The tragedy of the Common Agricultural Policy

All countries have bad policies. What matters is whether we have systems in place that will reform or abolish them. Few policies are as unambiguously bad as the rich countries' agricultural policies.

1. They are capitalised into land values, thereby intensifying agriculture, and so worsening the environment and animal welfare, as well as making the entry of young people into farming impossible.
2. They benefit wealthy landowners at the expense of consumers, taxpayers and food-rich developing countries.
3. They generate overproduction of unhealthy products, which are then disposed of to the detriment of people's health.

These policies have been widely challenged for decades; there's been some tinkering but, we still see, focusing on point (2): 

Revealed: billionaires are ‘ultimate beneficiaries’ linked to €3bn of EU farming subsidies

Thousands of small farms have closed according to analysis of official but opaque data from EU member states. ...The European Union gave generous farming subsidies to the companies of more than a dozen billionaires between 2018 and 2021... including companies owned by the former Czech prime minister Andrej Babiš and the British businessman Sir James Dyson. Billionaires were “ultimate beneficiaries” linked to €3.3bn (£2.76bn) of EU farming handouts over the four-year period even as thousands of small farms were closed down, according to the analysis of official but opaque data from EU member states. ...“It’s madness,” said Benoît Biteau, a French organic farmer and MEP for the Greens in the last European parliament. “The vast majority of farmers are struggling to make a living.” Ajit Niranjan, the Guardian, 3 November 2024

The stated objectives behind these corrupt policies sound grand: to secure the food supply (with huge quantities of imported oil) and, laughably, to protect the family farm.  

Perhaps the most important advantage of a Social Policy Bond regime would be that politicians would have to bind the financing of their policies inextricably to their stated goals. Under the current systems, they can get away with burying the actual goals (transferring money from the poor to rich individuals and, increasingly, corporations), under grandiose rhetoric and reams of legislation and regulation. Under a Social Policy Bond regime, policy outcomes and financing for their achievement would be exactly congruent. Unfortunately, the lobbies that resist reform can afford to do so precisely because of the subsidies they receive. So much so that, as Mr Niranjan points out: 

The EU gives one-third of its entire budget to farmers through its common agricultural policy (Cap), which hands out money based on the area of land a farmer owns rather than whether they need the support.

Agriculture is one sector with which the governments have enmeshed themselves for decades. Government involvement, though, need not be corrupt nor corrupting. A bond regime could ensure that governments would intervene to bring about only the outcomes that are supported by a consensus of the people they are supposed to represent.

Climate change policy: another way of subsidising the rich

I will persist in believing that, if governments were serious about doing anything to combat climate change, they'd target for reduction some of the adverse impacts of climate, and either legislate appropriately, or put in place some incentives that would help mitigate those impacts. That they are not serious, can be clearly seen by the UK Government's Zero Emission Vehicle (ZEV) mandate, which...:

...sets out the percentage of new zero emission cars and vans manufacturers will be required to produce each year up to 2030. [Eighty] % of new cars and 70% of new vans sold in Great Britain will now be zero emission by 2030, increasing to 100% by 2035. Source

 There are some loopholes, of course: 

 If a manufacturer fails to meet this target, it could be fined £15,000 per car it sells that’s outside the allowance. This is unlikely to happen, though, as there are several ways to avoid this. Non-compliant manufacturers can buy ‘credits’ from manufacturers that do comply, for example. Manufacturers that do comply can also ‘bank’ sales that can be traded in years where they may not comply. This system was introduced in 2023 as a part of the ban on fossil-fuel powered cars being pushed back from 2023 to 2035. EV bargains: why some nearly new electric cars are being heavily discounted, 'Which? News', 25 October 2024

 and subsidies to that fortunate part of the population that can afford to own cars and vans:

The government’s schemes to lower the upfront and running costs of owning an EV [Electric Vehicle] includes the plug-in van grant of up to £2,500 for small vans and £5,000 for large vans until at least 2025 and £350 off the cost of homeplace chargepoints for people living in flats. EV bargains: why some nearly new electric cars are being heavily discounted, 'Which? News', 25 October 2024

This is the usual complex, faintly corrupt, totally ineffectual policy that, sadly, is the norm. It might do something to change the ratio of EVs to other vehicles, but it is guaranteed to do nothing positive for the climate. Our politicians are more concerned with placating large corporations (those that make, sell and service vehicles), and motorists; and, as in agriculture (just one example), continuing to transfer funds from the poor to the wealthy. At least there's some consistency: amidst the tax hikes announced in the UK's budget today, we read that: 

Fuel duty stays frozen

Rates on fuel duty – a tax included in the price you pay for petrol, diesel and other fuels – will be kept the same in the next financial year. The temporary 5p per litre cut introduced in 2022 will remain for one more year. Autumn Budget 2024, 'Which? News' 30 October 2024

What would a meaningful attempt to combat climate change look like? First, we'd have some idea of what we want our policies to achieve. My thinking is that our goals would be expressed as an array of scientific, social and financial indicators of the climate and its impacts, each of which would have to fall within an approved range for a sustained period before they could be deemed achieved. What we have today is an exclusive focus on atmospheric composition. The plethora of policies supposedly aimed at influencing  that over the years have had precisely zero effect: 

 

'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 2023

For my suggestion as to how we can combat climate change or its adverse impacts on plant, animal and human life, please see the papers linked to here.

