowledge, never been tried, and there are few incentives and commensurately few resources that are channelled into saving the planet. It's sad.

Health and efficiency

(No, not H&E!)

Dr Malcolm Kendrick, in the third part of his inquiry into the UK's National Health Service (NHS) What is wrong with the NHS?, summarises the problem: 

[I]n the last four to five years, productivity has fallen by around twenty per cent. ...[W]hat we have is twenty per cent more staff, working just as hard, probably harder. Yet, they are creating no additional clinical outcomes. Where does this leave us? ...There is only one possible conclusion. Which is the following. At least twenty per-cent of the work that clinical staff are doing is non-productive.

A large part of the problem appears to be the lamentable proliferation of regulatory oversight and overseers in the NHS. He quotes from a report (pdf) by the Institute of Government:

We found that hospitals that had more managers or spent more on management were not rated as having higher quality management in the staff survey, nor did they have better performance. The implication being the overall hospital performance is dictated by clinical actions and behaviour, while hospital management is focused on administrative tasks ensuring regulatory constraints are met. The number of managers in each hospital was largely determined by the administrative tasks that needed to be fulfilled, with the scope of management circumscribed to these well-defined tasks. (Dr Kendrick's emphasis)

Dr Kendrick illustrates this point by showing a picture of Dr Gordon Caldwell lying beside the paperwork necessary to admit one patient to the Accident & Emergency department of an NHS hospital.

'These are the forms that now have to be completed to admit one patient in Accident and Emergency.'

It's not uncommon, in my view, for large institutions, be they public or private, to lose sight of their original goals. After enough time these organisations' existence is taken as a given, and they cease to be judged solely on how good they are at achieving their stated objectives. In the case of NHS hospitals, the original goals would have been expressed in terms of clinical outcomes but, because of regulatory pressures from outside, those outcomes have ceased to be the over-arching measure of success. 

This is where a Social Policy Bond regime could help. It would set down our long-term social and enviornmental goals and inject market incentives into their achievement. At every stage of progress toward achievement of our goals, investors in the bonds would have efficiency as their over-riding criterion. The bonds would always be owned by those who can maximise the speed and cost-effectiveness of the targeted goals. 

A bond regime targeting the health of a country's population would express its goals in terms that are stable, and long term. A health bond would target a range of indicators that could include such goals as improvements in longevity, reductions in infant mortality, and improvements in Quality Adjusted Life Years. (It should exclude such indicators as five-year cancer survival rates, which can mislead.) Broad measures such as those a bond regime target would be readily comprehensible to the public, and so would attract more buy-in. Links to my work on applying the Social Policy Bond concept to health can be found here.

Investing in world peace

As a species, we know the solutions to a very limited number of social and environmental problems. If the motivation and resources are there, we can be quite effective at solving visible and localised problems, such as a polluted lake, or high levels of crime or unemployment in a small area. But with any degree of complexity and complexity we're out of luck. We simply don't know the best ways of reducing crime, eliminating poverty, dealing with climate change or ending large-scale conflict. These are problems that are:

• long term,
  
• broad,
  
• likely to need a mix of diverse, adaptive approaches to their achievement, and
  
• resistant to any current or envisaged efforts by policymakers to their achievement.
  

Such problems are exactly those that Social Policy Bonds are poised to solve. Take a goal such as sustained world peace, which many of us see as impossibly idealistic. Our efforts, for the most part made by hard-working and well-meaning people, are distinctly unsuccessful. It's a problem suited to the Social Policy Bond idea. The bonds would, by rewarding the sustained achievement of world peace, motivate existing bodies to do more. This is where criticism of the bonds usually begins and ends, as if I am suggesting that employees of such organisations as the United Nations are motivated purely by money, and need more of it to do their jobs effectively. There's a hint of disdain for such mercenary motives here, familiar to those of us brought up in a society pervaded by class conflict and snobbery. To which I have two answers:

• The bonds would not just see that existing organisations pay their people more; they would also give these bodies more resources to work with, provided that investors in the bonds regard them as efficient; and
• The bonds would represent a commitment to a stable, long-term goal. With incentives to achieve that goal, not only would efficient, existing bodies benefit, but new organisations could be created whose every action would be devoted to achieving peace quickly and efficiently.

So a sufficiently funded World Peace Bond regime would generate more resources for all bodies, existing or new, so long as they are efficient. The effect would be to encourage research into diverse approaches; to finance trials of the most promising ones (and, importantly, to terminate those that are failing), and to enable the refinement and implementation of only those approaches that are most effective. 

Peace: the long view

Financial incentives aren't going to prevent terror groups from killing civilians of a different persuasion. They're too far gone for that. But that fact doesn't undermine the workings of Middle East Peace Bonds or World Peace Bonds.

It's true that we are unlikely to be able to deflect a terrorist who's been brought up from birth to hate members of a different religion, sect or ideology, from murderous intent with some cash payment. It is, however, possible, though still unlikely, to prevent him or her acting on that intent. But it's far more likely that if bonds had been issued targeting sustained peace in the Middle East (say), that such a person would not exist. A long-term peace strategy, of the sort currently pursued by well-intentioned but under-resourced groups could not only try to staunch the conditioning of schoolchildren and set up alternatives to the hate-filled media that is often a precursor to war, but would have the incentives and resources to do so effectively.

Most likely, such an approach would need to be taken in parallel with others, including strong defences, controls on weaponry, more inter-faith dialogue and other trust-building exercises. The reasons for applying the Social Policy Bond concept which, at its heart, is about using financial incentives are that:

• Once bonds have been issued there would be no uncertainty about policy changes, so investors in the bonds would be sure that, if successful, they would be rewarded; 
• Given the long-term vision, a wide range of possible approaches could be researched and tried and, if promising, implemented and refined. The bonds would reward only the most successful approaches and, in contrast to current policy, ensure that failing approaches are terminated. 

So, yes, people are right to be sceptical that fanatical ideologues can be dissuaded from killing people by a some pecuniary reward. But once a system of incentives is in place, all types of people could work towards countering hateful ideologies, promoting the benefits of tolerance, and creating the conditions for peace. The relevant question here is less 'could it work?', that 'is it more likely to work than the current array of (in my view) failing approaches?'

