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
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