 

Now let's try to solve terrestrial problems

The Economist explains how NASA is reducing costs and enhancing efficiency in space exploration:

Over the past ten years NASA has started to move away from the time-honoured model which sees it tell private industry exactly what it wants built and then pay the price, with a handsome guaranteed profit added on. Instead NASA tells companies what it wants done; lets them say how they would do it, how much new stuff they will have to develop and what that will all cost; and then offers fixed-price contracts to the best bids. The enlightened goal is to build up a thriving competitive market in such services. SpaceX is NASA’s biggest lunar rival, the 'Economist', 17 October 2024

This is exactly the model I've been advocating for many years: stipulate the outcome and let market incentives decide who shall achieve it and how they do so. As it's working successfully for space exploration maybe we could think about applying it to terrestrial problems. I'm not sure why we don't. It could be that the politicians and bureaucrats who control spending on social and environmental problems are reluctant to relinquish the power to determine which bodies receive government funding and how they go about achieving our goals. But they would still have the remit to help articulate society's goals and raise the revenue for their achievement. Democratic governments are quite effective in doing those things, but they will persist in dictating both which bodies receive their funding, and how they are to go about achieving our social and environmental goals. That model can work well when the causes of our social problems are easy to identify, but it's less successful when our problems are inescapably complex and long term in nature. Such problems include crime, poor health, climate change and - most deadly of all - war. They probably all require a wide range of diverse, adaptive approaches to their solution, and these are exactly the approaches that government cannot follow. Nor can any single conventional organisation, whose stated goals inevitably get forgotten over time in favour of self perpetuation. 

Social Policy Bonds would do what NASA's doing: contract out the achievement of our long-term social and environmental goals to investors in the bonds, who would have incentives to co-operate with each other with the sole aim of achieving these goals. When the bonds are issued, I envisage that a new sort of organisation will form, whose every activity will be devoted to maximising the efficiency with which investors solve, or pay others to solve, society's problems. Society's goals and those of investors would exactly coincide.

Climate and the environment: it could have been so different

Several years ago Michelle Nijhuis reviewed Losing earth: the decade we almost stopped climate change, by Nathaniel Rich. She wrote about missed opportunities to address climate change in the 1980s. In 1980 the US National Commission on Air Quality convened a meeting of climate and energy: 

[W]hen it came time to commit to specific solutions, the experts began to hesitate. China, the Soviet Union, and the United States were all accelerating coal production; [President] Carter was planning to invest $80 billion in synthetic fuels. Proposed laws or regulations would focus attention on the costs of emissions reduction, instantly politicizing the issue. “We are talking about some major fights in this country,” said the economist Thomas Waltz. “We had better be thinking this thing through.” By the third day, Rich recounts, the experts had abandoned solutions and were even reconsidering their statement of the problem, loading it with caveats. (Were climatic changes “highly likely” or “almost surely” to occur? Were said changes of an “undetermined” or “little-understood” nature?) In the end, the meeting’s final statement was weaker than the language the commission had used to announce the workshop .... Early warnings, Michelle Nijhuis, New York Review of Books, 27 June 2019

Then, as now, politicians' priority is to avoid difficult 'fights'. Much easier to move on to other, less contentious, issues. 

One of the advantages of Social Policy Bonds is that they put in place positive incentives. They channel self-interest into the public good. Sure, bondholders could lobby in favour of public funds being diverted to their target goal, but there is nevertheless a presentational advantage. With Climate Stability Bonds, people would be rewarded for avoiding climate change and its negative impacts. The climate goal could be expressed as a range of physical, ecological, financial and social indicators, all of which would have to fall into an approved range for a sustained period before the bonds would be redeemed. Importantly, the bonds could work well regardless of whether people believe or disbelieve (or say they disbelieve) that the climate is in fact changing. As with other goals that Social Policy Bonds could target, what matters is that the goal is achieved, not the effort required to achieve it, which means that, if the climate were somehow to revert to that deemed to be acceptable, bondholders would be paid out, even if they merely held the bonds and hoped for that outcome. Of course, if a bond regime were to target a goal seen as likely to be achieved, the float price of the bonds would be close to their redemption value. 

I say all this knowing that it's unlikely Climate Stability Bonds are ever going to be issued. They would require a huge redemption fund, backed by governments the world over, and there's no will now for such an initiative. The missed opportunities abound also for other environmental issues. Thus, the current Economist tells us that:

One study found the average size of wildlife populations had shrunk by 95% since 1970 in Latin America and the Caribbean - more than in any other region of the world. The drug lords' side-hustle: smuggling macaws, jaguars and frogs, the Economist, 10 October 2024

It's to be expected that vested interests will oppose policies that threaten their short-term financial goals. It's more of a tragedy that those who should be showing leadership back down in the face of such opposition. The Social Policy Bond principle, with their focus on rewarding meaningful social and environmental outcomes, could help, but inspired leadership would still be required. I'm not holding my breath.

Useless organisations

Adam Kogeman writes to the Economist:

 [T]he UN does some good through the provision of humanitarian aid, but it is a net negative contributor to global peace and prosperity. [It] prevents no conflicts and brings about no peace. Millions of Rwandans, Ukrainians, Sudanese, Lebanese, Syrians, Iraqis and Israelis, among others, can attest to that. It doesn’t follow through on its grandiose but unserious pledges to heal the environment and improve the lot of the world’s poorest. It provides diplomatic cover to the world’s worst human-rights abusers and physical cover to terrorist groups. It is consumed by a rabid obsession with denigrating the world’s only Jewish state. ...America’s occasional inability to hold sway at such a compromised, ineffectual institution is a reflection of the UN’s dysfunction and illegitimacy, not an indictment of its unmatched geopolitical influence. Letter to the editor, Adam Kogeman, the Economist, 26 September 2024

Whatever their founding intentions, I believe that every institution, be it public- or private-sector, including government (at any level), trade union, church, university, charity or large corporation, eventually, inevitably, becomes consumed by one over-arching goal: self perpetuation. Vested interests get bedded in, acquiring the power to oppose meaningful reform. (See one of my previous posts here about how, despite the many efforts of many organisations to reduce greenhouse gas emissions, nothing has been achieved.)