Peace in the Middle East

Decades of negotiations and initiatives have failed. We might well be on the brink of a nuclear calamity, and the entire region is a seething cauldron of every sort of hatred: ethnic, confessional, sectarian and gender. I have no solution to the anxieties and potential catastrophes facing Israel, nor to the wider problems facing the citizens of all the Middle Eastern countries. What I offer instead is a way of encouraging people to find effective and efficient solutions. At this time, my vision of peace must sound like an impossible dream, but we can look at, for instance, the current relationship between Scotland and England; the long-running vicious battles between the two countries have ended and the border is one of the more peaceful in the world. There are other examples.

Most ordinary people in the region, given time to reflect and the freedom to express their opinions would like nothing more than to see an end to the violence in the region. But there are enough powerful people inside and outside the region with a vested interest in keeping conflict going. They include men of religion, ideologues, politicians and bureaucrats. There are also, of course, the weapons merchants and their corrupt beneficiaries in government. Well-meaning idealists on all sides do what they can, but their efforts are overwhelmed and relentlessly undermined by the powerful people and institutions that want them to fail.

Peace above all

We also need to focus exclusively on our goal of peace, which will mean putting aside feelings of fairness and justice, except insofar as they help our cause.

And we need ways of promoting peace that can modify or circumvent people's uncooperative or obstructive behaviour; ways that can co-opt or subsidise those people in positions of authority and power who want to help, and at the same time bypass, distract, or otherwise undermine those opposed to our goal.

Ideally too, we would deploy market forces. Markets are the most efficient means yet discovered of allocating society's scarce resources, but many believe that market forces inevitably conflict with social goals: accentuating extremes of wealth and poverty, for example, or accelerating the degradation of the environment. So it is important to remind ourselves that market forces can serve public, as well as private, goals.

We need to give people and organisations of all kinds the incentives to create and sustain peace, rather than conflict.  We also need a verifiable definition of peace, which will consist of a combination of conditions that have to be satisfied and sustained. These could include:

• a much-reduced number of people killed in conflict
• a much-reduced level of terrorist events, or military incursions
• minimal forcible expulsions of people        
• no use of nuclear weapons

As well, given the strong causal relationship between mass media incitements to violence and actual violence we could add to our definition of peace:

• a drastic reduction in mass media incitements to violence; and
• school texts to be approved by all sides of the conflict. 

I would aim to issue Middle East Peace Bonds, which would reward investors only when all the conditions for peace have been satisfied and sustained for two or three decades.

Middle East Peace Bonds

My suggestion is that philanthropists ideally with governments and other interested organisations and individuals, collectively raise a large amount of money, put it into an escrow account, and use these funds to redeem at some future time a new financial instrument: Middle East Peace Bonds. These would be sold by auction for whatever they would fetch. They would be redeemed for, say, £100 000 each only when all the conditions for peace, as defined by the issuers, had been satisfied and sustained.

Importantly, the issuers of the bonds would make no assumptions as to how to bring about greater peace. No one solution, nor even an array of solutions will work all the time. We need diverse approaches that are adaptive, and therefore unlike anything our current institutions can envisage. The bonds instead will stimulate diverse, adaptive solutions.

Nor do we need to know who would hold the bonds or carry out peace-creating projects. Those decisions would be made by would-be investors in the market for the bonds. Unlike normal bonds, Middle East Peace Bonds would not bear interest and their redemption date would be uncertain. Bondholders would gain most by ensuring that peace is achieved quickly. As the prospects for peace brighten, the value of the bonds will rise.

Trading the bonds
Middle East Peace Bonds, once floated, must be readily tradable at any time until redemption. Many bond purchasers would want or need to sell their bonds before redemption, which might be a long time in the future. With tradability,  these holders would be able to realise any capital appreciation experienced by their holdings of Middle East Peace Bonds whenever they choose to do so.

The bonds will be worth more to those who believe they can do most to help reduce the violence, who will then own most of the bonds. Large bondholders might decide to subcontract out peace-building projects to many different agents, while they themselves held the bonds from issue to redemption. The important point is that the bond mechanism will ensure that the people who allocate funds have incentives to do so efficiently and to reward successful outcomes, rather than merely pay people for undertaking activities.

Too large a number of small bondholders could probably do little to help achieve peace by themselves. If there were many small holders, it is likely that the value of their bonds would fall until there were aggregation of holdings by people or institutions large enough to initiate effective peace-building projects. As with shares in newly privatised companies the world over, Middle East Peace Bonds would mainly end up in the hands of large holders, be they individuals or institutions. Between them, these large holders would probably account for the majority of the bonds. Even these bodies might not be big enough, on their own, to achieve much without the co-operation of other bondholders. They might also resist initiating projects until they were assured that other holders would not be free riders. So there would be a powerful incentive for all bondholders to co-operate with each other to help bring about peace in the Middle East. They would share information, trade bonds with each other and collaborate on conflict-quelling projects. They would also set up payment systems to ensure that people, bondholders or not, were mobilised to help build peace. Large bondholders, in co-operation with each other, would be able to set up such systems cost-effectively.

Regardless of who actually owns the bonds, aggregation of holdings, and the co-operation of large bondholders, would ensure that those who invest in the bonds are rewarded in ways that maximise their effectiveness in bringing about peace.

So, in contrast to today’s short-term, tried, tested and failed approaches, a Middle East Peace Bond regime would stimulate research into finding the  most cost-effective ways of achieving peace. Indeed, bondholders would be in a better position than governments to undertake a range of peace-building initiatives, having more freedom to try innovative approaches. They might, for example, finance sports matches between opposing sides, promote anti-war programmes on TV, set up exchange schemes for students of the opposing sides. They might try to influence the financial supporters of conflict outside the region to redirect their funding into more positive ways. They could offer the Palestinians and the citizens of neighbouring Arab countries different forms of aid, including education and scientific aid, and measures aimed at providing a secular education for all Arab citizens.

By appealing to people's self-interest, Middle East Peace Bonds would be more effective than conventional efforts aimed at reducing violence. In channelling market forces into the achievement of this objective the bonds could bypass or even co-opt the corrupt or malicious people in government and elsewhere who currently benefit from conflict.

Middle East Peace Bonds would focus on an identifiable peace outcomes and channel market efficiencies into diverse, adaptive ways of achieving it. They might sound implausible and radical but - let’s be frank - the way things are currently going, with no end of well-meaning inter-faith dialogue and not-always-well-meaning interventions by UN bodies, governments outside the region and NGOs, isleading all of us into the abyss.

For another version of this essay, see here. For applying the Social Policy Bond principle to conflict reduction more generally, see here. 

Bureaucracy triumphs over health outcomes

Dr Malcolm Kendrick describes the Quality and Outcomes Framework (QOF) of the UK's National Health Service. It's the usual array of poorly-thought out, meaningless micro-targets that doctors are paid to achieve, but that have nothing to do with health. As Dr Kendrick points out, such (perhaps) well-intentioned, but futile bureaucratic processes impose a formidable opportunity cost on the NHS, to the detriment of doctors and patients. My suggested solution is to apply the Social Policy Bond principle to health; a short description of this application of the bonds is given here; a much longer version here.

We see the same proliferation of Mickey Mouse micro-targets in other policy realms, notably education, and in diversity guidelines or regulations. They spring from the same presumably benign impulse, but they suffer from a similar lack of vision and strategy. They assume that processes that might have served society well in the past will continue to do so into the indefinite future. They do not allow for diverse, adaptive approaches. Yet it takes courage to criticise them, as Dr Kendrick is doing. My experience is that many people grumble about such top-down initiatives but are understandably reluctant to say anything openly. Though Social Policy Bonds aim to inject the market's incentives and efficiences into the solution of our social problems, perhaps their more important contribution - if they ever take off - will be to focus policymakers' attention on outcomes that are meaningful to the people they are supposed to represent.

Greenhouse gas emissions: we're not actually doing anything to reduce them

Here, as reported in the current Economist, are some grounds for optimism about curbing global emissions:

• 'China understands the need to decarbonise and is investing massively in solar and wind.'
• 'The second-biggest emitter, America, has taken a green turn under Mr Biden.'
• 'Brazil has sacked a rainforest-slashing president;'
• 'Australia has ditched a coal-coddling prime minister.'
• 'Nearly a quarter of emissions are now subject to carbon pricing.'
  
• 'In polls of 12 rich countries...the share of respondents who said [climate change] was a "major threat" rose in every country except South Korea, where it was already high.'

I'm in the happy intellectual position of not having to advocate for or against greenhouse gas emissions, because I think the priority is to decide on those climate-related outcomes we want to see, then rewarding people for achieving them, however they do so. But since emissions are the bandwagon onto which everyone has climbed, what's happening to them is an indicator of how serious we are about the climate. It sounds good so far doesn't it? All those positive trends. But we shall get a better picture if I just repost (I first posted these on 7 September) this graph and caption from John Michael Greer's blog: 

'Climate activism became a big public cause about halfway along this graph. Notice any effect?'

It's the outcomes that are important and it's clear that, despite the singular focus on greenhouse gases, we're not actually achieving any reductions in the rate at which they're emitted. It's a familiar story: we target surrogate indicators; things that current science tells us will influence a target variable, rtaher than the variable itself. In this instance, greenhouse gas emissions, rather than climate change (or the negative impacts of climate change), and we're not even succeeding at that.

Here's a better idea: let's not assume the questions about the causes of climate change have been definitively answered. Let's also decide on what combination of goals we wish to achieve. And then reward the sustained achievement of these goals. I have written innumerable papers and blog posts about applying the Social Policy Bond principle to climate change. Links to papers can be found here, and this blog can be searched for relevant posts.

Paying people not to kill each other: why not?

Some of the people I speak to disdain applications of the Social Policy Bond idea because it's transactional. 'They shouldn't be doing it for the money: people should not have to be paid to reduce their pollution, or to look after their own bodies, or not to commit burglaries.' Or, indeed, to refrain from killing each other. So neither Middle East Peace Bonds nor World Peace Bonds, nor any variant has ever been issued; nor, let's be frank, is likely to be issued in the foreseeable future. I will admit that paying people to achieve peace sounds, at first, a long way short of ideal. We should be at peace because we respect and even love each other, even people of a different tribe, race, religion and all the rest. That would be lovely, but it's plainly not working.

So, for those who are squeamish about aiming for a noble ideal (peace) using sordid means (money), here are my reasons: 

• Paying people who achieve peace is similar to paying nurses and teachers who also work, at least partly, for idealistic reasons. Money pays their bills and allows them to raise families. It is not all about enriching already wealthy plutocrats or corporations but even if, under a bond regime, that were to occur, it would have been a result of channeling people's self-interest into socially beneficial outcomes. 
• There are plenty of people who benefit financially from fomenting conflict. A World Peace Bond regime would help to offset the incentives on offer to those people. 
• A bond regime aiming for a decades-long sustained period of peace would set in place incentives for people to explore, research, investigate and refine many different ways of achieving peace. Many bodies already work to this end but...
• ...a bond regime would give them more resources to work with. This includes people: rewarding peace would allow these bodies to attract more, and better-qualified, people to work for them. We need to divert talented, hard-working people away from less socially beneficial activities (trading currencies, say) or socially destructive (creating ever more sophisticated weapons of mass destruction), and towards such worthwhile goals as the ending of war which, I believe, in spite of all the evidence, is achievable - provided we have it as a long-term goal, and reward it in accordance with its value. 

As I say, the current methods of trying to end war aren't working. Perhaps it's because the rewards and incentives are dwarfed by those reaped by those who depend on conflict for their living. A bond regime may be our best hope of bringing about the sustained period of world peace that all of humanity craves and deserves. Or maybe somebody out there has a better idea?