[T]the National Institute on Drug Abuse in Washington has sometimes claimed greatly to have advanced human understanding of addiction, largely thanks to itself, at the same time as the country in which it is located has suffered from an unprecedented epidemic of deaths from overdose—of drugs of addiction. The total of these deaths far exceeds that of all American military deaths since the end of the Second World War, two major wars included. ...The vast increase in the study of crime has not resulted in the diminution of crime, on the contrary, though it has certainly increased the number of criminologists. ... Another field of study whose academics and practitioners have made claims to great strides in understanding is psychology. This study too has undergone a vast expansion, indeed out of all recognition. Psychology is now the third most popular subject in American colleges and universities, and no doubt elsewhere as well. ...Despite unprecedentedly large numbers of psychologists, the psychological condition of the population does not seem to have improved. Finding a cure for psychology, Theodore Dalrymple, Quadrant, 30 September 2024

Whereas large private-sector corporations at least, in theory, are subject to the discipline of the market (which they do their best to undermine), those organisations whose supposed goals are to solve our social and environmental problems face no such restraint. All of which means, to me, that we need a new type of organisation: ones whose every activity is dedicated to achieving their stated goals. A Social Policy Bond regime, targeting broad, long-term goals, would lead to the creation of such organisations. They'd be driven entirely by financial incentives, which need not be as mercenary as it sounds. We pay people to teach, for example, or to care for people, but that doesn't mean those professions should be regarded with the disdain that many feel when the concept of paying people to achieve social goals - a la Social Policy Bonds - is mentioned. 

A bond regime would work by raising funds to pay investors in the bonds only when a targeted social goal had been achieved. Incentives would cascade down from investors to all those contracted to work to achieve the goal. In the long run, a new type of organisation would evolve with the sole function of funding the most promising approaches to achieving the goal and, importantly, terminating those that are failing. Payment is thus inextricably linked to achievement of the goal. For more about such an organisation see here.

Uncertainty is not an excuse for inaction

We need to recognize our limited knowledge. We don't know how best to solve many of our social and environmental problems. With some problems, we do acknowledge our limited capacity; war, for instance, has been thought to be an intractable aspect of our species, so that efforts to reduce it are sporadic, regional, incoherent and mostly ineffectual. 

Similarly with climate change. We feel the need to 'do something' and so we use the tools at our disposal. With climate change, the main tool is ossified science. We know that our knowledge of the scientific relationships between our activities and the climate is not complete, yet we make policy as if it were. Most our efforts to reduce the pace of climate change are directed at reducing our emissions of greenhouse gases. It was only the Kyoto Protocol of 1997 that targeted for reduction gasses other than carbon dioxide, some of which, fluorinated gases for instance, are extremely potent.

There's a case for saying that the multitude of policies supposedly aimed at combating climate change are made cynically, and that they really have no such intention. Hence: 

A paper published in Science last month reviewed 1,500 climate policies around the world, and found that only 63 have delivered significant benefits. Perceptionware, George Monbiot, 19 September 2024

With the predictable outcome: 

 

'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 2023

But just because our knowledge of the causes of climate change is incomplete, that is not a reason for inaction or - the chosen course - for making ineffective policy. We don't have to wait for certainty. My suggestion is that, instead of basing policy on fossilised and incomplete science, we target our desired climate goal. This could be expressed as an array of quantifiable outcomes, each one of which would have to fall within a targeted range for a sustained period, before the goal would be deemed achieved. And once it has been achieved, and only then, the people who helped achieve it would be rewarded. The outcomes targeted could be physical (eg, temperatures), social (eg people made homeless by adverse climatic events), ecological (eg fates of keystone species), or financial (eg insurance rates for homes in developed countries). I suggest that governments, in conjunction with non-governmental organisations, philanthropists and others back Climate Stability Bonds, which would provide funds for the redemption of the bonds once the targeted outcomes had been achieved. The main advantages of such the bonds would be: 

• the bonds would supply incentives for investors to explore, investigate and implement diverse, adaptive solutions to the climate change problem; and
• the bonds would use market incentives to motivate people to be efficient in their pursuit of successful solutions.

For links to much more about Climate Stability Bonds, see here. 

Finance, like dog food advertising, is a low priority

Social Policy Bonds are intended to channel our ingenuity and ever more impressive technology into achieving our social and environmental goals. I often suggest that many of the activities into which we currently devote boundless energy and resources are socially useless or in conflict with society's wishes. It is not only the relatively minor indulgences that somehow win society's approval against which I inveigh: advertising dog food for example, but such far more consequential resource sinks, such as nuclear weaponry (see my previous post), or finance: 

That’s finance. The total value of all the economic activity in the world is estimated at $105 trillion. ...The value of the financial derivatives which arise from this activity – that’s the subsequent trading – is $667 trillion. That makes it the biggest business in the world. And in terms of the things it produces, that business is useless. It does nothing and adds no value. It is just one speculator betting against another and for every winner, on every single transaction, there is an exactly equivalent loser.  For Every Winner a Loser: What is finance for?, John Lanchester, London Review of Books, 12 September 2024

We ought not to condemn those who choose financial trading as a career, whatever the net results of their collective actions. These people are reacting rationally to the incentives on offer. As Mr Lanchester says:

[I]n our society the classic three ways of making a fortune still apply: inherit it, marry it, or steal it. But for an ordinary citizen who wants to become rich through working at a salaried job, finance is by an enormous margin the most likely path. And yet, the thing they’re doing in finance is useless.

It's the incentives that are perverse, directing our efforts into socially useless, or worse, activities. One way of re-jigging the incentives would be to issue Social Policy Bonds, which would inextricably link the rewards gained by efficient resource allocation to the achievement of our social goals. These non-interest bearing bonds would be redeemable for a fixed sum only when a specified social goal. These goals would be broad and, importantly, meaningful to ordinary people, who could thereby participate in which goals would be chosen, and which would have higher priority. Such goals could include: reduced crime, an improved environment or, at the global level, nuclear peace, or a reduction in adverse climatic events. 

A Social Policy Bond regime would allow us to target broad global and national goals explicitly, while channeling the market's efficiencies into the best use of our limited resources. Given that the survival of the planet itself is under threat, I think the case for such targeting is a strong one, even if financial markets lose a fraction of their liquidity in order for us to get there.

Bypass the generals and politicians: target nuclear peace

How do we get to the point at which the US has 14 US Ohio-class submarines, each one of which has the destructive power of 1250 Hiroshima bombs? It's a complicated, expensive, extremely dangerous way of achieving ...what exactly? I'm not singling out the US here: all countries are doing it. What I'm getting at is the disconnect between the stated goals of policies - in this case, presumably, national security - and the likely results of the way we go about achieving them.

As with other social and environmental problems, we really don't know the most efficient and effective ways of ensuring national security. But our decisions as to who gets to choose these ways embody the assumptions that the military, especially those generals who fought previous wars, are those who know best. I believe that there could well be other, less potentially disastrous, ways of achieving the security that we all yearn for, and that we should explore those ways. Actually, we can go further back and ask: who chooses the choosers? Those who delegate national security to the military are invariably politicians whose expertise lies in the acquisition and retention of power. 

I suggest we explore alternatives; or rather, that we put in place incentives that would encourage people to explore alternatives. A goal that we should target immediately is, in my view, sustained nuclear peace. It's one that probably everyone on the planet would like to see, and one whose achievement or otherwise is easy to monitor. If it's a priority at all, it's one that only a few dedicated people have as their vocation and for which they receive derisory funding. 

By backing nuclear peace bonds, a combination of governments, non-governmental organisations, philanthropists and ordinary people could increase the rewards to existing bodies working to achieve nuclear peace, but also increase the resources available for them - and, crucially, others - to work with in support of the nuclear peace goal. It would be up to highly motivated investors in the bonds to research, experiment and eventually implement the ways in which they best think nuclear peace could be achieved and sustained. To be sure, they might decide that the best way of doing so is for big countries to pile up masses of nuclear destructive potential and hope that nothing goes wrong. But they might also look into alternative approaches that pose less danger and that are being neglected by those who currently make all the relevant decisions.

We might then look at other social problems, and decide to target those directly, rather than via politicians and so-called experts working in organisations whose interests invariably differ from those of society.

So, if we want to raise literacy, why not target literacy directly? If we want to reduce crime, why not reward people for reducing crime, however they do so? If we want to improve the environment, why not target the well-being of human, plant and animal life? In short, why not target outcomes, rather than activities, institutions, inputs or outputs, and let the most effiicient operators, be they public- or private sector, rather than the taxpayer, be penalised for failure? Such would be the effect of a Social Policy Bond regime.

Most environmental and social policies are ineffective

New Scientist says it bluntly, but truthfully:

Most climate policies aren't effective

I have been suggesting for many years now that, instead of enacting policies that are entirely focussed on cutting emissions of those gasses thought to contribute to climate change, we should be clear exactly what outcomes we wish to see, and then reward the people who do actually achieve those outcomes. Instead we have an array of divisive, expensive policies, such as subsidising the substitution of one type of car for another, that have done nothing to affect the climate. Even in their own terms - cutting greenhouse gas emissions - they have failed in their ostensible purpose:

 

'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

If we were serious about tackling climate change we'd first answer the fundamental question: do we want to stop the climate changing, or do we want to mitigate adverse events caused by the climate? Then we'd admit that, while we don't really know how best to achieve either of these outcomes, we do know that a multitude of diverse, adaptive approaches will be required. Then we'd put in place incentives for people to research, experiment, refine and then implement these approaches, terminate those that are ineffective, and invest in those that are most promising. 

The problem is a wider one in the public sector: we do not express policy goals in terms of broad outcomes that are meaningful to ordinary people. Instead we put resources into existing institutions, which have their own agendas, top of which is usually self-perpetuation. These agendas may have little to do with the institutions' stated purpose, still less to do with bringing about meaningful improvements in environmental and societal well-being.

So we end up with the climate change bandwaggon, on which hordes of well-meaning, hard-working (for the most part), people are working in bodies whose finance depends on their carrying out specified activities, rather than actually improving the environment or society's well-being. Companies in the private sector - those that operate in a competitive market - don't have that luxury. When they fail, they go out of business. A Social Policy Bond approach, applied to the climate or to other goals, would impose such discipline on organisations that work in the public sector. Achieve what society wants you to achieve, and be rewarded. Fail and you disappear. It's not as harsh as it sounds, as everyone ultimately depends on our environmental and social policies being effective.

Avoiding Armageddon - an alternative approach

The Economist asks What if South Korea got a nuclear bomb? 'Public support is high....' and, after all,

North Korea is believed to have dozens of nuclear weapons; its arsenal is already projected to grow into the hundreds by the end of this decade. ...Detractors counter that the [Korean] peninsula will inevitably become a much more dangerous place if South Korea goes nuclear. ....Untested leaders on both sides of the border will have their fingers on the nuclear trigger. The finale of this drama could see them stumbling into Armageddon. What if South Korea got a nuclear bomb?, 'Economist', 17 August

'[T]hem or 'us'? Because a nuclear exchange would be a global catastrophe, even it it did not spark a wider conflict. How are we, that is, the non-existent 'international community', going about reducing the probability of a nuclear conflict? It's a subjective view, but I'd say we're failing. Along with everyone else in the world, I can't see how we could convince those in control of nuclear weapons not to use them. What I can suggest is that we put in place incentives that would reward people who can achieve a sustained period of nuclear peace. If there are such incentives in place today, they're too meagre, because they're not working. We can't yet identify the best approaches to nuclear peace, but we can encourage people to research, experiment and follow such approaches.