Perverse incentives and health

 The Economist writes about organ transplants in the US:

[I]f the recipient dies soon after the transplant, hospitals suffer—a key measure used to evaluate them is the survival rate of recipients a year after transplant. According to Robert Cannon, a liver-transplant surgeon ..., hospitals succeed by being excessively cautious and keeping patients with worse prospects off waiting lists. In America, lots of usable organs go unrecovered or get binned, the Economist, 16 September

It's just one example of a narrow, poorly thought-through goal that's in conflict with social well-being. In this instance, improving the financial status of hospitals worsens the health of patients. A more usual comment, though in a bizarre setting is:

An anonymous nurse involved in the case suggested that the deceased patient might not have needed the [heart] procedure in the first place. Woman propped up to look alive for family after already being declared dead at Adena Hospital, Derek Myers, Scioto Valley Guardian, 20 September

There are other examples, some of which I write about in my long piece on using the Social Policy Bond concept to improve broad, societal health outcomes. (For a shorter treatment, see here.) 

In our complex societies, we rely on numerical data to give us an idea of where we, where we are going and where we want to be going. For private sector entities, narrow, short-term financial goals are good enough, but for a country, or the world, we need broad, long-term goals whose achievement is inextricably linked to the well-being of people and the environment. Social Policy Bonds were conceived as a way of injecting the market's incentives and efficiencies into the solution of social problems, but perhaps their greater contribution would be to encourage policymakers to think more carefully about society's over-arching, long-term goals. I believe there would be more consensus over such goals than there is over the alleged means of achieving them and, further, that targeting broad goals that are meaningful to ordinary people would close the gap between policymakers and the people they are supposed to represent. There would be other advantages to the bond concept, but those are the crucial ones. Meantime, it looks very much as though the sort of Mickey Mouse micro-objectives that bedevil healthcare - and not only in the US - are worse for society than the old-fashioned way of relying on people's integrity and willingness to do the right thing.

Social Policy Bonds: current state of play

I don't think any Social Policy Bonds have yet been issued, despite their having been in the public arena for about 35 years. That said, more national and local entities continue to issue Social Impact Bonds, the non-tradable variant of Social Policy Bonds. This wikipedia page summarises the history and current deployment of SIBs, currrently issued in about 25 countries. These include the UK, Australia, the US, and they are also being considered in Brazil, Israel and New Zealand. Dan Corry of NPC (formerly New Philanthropy Capital) in London summarises the state of play in 2022 with SIBs in the UK here:

There was a time when social impact bonds (SIBs) were all the rage, the shiny new policy wonk instrument. This instrument is a contract where payment is hard-wired into specified outcomes being achieved. Independent investors put up the working and risk capital and only get paid back if it all works, it was said these instruments would help us all deliver better services, would encourage innovation, guide government and philanthropists to a better way of commissioning, and would mean we only paid for the things we wanted. But then they sort of faded away from the front-line of interesting ideas: I’ve not seen a think tank or politician talk about them in a long time, even though some keep going in the background. ...

So far, [SIBs] have yet to really taken off despite the pleas of their fans. Are they the future or the last dregs of the New Public Management and the marketisation of everything?  ... Only time will tell. What is the future for Social Impact Bonds?, Dan Corry, NPC, 5 October 2022

I do have reservations about SIBs, which I have expressed here, here, and in several blog posts (search this blog site for Social Impact Bonds). They are necessarily narrow in scope and, in my view, will be prone to manipulation and gaming, especially if they become so commonplace that they escape public scrutiny. Because of their limitations they are also, as I expected and as mentioned by Mr Corry, costly to administer. I haven't been consulted about, and have no involvement in, anything to do with SIBs. As regards Social Policy Bonds, there are occasional mentions in esoteric discussion of innovative finance (see here, for example, or this X thread), but I have to be realistic and I don't think it's likely that any will be issued in the near future. This saddens me, as I do think they could do much to narrow the gap between policymakers and the people they are supposed to represent, and stimulate the diverse, adaptive approaches that humanity needs to solve its big, urgent social and environmental problems. It is, though possible that SIBs, because of their focus on meaningful outcomes will advance, rather than discredit, the Social Policy Bond concept: either scenario is possible.

Climate policy has failed

John Michael Greer writes: 

If the point of the last three decades of climate change activism was to slow the rate at which greenhouse gases enter the atmosphere, the results are in and the activists have failed. Nor is there any reason to think that doing more of the same will yield anything else... Riding the Climate Toboggan, John Michael Greer, 6 September

'Climate activism became a big public cause about halfway along this graph. Notice any effect?'

 

Some might argue that, without climate activism, the trend line would have become steeper in recent years, but it doesn't really matter. What does matter is that a great deal of policymakers' thinking and public resources have gone into trying to reduce greenhouse gas emissions, none of it has had the slightest discernible effect. This was foreseeable.

I suggest that we clarify what it is we actually want to achieve. Do we want to change the climate, or should we instead aim to reduce the impact of adverse climatic events on human, animal and plant life? Most likely, we should target a wide array of approaches that would fit into either category. The next step is to issue Climate Stability Bonds, which would reward the achievement of our impact-reduction goals regardless of whether bondholders do so by trying to influence the climate or by more direct means, such as, for example, reinforcing levees, building new homes for people currently living in flood-prone areas etc.

Climate Stability Bonds would have the long-term focus that current policymaking eschews; the issuers could stipulate that the bonds shall not be redeemed until all targeted indicators fall into an approved range for a sustained period, which could be three decades; bondholders would still profit by doing whatever they can to achieve the targeted goals, seeing the value of their holding rise, then selling their bonds to whoever is best placed to continue with achieving the goals. I have written many treatments of the Climate Stability Bond concept; all of which are freely available here, and there are also numerous posts on this blog (see here, here and here, for instance).

Resources for health

Today's Financial Times has a feature on antimicrobial resistance, pointing out that resistant pathogens are thought to have killed 1.26 million people in 2019, and that the problem is getting worse. 

Few venture capitalists or large drugmakers want to fund the costly clinical trials required by regulators.... As with climate change and future pandemics, no one is taking enough responsibility for the ever-present global threat of antimicrobial resistance.... Why it's so hard to stop the 'silent pandemic', Hannah Kuchler, 'Financial Times', 29 August

The article does talk about philanthropic investment aimed at launching two to four new antimicrobials in the next decade, but this is thought to be insufficient, and:

attention is turning to changing how health systems buy antibiotics. This year, the UK has proposed expanding its novel subscription model, so drugmakers would receive up to £20 million a year for selling innovative antibiotics, no matter how many - or how few - are prescribed.