Ideally, we'd also channel the market's efficiencies into efforts to bring about nuclear peace. We can do this, I suggest, by issuing Nuclear Peace Bonds. These bonds would be redeemable for a fixed sum only when nobody detonates a nuclear device that immediately kills, say, 100 people; such a period of nuclear peace to be sustained for, say 30 years, before the bonds would be redeemed. Backed by a combination of governments, non-governmental organisations, philanthropists and ordinary people, they would encourage a number of peace-generating approaches. Some would be less promising than others: the way the market for the bonds would work means that these efforts would be terminated and resources diverted into the more promising initiatives. 

A Nuclear Peace Bond regime would reward those who achieve peace, whoever they are and however they do so. It’s an admittedly unconventional approach. In its favour is that the funds used to back the bonds could be payable only if the bonds succeed, and nuclear peace reigns. And, the relevant question is: what is the alternative? The current approach has brought us to the brink of nuclear catastrophe. The taboo against threatening the use of nuclear weapons has already been broken. It now appears inevitable that, unless we actively support and pay for nuclear peace, the taboo against their use will also be broken. It’s now time to encourage and reward diverse, adaptive and successful ways of dealing with the looming nuclear threat.

Why bother with the root causes of anaesthesia - or war?

Saying that we need to find the 'root causes' of our social and environmental problems, in the belief that doing so is necessary to solve them, can be a sincere and necessary position. It can also be a distraction, unnecessary, or a cynical excuse for inaction.

Despite the widespread presence of clinical anesthesiology in medical practice, the mechanism by which diverse inhalational agents result in the state of general anesthesia remains unknown. Mechanisms of general anesthesia: from molecules to mind, George A Mashour, Stuart A Forman, Jason A Campagna, Best Pract Res Clin Anaesthesiol 2005 Sep;19(3):349-64.

And even when identifying root causes turns out to be a necessary condition for solving our problems, it needn't be carried out by government. Social Policy Bonds work by rewarding the achievement of a targeted goal; how this is done, and by whom, are not specified - they don't need to be. Even the people who help achieve the goal need not necessarily know why exactly their methods work.

Take violent political conflict. It's still going on, killing, maiming and making homeless millions of people every year. We could spend years analysing past outbreaks of war, but still never get close to identifying root causes in ways that could be usefully be deployed to forestall future outbreaks. Society is just too complex, diverse and fast-changing. Policymakers should begin by specifying society's desired outcomes, and then put in place ways of rewarding those who achieve them, rather try to identify any root causes. Society and the environment are not like simple chemistry or physics. The entities and their relationships are not static. 

A bond regime wouldn't try to identify the root causes of war, which are a moving target anyway. Instead it would start by specifying exactly the outcomes we want to achieve, and then injecting market incentives into achieving those outcomes. The Social Policy Bond principle, applied to conflict, are the means by which I propose we begin to end all war for all time. There are many organisations, staffed by hard-working, dedicated people, already aimed at ending conflict. But their resources and influence are pitiful compared to the scale of the problem. We should acknowledge that our current ways of trying to bring about world peace are insufficient at the global level, and that we need to encourage new approaches. In economic theory, and on all the evidence, competitive markets, of the sort in which Social Policy Bonds would be bought and sold, are the most efficient way of allocating society's scarce resources. Conflict Reduction Bonds would channel the market's incentives and efficiencies into finding cost-effective solutions. They would would increase people's motivation and attract more resources into solving the problem of conflict, and the principle could be deployed to solve our other social and environmental problems. This is not idealism, of the sort that can be put into a box and hence ignored: it's giving incentives to motivated people to find solutions and rewarding only those who succeed in doing so.

Funding drug trials

Monika Odermatt writes about the possibility of issuing Social Impact Bonds to fund certain drug trials: 

I had the pleasure of speaking with Dr. Rick Thompson, CEO [of Reboot Rx]... [I asked] him about the drug repurposing social impact bond (SIB), the challenges he has encountered, and his perspective on the future of SIBs. According to Rick, the following ingredients are key to a successful SIB: flexibility, imagination, and funding. There is a need for flexibility in order to have an open mind and learn from the experiences of other organizations who have worked with SIBs before; imagination in order to overcome hurdles one encounters when trying to implement a SIB, and to find ways to collaborate with other countries and partners; and impact investors to fund the SIB and trials. Social impact bonds could fund drug repurposing clinical trials, Monika Odermatt

I agree, and intend to contact Reboot Rx, along these lines: The flexibility I'd like to see is the sort that would make the bonds tradeable. Finding cures for the rare diseases mentioned is inevitably going to be a long-term endeavour. The incentives on offer should encourage efficient new approaches, and terminate failing approaches. Funds should be channelled into organisations that are most efficient at achieving goals along the way to success; likely to be a multi-step process, in which each step is best taken by organisations with specific strengths. The cast of actors should be flexible enough to encourage efficiency at every stage of the path to success, which means that those who succeed at one step should be able to benefit from the incentives without having to proceed to the next step, in which they may have little expertise. 

I've written elsewhere about the need to make the bonds tradeable for long-term goals such as those of Reboot Rx, and other goals that will inevitably take decades to realise. These include nuclear peace and other forms of conflict reduction, climate stability and other environmental goals.

Incentives matter - more than we want them to

Theodore Dalrymple writes about the UK's public sector:

Everywhere one looks, one sees evidence of things not done properly, but nevertheless expensively. It is as if the real purpose of public expenditure were first to assure the pensions of those working, or ever to have worked, in the public sector, and to assure the employment of hordes of consultants, special advisors and the like. With expenditure about 25 per cent lower than Britain’s own defence, France has more than 33 per cent more soldiers, more than twice as many tanks, six times as many military satellites, and more ships in its navy. The cost of HS2 to Manchester [from London, a distance of 184 miles] is projected to be more than twice the whole of Spain’s entire high-speed railway network (the largest in Europe). While there are good reasons why it is cheaper to build such railways in Spain, they surely cannot explain why in Spain it takes less than 5 per cent of what it costs in Britain to build a mile of such railway. Corruption legalised, Theodore Dalrymple, the Salisbury Review, 21 March 2024

The Consciousness of Sheep explains why:

[I]n the immortal words of Upton Sinclair, “It is difficult to get a man to understand something, when his income depends on his not understanding it.” That is, if MPs [in the UK] had a financial interest in getting infrastructure projects done, they would do so. The fact that they do not is at best evidence of their turning a blind eye, and at worst of direct collusion. What would Xi do?, Consciousness of Sheep, 17 July 2024

Financial incentives matter. Sadly, in my view, more than they should, more than we might want them to. But in our highly aggregated, increasingly diverse and mobile societies, they are almost the only thing that matters. It's a shame, I think, but it's a fact. The Social Policy Bond concept is an attempt to inject financial incentives into the achievement of our social goals, channelling our self-interest into more socially beneficial ends than the mere accumulation of wealth gained by undertaking activities of no or negative social benefit. 

In so many areas, the financial incentives to create social problems are immediate, highly visible and (still) socially acceptable. Two examples

• Selling weaponry without which large-scale war would be less likely, is highly profitable, while the rewards and resources on offer to peace makers are nugatory, and unrelated to their success of failure in preventing war.  

• The social costs (negative externalities, in economics parlance) of mining, production and consumption are largely imposed on our air, water and land. In former times, such costs of exploitation might have been low, relative both to the planet's capacity to absorb them and to the benefits derived from doing so. But that doesn't apply today, and while we do try to regulate some of the environmental burdens, the incentives to forestall, undermine or ignore such attempts are huge, while the incentives for legislators and those trying to preserve the environment are both low and uncorrelated to their success or otherwise in doing so. 

In both war and the environment, and in other policy areas, Social Policy Bonds could be issued that would go some way to rejigging the incentives. The bonds would enhance the rewards to those engaged in achieving our social and environmental goals and, importantly, divert resources away from those creating problems and towards those dedicated to solving them.

Why don't we trust politicians any more? It's (largely) our fault

In her article Why no one trusts politicians any more, Camilla Cavendish writes about ways of closing the gap between politicians and the people they are supposed to represent:

The usual proposals - tightening the ministerial code, properly regulating the revolving door between public office and business and stopping abuses of the honours system - would all help. But they will not address the deeper issue of eroding faith in government: the lack of accountability for failure. Financial Times, 29 June 2024

I agree.

[G]overnment bureaucracies non-self-evaluate. At a minimum, agencies with evaluative responsibilities are not invited to evaluate - they are kept out of the loop, their opinions unsought. At a maximum, government agencies actively suppress their own internal evaluative units and are discouraged from evaluating the beliefs and policies of other agencies. Why States Believe Foolish Ideas: Non-Self-Evaluation By States And Societies (pdf), Stephen Van Evera, Massachusetts Institute of Technology Political Science Department and Security Studies Program, 2002

Our politicians and bureaucrats can get away with this, because their stated goals are rarely expressed as meaningful, verifiable outcomes. They talk about vague, lofty ideals; or about policies, which are means to ends, rather than outcomes, which are ends in themselves, and which are more difficult to achieve. So low and entrenched are our expectations of our governments that even radical attempts to change things - see my previous post about injecting AI into politics - ask for no more than policy proposals when, in my view, we should be discussing, costing and prioritising policy goals.

That's not the whole answer

Another explanation for why our politicians disappoint is one that perhaps nobody in the media really wants to cite: the very high costs of becoming and being a member of a democratic government. These costs, borne by aspiring politicians and their families, include the intense, unceasing and merciless scrutiny of their current and past behaviour, the constant threats to their physical security and consequent the loss of privacy - which will continue when they leave office. The opportunity cost of entering politics has also risen in line with the relatively great financial rewards from alternative professions, such finance, the law, computing. As a result, the pool of potentially highly capable politicians who care about their country has shrunk. We are left with the mediocre, the thick-skinned, the power-seekers, the ideologues and the ones who cannot find employment elsewhere. There remain few who have any appealing long-term vision for their country.

A Social Policy Bond regime could help by taking away some of the powers of these democratic governments. Under a bond regime, governments would continue to do what they can do well: articulating society's wishes and raising the revenue for their achievement; but they would contract out the actual achievement of our goals to investors who would have incentives to achieve them efficiently and quickly. Politicians and officials would lose the power to allocate funding to their favoured bodies. That is a matter of resource allocation which in theory and practice has been shown to be best done by competitive markets.

AI enters politics

Some early applications of Artificial Intelligence (AI) are being reported. In the UK, Steve Endacott, or "AI Steve" is asking the constituents of Brighton and Hove to submit policy proposals:

Endacott created the AI candidate’s initial platform, for example, and the campaign wants to recruit 5,000 people to be “creators”—these are the folks who will have discussions with the chatbot—to surface potential policies. ...These people, everyday Brighton commuters, will review and rate AI Steve’s policies on a scale of 1 to 10. Source

I think asking people for their preferred policies is a missed opportunity: we should be asked what are our preferred goals. Policies are a means to an end. Very often they don't achieve their stated goals, or do so inefficiently and in conflict with other goals. For most of us, it's not policies that are important; it's how closely society's goals are met. (I've written to AI Steve along these lines.)