...nor indeed how effective or ineffective they are - which is the problem: we shouldn't be targeting how many new antibiotics are marketed; that's, at best, a surrogate endpoint. It's not a meaningful outcome to people who want to optimise their health nor, therefore, for policymakers who represent those people. What we need to be doing is targeting broad, meaningful indicators of national health and reward improvements in these indicators however they are achieved. Funding should be dictated by its expected benefits to people, rather than to drugmakers; and it should be directed to where it will achieve the maximum improvement in health per pound spent. Such improvement could be measured using such indicators as Quality Adjusted Life Years, longevity and an array of other measures. It may be that these investments in producing new antimicrobials are appropriate on that basis  - or there may be other priorities that would generate a higher return. My concern is that there is little to suggest an analysis of expected benefits per pound spent has been carried out.

My suggestion, therefore, is that national governments issue Tradeable Health Outcome Bonds, which would provide incentives to research, develop and refine all approaches to improving our health, including measures that are currently thought to be beyond the remit of health authorities, but that could have large positive health improvements. Such measure could include providing better public transport for low-income households, or subsidised apprenticeships. There are many other possibilities, but there are few incentives to consider their health impacts. The linked essay is long, at 9500 words. A shorter version is here.

Targeting environmental outcomes: thirty wasted years

What sort of environmental policy are we seeking? What are our goals? What should be our goals? Such questions arise when we read that, for instance, operating carbon capture and storage would increase direct emissions of NOx [nitrous oxides] and particulate matter by nearly a half and a third, respectively, because of additional fuel burned, and increase direct NH3 emissions significantly because of the assumed degradation of the amine-based solvent. From Air pollution impacts from carbon capture and storage (CCS) [pdf], EEA Technical report No 14/2011

...or when we reading about road vehicles, we realize that:

their tyres  brakes and wear and tear on the road also produce dangerous pollutants, which get worse the heavier vehicles are. How green is your electric vehicle, really?, the Economist, 10 August

...and that electric vehicles are heavier than their internal combustion equivalents. Clearly, there are significant environmental trade-offs here: we can reduce emissions of greenhouse gases, but at the cost of increased emissions of other air pollutants. Currently, policy is made without much consideration of these trade-offs: an apparent emergency, such as climate change, dominates policymakers' thinking so much that the impacts of addressing it are neglected. So, for another example, the environmental costs of generating electricity using wind turbines (with non-biodegradable blades) or solar energy (with loses to biodiversity) are ignored. 

It's quite possible that, in the long run, the policymakers have chosen correctly and that climate change is a real emergency that merits increased pollution of the atmosphere with nitrous oxides,, particulates from tyres, etc and the loss of biodiversity. There are very few instances where one human activity, whether it produces energy or anything else, does not have a negative environmental impact. So, mining and using the filthiest coal to generate electricity has, and still does, bring heat and light to poor people at low cost, while polluting the air and costing the lives of miners. Once the negative impacts become impossible to ignore, and society becomes wealthier, we make efforts to regulate or price the negative impacts.

How is this policymaking approach working? I think the consensus would be: not very well. As well as climate change with all its attendant dangers, we are facing biodiversity loss, overfishing, water and air pollution, and other depredations at all scales. But we can't  expect policymakers to weigh up all the impacts of our activities and price or regulate them accordingly, and to do so on a continuous basis to ensure that policy keeps up with scientific advances (just one current possibility here) and the growth of our knowledge about scientific relationships.

So I propose a different method. The current system reacts to problems when they become politically unavoidable, and then tries to identify and address their causes. My method would be instead to specify acceptable ranges of indicators of environmental health, including human, animal and plant health, and supply incentives for people to ensure that the targeted indicators remain within those ranges for a sustained period. In short, to target environmental goals and reward those who achieve them.

My suggested way of doing this at the national level would be for the government to issue Environmental Policy Bonds. These bonds would not bear interest, but would be redeemable once the specified environmental targets had been achieved and sustained. The bonds would be tradeable and, could have a very long-term focus, encouraging people to research, refine and undertake activities directed toward one or all of the targeted goals. In this, and in other ways, they would have several advantages over current policymaking:

• We'd be targeting outcomes, for which there is more consensus than for the means to achieve them.  

• People can identify more readily with explicit environmental goals than with the means to achieve them, which means that there would be more engagement with the public when developing environmental policy, which in turns means more buy-in, which I consider to be essential.

• The target outcomes would be stable and have a very long-term focus: essential if we are to encourage new ways of achieving our environmental goals.
  

If national governments successfully implemented Environmental Policy Bonds, they could conceivably collectively issue bonds targeting global environmental objectives, encompassing, for example, the health of the seas and atmospheric pollution as well as climate change and biodiversity loss. I have to admit that that looks extremely unlikely, especially as the concept has been in the public arena now for more than thirty years, and only a non-tradeable variant (Social Impact Bonds) has so far been tried. As I explain here and here tradeability is absolutely necessary if we want to achieve broad, long-term goals. Perhaps, rather than wait for government to change the way it does things, we should try to engage with philanthropists. I've tried and had no luck, but perhaps my readers will be more successful.

Using reason to make policy

The Economist writes:

...Americans need to recognise just how many of their compatriots’ lives are being squandered. Too often politicians have been slow to do so and, as a result, America has come to tolerate an obscene level of early deaths. Only after the shock and shame of yet another mass shooting, at an elementary school in Uvalde, Texas, last year, did Congress muster the will to pass modest new gun controls. A proper sense of alarm at other kinds of needless loss may help bring about measures to keep more Americans alive for longer. That way the country could start to curb the carnage. How to reduce American carnage, the Economist, 31 July

It's unfortunate that it takes dramatic events that have immediate visual impact before our current policymakers think about addressing many of our social problems. Ideally, we should aim for policies that minimise adverse impacts on all people's well-being, regardless of who they are, where they happen to live, or whether their plight is dramatic enough to make people watch news bulletins.