A political application of AI in the US looks more promising. Victor Miller, running for mayor of Cheyenne, Wyoming, has created a chatbot ("VIC") that would call the shots:

Miller fed VIC the supporting  documents - emails, public records, notices - from past Cheyenne Fity Council meetings... By analyzing these documents, Miller says VIC will learn to make policy recommendations, figure what's important and decide how to vote in council meetings. "It's unlikely that a human can read, say, 400-plus supporting documents between meetings," he says, "But VIC can do that[.] An AI Bot Is (Sort of) Running for Mayor in Wyoming, Vittoria Elliott, wired.com, 12 June 2024

A possible danger of injecting AI into politics is that it could be used to entrench existing inefficient and opaque policymaking systems by making them easier to work with. My hope is that it can help in the articulation, prioritising and costing of society's goals - a necessary condition for implementing the Social Policy Bond concept.

Social Impact Bonds: tradeability would change everything

I'm not a great supporter of Social Impact Bonds (SIBs), with which I've had no involvement. They came on the scene after my first presentations of Social Policy Bonds and differ in that they are not tradeable. This seemingly minor difference is actually critical, and I've explained why here.

So I agree with most of the aspersions cast on Social Impact Bonds by the authors of the paper excerpted below, which echo my own sentiments expressed here and here. However:

The introduction of a profit incentive fundamentally alters the relationship between the service provider and user. The principal client and dominant stakeholder of any given SIB is its financier, not those who receive the services it finances and whose voice rarely figures into any discussion. The motivation propelling private investment in SIBs is profit or return on investment, rather than assisting or changing the circumstances of citizens in need. ... This does not seem to trouble SIBs’ many proponents, who blandly assume that the interests of private financiers can be aligned with the needs of service users, and who are content to see the changing fortunes of citizens instrumentalized as payment triggers. SIBs thereby transform citizens into commodities....  SIBs exemplify the financialization and privatization of social and public policy; they reduce the rights of citizens both as service users and as a polity. A Critical Reflection on Social Impact Bonds, Michael J. Roy, Neil McHugh, and Stephen Sinclair, 'Stanford Social Innovation Review', 1 May 2018

Social Policy Bonds, being tradeable, can take a very long-term view: they can target goals that will depend on a shifting cast of investors for their achievement. Their goals can be meaningful not only to a clique of financiers, but to the public, who can participate in decisions about which goals shall be targeted and their relative importance. With such transparency about broad social and environmental goals, it is society as a whole who will be the principal stakeholders of a bond regime, and many will also be the direct beneficiaries of such goals as cleaner air, reduced crime rates, or similar large-scale goals that a Social Policy Bond regime can target. 

I also think Social Policy Bonds would not lead to undue profits, as implied by the paper and as could readily be made in a SIB regime. It's true that organisations would make profits if they are successful in achieving the targeted goals - that is, those goals that society wishes to see achieved. But, again, tradeability and the ability to target long-term goals, mean that the identity of service providers, whether those invested in the bonds or their agents, can change over time. (See here, for how Social Policy Bonds could lead to a new type of organisation, whose every activity would be aimed at achieving our social goals.)

And, because there would be no barriers of entry into investment in Social Policy Bonds, any profits would tend to be competed away over time between the bonds' flotation and their redemption after long-term goals have been achieved. There would be profits, but they would not be excessive. I don't agree with the authors of the paper that such profits would transform citizens into commodities, any more than paying teachers or nurses transforms schoolchildren or patients into commodities. 

All that said, I think SIBs could play a positive role if they serve as a stepping stone toward Social Policy Bonds. The danger is that their practical disadvantages might discredit the whole idea of contracting out the achievement of broad, long-term social and environmental goals to a protean cast of motivated investors.

Outlook: scary

Post number 1397, and as good a time as any to discuss policymaking and Social Policy Bonds. On both counts, I think the outlook is gloomy. I'd be less concerned about the fate of the bonds if there were any sign that policymaking were becoming more responsive to ordinary people's wishes and well-being. I don't see such signs, either in the country in which I'm currently based (the UK) or in the wider world. Government agencies and large organisations of every sort - corporations trade unions, universities, religious bodies, charities, etc - work hand-in-hand to further their own goals, which are very often irrelevant to the interests of the people they are supposed to represent, or actually in conflict with them. This divergence is replicated at the supra-governmental level.  

20 May 2024

Members of the Security Council observe a moment of silence in the memory of Seyyed Ebrahim Raisi, President of the Islamic Republic of Iran, aka as the 'Butcher of Teheran'. Source

 

 

The results of this divergence are apparent and disconcerting: 

• increasing inequality of income and (especially) wealth within countries, leading to a loss of faith in government in democracies and autocracies alike,
• extreme polarisation of political factions,
• environmental disasters, in the seas, rivers, climate etc, and
• increasing fears of a nuclear exchange.

Decades of all politicians' ignoring the wishes of ordinary people have led to a pervasive nihilism and learned helplessness as nobody thinks they can do anything to improve things at any level above the local.

The aim of Social Policy Bonds is to inject market incentives into the solution of our social problems. But the first essential element was to articulate and prioritise society's goals. Free, competitive, markets have been manipulated and undermined by big organisations, including government regulatory agencies, but even more crucially, there's little discussion of, or priority given, to society's wishes. Vague suggestions that more economic growth will solve all our problems are made, though even given the narrow definition of growth, as measured (usually) by GDP, the poorest in most western countries have benefited little from decades of it. Politicians, prisoners of their paymasters or their ideology, just don't identify with ordinary citizens.