One way of doing this would be for government to consult with citizens to discover their priorities for policymakers, specified in terms of broad goals, at times of relative calmness and over a sustained period. Examples of such goals could be: cut violent crime by 50 percent; raise literacy to 99.5%; improve life expectancy by three years. The exact formulation of these goals would be decided by experts and confirmed by government. 

The next step would be to reward people for achieving these goals, whoever they are and however they do so, provided the act within the law - though as part of their goal-achieving activities they can lobby for changes in the law. 

I would go further: my Social Policy Bond concept would aim to inject the market's incentives and efficiencies into the achievement of our specified social and environmental goals. It's a simple idea but one that represents a complete change in the ways government currently runs things. Essentially, it would allow government to concentrate on articulating society's wishes and raising the revenue to achieve them: things that democratic governments are actually quite good at. But the bonds would, in effect, contract out the achievement of these goals to whoever thinks they are best placed to do so. These investors in the bonds would be prepared to pay more for them than they are worth to current holders, so that the bonds would always flow into the hands of those who can best advance progress towards the targeted goal. Because they would be tradeable, investors wouldn't have to hold them for long: they could buy them, advance progress toward the targeted goal, so seeing the value of the bonds rise, then sell them to those best placed to to take the next steps towards the goal's achievement, at which point the bonds would be redeemed. 

In such a way, government would be doing what it's best at, while the market for the bonds would do what - in economic theory and on all the evidence - markets do best: allocate society'e scarce resources optimally.

Uncosted goals are platitudes

Janan Ganesh writes:

Let us dispose of the idea that net zero is popular. Yes, in Ipsos surveys, voters endorse various green policies by supermajorities. But when a financial cost is attached to them, most are rejected. ...Last month, a YouGov poll found that around 70 per cent of [UK] adults support net zero. If this entailed “some additional costs for ordinary people”, however, that share falls to just over a quarter. The beginning of the end of Britain’s net zero consensus, Janan Ganesh, Financial Times, 2 August (archived here)

Government, unfortunately, rarely sets out transparent, explicit, verifiable goals. One such is the 2 percent annual inflation rate, targeted by the UK Government: currently the rate exceeds 8 percent. The same Government's goal of 'net zero' by 2050 is even less credible. Perhaps, like most others, knows that nobody takes its goals seriously, and that nobody will be held accountable for its failure to achieve them.

A Social Policy Bond regime would be different. Under a bond regime a government would spend more time setting explicit, clear and meaningful goals than trying to achieve them, or hiding or explaining away its failure to do so. Democratic governments could be effective at articulating society's wishes and raising the revenue to fulfil them. They are not so effective at actually achieving them. Still less do they correctly estimate or explain the inevitable trade-offs that their policies entail. They can get away with such irresponsible behaviour because society is complex, and people too preoccupied with more day-to-day matters. 

As I explain in more detail in my book, under a government-backed Social Policy Bond regime, costs of achievement of goals need not be accurately estimated. Government would put funds for the ultimate redemption of the bonds into an escrow account; the bonds would be redeemed only when the specified social or environmental goal had been achieved. If the funds are deemed by the market to be insufficient, then investors will show no interest in the bonds. If the funds are roughly equal to, or even much, much greater than, the market's view of how much achievement will cost, then investors would buy the bonds, bidding for them against each other, so that the net cost to the government of achieving the goal will be minimised. The market for the bonds would ensure that this would happen continuously, with investors having powerful incentives to assess the effects of new knowledge and events quickly. Tradeability, which I discuss here and here, greatly expands the range of goals that the bonds can achieve: government could target very long-term outcomes, such as universal literacy or greater life expectancy and then disengage from any attempt to achieve them, which would become the responsibility of investors in the bonds. 

Sadly, governments today, knowing that they are rarely held accountable, are prone to preach such uncosted goals as 'net zero' that function as little more than self-satisfied advertising slogans.

Focusing on nuclear peace

Back in April 2014 just after Russia had annexed Crimea, the London-based think-tank , Chatham House, published a report on the dangers of unintended nuclear conflict: 'The probability of inadvertent nuclear use is not zero and is higher than had been widely considered,' it stated. 'The risk associated with nuclear weapons is high' and 'under-appreciated.'

You don't need to know much about, say, the origins of the First World War to be scared by the possibility that Russia and NATO might be sleepwalking towards a nuclear catastrophe. We could spend a lot of energy trying to allocate blame, but doing so is far less important than striving to reduce the likelihood of such a conflict. There are bodies that are working toward that end, either as their main activity or indirectly, with peace being a hoped-for result of such aims as poverty reduction, climate change mitigation or mass vaccination.

I think, though, that we need to be more focused: a nuclear conflict is one of the worst scenarios imaginable, dwarfing our other serious social and environmental problems. I cannot suggest a way out of any impending nuclear conflict, but what I do propose is that we offer incentives for people to find ways of avoiding such a disaster. Rather than leave everything to the politicians, ideologues, military men and the war-gamers, we could encourage people to back Nuclear Peace Bonds that would be redeemed only when there has been a sustained period of nuclear peace. Backers would contribute to the funds for redemption of the bonds, which would occur only when nuclear peace, defined as, say, the absence of a nuclear detonation that kills more than 100 people, has been sustained for three decades. Backers could comprise any combination of governments, international organisations, non-governmental organisations and philanthropists, and their funds could be swelled by contributions from the rest of us.

The maintenance of nuclear peace is an ideal for targeting via the Social Policy Bond concept:

•     it has an unambiguous, verifiable metric,
•     existing policy doesn't seem to be working,
•     nobody now knows the best ways of achieving the goal,
•     the goal is long term, and
  
•     the goal is likely to require a multiplicity of diverse, adaptive approaches.   

Of course, the bond approach can run in parallel with existing efforts. It's likely to channel resources into those bodies whose activities are most promising. It would also encourage new approaches, the precise nature of which we cannot and need not know in advance.

World targets in megadeaths: the superforecasters give their opinion

The current issue of the Economist reports on a survey of 89 'superforecasters', defined as 'general-purpose prognosticators with a record of making accurate predictions on all sorts of topics, from election results to the outbreak of wars.' They were asked to estimate the likelihood that an unspecified event, such as an AI-caused extinction or a nuclear war, would kill 10% or more of the world's population (or around 800 million people) before the year 2100. The superforecasters gave that event a probability of 9%. 

Nine percent is worryingly high, but quite plausible. We could speculate on the type of event most likely to bring about such a catastrophe, but it's more important to see if we can find a way of forestalling it. 

I think the answer might be to use the Social Policy Bond concept to prevent any sort of catastrophe from happening for a sustained period. The issuers of such Disaster Prevention Bonds need have no knowledge of the relative likelihoods of known or unforseeable catastrophic events. Neither would they have to pre-judge, with our current limited scientific knowledge, the most efficient ways of ensuring our survival. Instead, the bond mechanism could target the sustained avoidance of any - unspecified - catastrophe. It would do so in a way that encourages the exploration and investigation of all threats, known and new, impartially. Policymakers would not (and, anyway, could not) try to calculate how dangerous each threat is. That would be left to bondholders, who would have powerful incentives to do so continuously, which is necessary because the most likely type of catastrophe will change over time. Investors in the bonds would be rewarded only if they can successfully adapt to rapidly changing events and our ever-expanding knowledge.

This is a stark contrast to the current approach; the one that has led to highly intelligent men and women giving our survival such a gloomy prognosis. The people who are currently working in favour of humanity do so in ways that, while worthy of great respect, are doing so within a system that is heavily weighted to favour the short-term goals of large organisations, including governments, that have little incentive or capacity to care about the long-term future of the whole of humanity. It's very regrettable, and Disaster Prevention Bonds, issued with sufficient backing, could change all that. With sufficient backing from governments, corporations, non-governmental organisations and philanthropists, they could encourage more people and more resources into activities that would help reduce the likelihood of catastrophe. 

How best to allocate healthcare funds

It's striking how unrelated is healthcare funding to need. Medical experts have little capacity or incentive to see beyond their own institution or speciality. Governments respond to pressure from interest groups and industry, and allocate funds accordingly. Slipping through the cracks are unglamorous diseases, such as some mental illnesses. Even within a class of diseases, such as cancer, funding discrepancies are stark. I think government here is failing in its purpose. It should target for improvement the broad health of all its citizens rather than merely respond to lobbyists, however dedicated, sincere and hard working. It should, as far as possible, be impartial as to the causes of ill health, and direct resources to where they can return the biggest health benefit per dollar spent. Applying the Social Policy Bond principle to health could do this. At the national level, governments could gradually divert an increasing proportion of its healthcare spending to create and expand a fund to redeem Tradeable Health Outcome Bonds  (For a shorter treatment see here.) 

At the global level - I'll be realistic - such an approach is even less likely to be followed so, having read Peter Singer's The Life You Can Save: acting now to end world poverty, I can recommend the approach he takes when it comes to choosing which charities to support, which are those that, in his assessment, generate the highest increase in well-being per dollar spent. As he points out, 'The best charities can be hundreds or even thousands of times more impactful than others.' See here for more.

The continuing destruction of tropical forests

The Financial Times summarises  a recent report by the University of Maryland and the World Resources Institute's Global Forest Watch:

The equivalent of 11 football fields worth of primary tropical forests disappeared per minute last year[.] Tropical forest loss rises 10% despite pledge by 145 nations, Financial Times, 28 June

The article concludes:

'Market forces driving deforestation were "much greater" than those behind protecting woodland' according to Mikaela Weisse director of the Global Forest Watch.

There's nothing inevitable about market forces when there are no markets for negative externalities and markets themselves are undermined or manipulated by large corporations, or subject to legislative and regulatory constraints. Rather this is a tragic case of market failure. It could conceivably be addressed by doing some complicated and divisive calculations as to the likely impacts of lost woodland and attendant atmospheric pollution, and applying a contentious discount rate to some highly aggregated cash-equivalent figures. That's practically and politically impossible to do. However, I do not believe that a perfect market for, say 'woodland services', with all externalities accounted for, even if it were possible to create one, is an end in itself. It would be a means to an end, and we'd do better to focus on what, actually we want to achieve. 

My suggestion is that we stipulate the environmental goals we want to achieve. One such goal could be a limit on the area of primary woodland destroyed over a period of, say, 30 years. Then Social Policy Bonds could be issued that would be redeemable only when that goal had been achieved. Redemption funds could be raised by a consortium comprising some or all of world governments, NGOs, corporations or philanthropists. The funds would be held in escrow until the targeted woodland preservation goal had been achieved. It would be up to bondholders to decide how to limit the destruction of woodland, and they would have a powerful incentive - the increase in value of their bonds - to do so effectively and quickly. They could take steps that current bodies cannot or will not take, such as bribing illegal loggers to undertake some other activity. A bond regime, rather than eschew market forces, would channel them into the preservation of the world's primary tropical forest. 

For more about applying the Social Policy Bond concept to the environment, click here

Ending world poverty efficiently

Reading Peter Singer's The Life You Can Save: acting now to end world poverty, I'm pleased to see that someone else recognises the importance of solving social problems as efficiently as possible. It's not a given: institutions - even the best run, most dedicated - have their own priorities, of which self-perpetuation is paramount. Efficiency, as measured by improvement in well-being per dollar spent, should be an end in itself, in that optimal efficiency maximises the benefits from our scarce resources. But it is, in my view, also a means to an end, in that efficient poverty relief programmes would encourage more people to contribute to them. To quote Dr Singer: '[A]s people become more confident of the cost-effectiveness of charities, they will become more willing to give.' I haven't finished reading his book but, in it, Dr Singer quotes William Easterly:

The West spent $2.3 trillion on foreign aid over the last five decades
and still had not managed to get twelve-cent medicines to children to
prevent half of all malaria deaths. The West spent $2.3 trillion and
still had not managed to get four-dollar bed nets to poor families. …
It’s a tragedy that so much well-meaning compassion did not bring
these results for needy people. William Easterly, The White Man’s Burden, 2007

In a Social Policy Bond regime, the most important feature would be the targeted outcome, not the institution. A bond regime could target long-term goals in ways that current organisations cannot. All activities would be subordinated to the efficient achievement of the targeted goal. Existing institutional involvement would not be taken as a given: efficient organisations would thrive under a bond regime, but the less efficient would see a drop in their funding. The long-term feature of the bonds means there would be ample time to try diverse, adaptive approaches, and promote the most promising of those while, importantly, terminating those that show themselves to be inefficient. Consistent with Dr Singer's thesis, the best approach would be to issue bonds that target global poverty, with resources being channelled to wherever in the world they can do most good, regardless of the nationality, ethnicity etc of beneficiaries. A starting point could be to issue bonds targeting improvement in some refinement of the Human Development Index. For reasons I've recently given, existing bodies are unlikely to fund such bonds. Philanthropists could, in theory, but I suspect they too would not want to relinquish the control and kudos that come with dispensing large sums of money to needy people. It's certainly, and understandably, difficult for ordinary people to make suggestions along those lines to wealthy individuals, though I try.

Give cash payments a chance

Below is an article I've written recently and sent to a couple of UK newspapers. They won't print it, so I'm making it freely available here. For those familiar with the Social Policy Bond concept, there will be little new in this piece.

Give cash payments a chance: World Peace Bonds

Pay people to stop killing each other? Sounds crazy, and a long way short of ideal. But better, perhaps, than where we are headed.

As the rhetoric gets ever more heated; the piles of weapons ever greater and more lethal, it seems very much as if we’re in a pre-calamity phase. Along with other social and environmental problems, the likelihood of nuclear conflict is probably contributing to falling birth rates in the most liberal and wealthy societies that have ever existed. There are efforts being made by well-meaning, hard-working people and organisations doing what they can to facilitate dialogue, defuse tension, and limit deployment of, and trade in arms. But the sum of their efforts doesn’t change the portentous reality: we are in grave danger of a world war. As the Institute for Economics and Peace tells us, the world has become successively less peaceful each year since 2014. (Source: Institute for Economics & Peace. Global Peace Index 2022: Measuring Peace in a Complex World, Sydney, June 2022. Available from: http://visionofhumanity.org/resources (accessed 21 May 2023).

World Peace Bonds

There’s no single solution to the problem of violent conflict and I can’t offer one. But I can offer a means by which we can find solutions: solutions that will be diverse, adaptive and efficient – as they need to be. My suggestion is that philanthropists put up initial funding for a new type of financial instrument: World Peace Bonds. Funds for the redemption of the bonds could be further swelled by non-governmental bodies, and the wider public. Even governments could contribute, if they could bear to focus on the long-term interests of the people they are supposed to represent. The bonds would be floated by auction and redeemed for a fixed sum only when the number of people killed by violent political conflict fell to, say, 50 000 a year, for a sustained period.

World Peace Bonds (unlike the similar Social Impact Bonds) would be tradeable on the open market. People would buy bonds only if they expect their market price to rise. Because bondholders could sell their bonds at any time, they wouldn’t have to hold them to redemption to make a profit. The bond issuers could therefore target very long-term goals, such as our world peace goal sustained for, say, three decades.

Importantly, the bonds would make no assumptions as to how to bring about greater peace, nor who would do so: these decisions would be made by bondholders. Unlike normal bonds, World Peace Bonds would not bear interest and their redemption date would be uncertain. Bondholders would gain most by ensuring that peace is achieved quickly.

As the level and likelihood of large-scale violence fell, so the market price of the bond would rise. Bondholders would have incentives to cooperate with each other to do what they can to achieve peace, see the value of their bondholdings rise, then sell their bonds, and realise their profit. The bond’s backers need decide only on the definition of peace to be targeted - not on how to achieve it. That would be left up to investors in the bonds, who would have every incentive to maximise their, and the backers’, reduction in violence per unit outlay. So, in contrast to the current approaches to achieving peace, a World Peace Bond regime would stimulate research into, and implementation of, ever more cost-effective ways of defusing and eliminating political violence.

Bondholders would be in a better position than governments to undertake a range of peace-building initiatives. They could lobby or work with governments to, say, change and enforce laws that make wars at home or overseas a less likely prospect. They could finance sports matches between potential protagonists, promote anti-war programmes on TV, or set up exchange schemes for students and schoolchildren. They could try to cajole the financial supporters of conflict into redirecting their funds along more edifying lines. They could offer poor countries innovative forms of aid, including education and scientific aid, and measures aimed at enlightening populations. They might even subsidise intermarriage between members of different ethnic or religious groups. And they could simply pay people to stop killing each other, when they think that’s the most cost-effective approach. The crucial point is that bondholders have more freedom and incentive to explore and carry out such diverse initiatives than governments or other international bodies.

By appealing to people's self-interest, World Peace Bonds are likely to be more effective than conventional efforts aimed at reducing violence. In channelling market forces into the achievement of this objective the bonds could bypass or even co-opt the corrupt or malicious people in government or elsewhere who stand in the way of peace.

In today's emotional climate decision-making is too often reactive. It is too easily swayed by those with a propensity for violence or those who benefit from it, financially or emotionally. There are enlightened, hard-working, supra-national organisations working for peace, but their funding is conditional on their carrying out the limited, short-term activities approved by their sponsoring governments. Private peace-building bodies work in admirable and diverse ways, but their efforts are small-scale and uncoordinated. For neither type of organisation are the financial rewards from building peace correlated with their effectiveness in actually doing so. World Peace Bonds, in contrast, would explicitly reward movement toward a long period of world peace, however it is done, and whoever achieves it. They would focus on an identifiable, meaningful outcome and channel market efficiencies into exploring ways of achieving it. They could be the most effective means of achieving the peace that people all over the world yearn for and deserve.

© Ronnie Horesh, May 2023

Ronnie Horesh was an economist for the New Zealand Government. He is currently based in the UK. Links to his work on World Peace Bonds can be found on his website: http://SocialGoals.com