Realistically, there's almost no chance that anything like Social Policy Bonds will be issued in the near future. There has been some interest in the non-tradeable version (with which I have no involvement) known as Social Impact Bonds or Pay-for-success Bonds, but nobody's made the leap to making them tradeable, which I regard as essential to the achievement of society's goals. My main worry now is about a nuclear exchange. The taboo against threatening use of nuclear weapons has recently been broken; the taboo against their use looks fragile. The other huge challenges - environmental and social - remain, but a sustained absence of a nuclear exchange is a necessary condition for addressing them. My forlorn hope is that some combination of government, NGOs, philanthropists and ordinary people, raise funds that would provide meaningful incentives for people to actually bring about (not simply to 'work towards') world peace. Applying the Social Policy Bond concept to that goal is my suggestion, though I'd welcome any gesture in that direction.

Poor countries have no incentive to deal with climate change

Bjorn Lomborg writes: 

Life for most people on earth is still a battle against poverty, hunger and disease.... Tackling global temperatures a century out has never ranked high among the priorities of developing countries' voters - and without their cooperation, the project is doomed. When the only problem was climate change, Bjorn Lomborg, 'Wall Street Journal', 8 May 2024

Sad, but true. The intense focus on climate change and, in particular, greenhouse gas emissions is, I think, unfortunate, in that it's a global problem that requires global cooperation - which is not happening and is not going to happen. National governments should focus on improving the well-being of the people they are supposed to represent; there are plenty of country-level environmental problems that could be solved without the cooperation of other countries: I'd nominate clean water and air, and loss of habitat as a priority for most developed countries, but others will disagree. 

But climate change, or climate breakdown, and the problems it gives rise to, is serious. I think it should be addressed by Climate Stability Bonds, which would be issued by a supra-national body, and backed by contributions for national governments, NGOs, and philanthropists. A crucial first step would be to define precisely, exactly what we want to achieve. The fundamental question is whether we want to try to change climate, or to mitigate climate-related adverse impacts on human, animal and plant life. I envisage a range of biological, ecological, financial and social measures would be targeted, all of which would have to fall within an approved range for a sustained period before the global climate stability goal would be deemed achieved, and after which bondholders would be paid. Such a scheme would have big advantages over the current approach, which is extremely expensive and achieving nothing at all: I refer (again) to this graph:

'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 2023

I have written about the bonds and their advantages in papers linked to here. For the purposes of this discussion, the one relevant advantage is that, once they have deposited their funds into the bonds' escrow account, governments need not try to persuade, cajole or threaten other governments to help achieve our climate change goals: all necessary actions would be undertaken by a shifting cast of highly motivated bondholders, working with each other in ways that we cannot foresee, over the requisite, long, time period. The bonds would set up a system of cascading incentives: bondholders would do what they can to ensure that, when global cooperation is absolutely required, reluctant national governments would have incentives to comply. 

'Flow-trimming': another deception

George Monbiot writes about UK rivers:

I’d been wondering how, when more sewage has been entering our rivers than ever before, some of the water companies have managed to improve the ratio of the sewage they treat v the sewage that pours untreated from their storm overflows into our rivers and the sea. Now we know. It’s called “flow trimming”. Sounds innocuous, doesn’t it? What it means is that sewage is diverted into rivers and ditches upstream of the water treatment works. By reducing the amount of sewage entering the works, the companies can claim to be dealing responsibly with a higher proportion of it. The one reliable pipeline, George Monbiot, 10 May 2024

When goals are narrowly defined, it's easy to get away with stipulating outcomes that do nothing to achieve what society wants to achieve or, worse, that conflict with society's wishes. That's because narrowly defined goals are of little interest to most of us, so are not subject to widespread monitoring. As with much of the regulatory environment, they can be easily manipulated to mislead the public or to stifle competition. 'Flow trimming' is just another example.

My suggestion is that we become more familiar with defining society's environmental and social goals as broadly as possible. So that, instead of meaningless goals such as 'increasing the proportion of sewage entering the plant that's treated', we target indicators that actually are, or are inextricably correlated, with what we want to achieve. So, we should be targeting 'the health all of our rivers', as exhibited by an array of indicators of ecological well being. The benefits of doing so are not limited to making manipulation more difficult: goals that are too narrowly defined can be achieved by shifting problems from one realm to another. So, for example, the goal of reducing the level of several particular polyfluoroalkyl substances (PFAs - better known as 'forever chemicals') in our rivers could be readily achieved by replacing them with an untargeted set of such chemicals. The goal of improving the health of one river could be achieved simply by relocating a source of pollution to a different river a few miles away. 

Expressing our goals in broad, meaningful, terms has advantages other than making our goals less susceptible to manipulation. It makes them more amenable to public participation in their construction and, for many goals, more public engagement in monitoring progress toward their achievement. It means we can more readily formulate long-term goals, so making it easier to optimise resource allocation over time, and providing policy certainty which, again, encourages long-term thinking. 

The Social Policy Bond concept would have these, and additional advantages: it would inject market incentives into the achievement of our social or environmental goals, maximising efficiency as measured, in our example, by improvements in the health of the UK's rivers per pound spent. My work on applying the concept to environmental goals is linked to here.

Sitting on the razor's edge

Concluding her recent book on nuclear war, Annie Jacobsen writes:

Nuclear war is insane. Every person I interviewed for this book knows this. Every person. The whole premise of using nuclear weapons is madness. It is irrational. And yet here we are. Russian president Vladimir Putin recently said that he is “not bluffing” about the possibility of using weapons of mass destruction. North Korea recently accused the U.S. of having “a sinister intention to provoke a nuclear war.” We all sit on the razor’s edge. Nuclear War: A Scenario, Annie Jacobsen, March 2024

Each step along this razor's edge was taken rationally given the incentives on offer, and historical precedent, which tells us that if someone else, enemy or not, has a decisive weapon in their artillery, then we had better acquire one too. These individually justifiable steps have taken us, collectively, to the brink of nuclear exchange. (The term 'nuclear war' isn't really apt, as it's likely the exchange would take place over hours rather than years.) It speaks to the madness of humanity's current condition that we are at a point where our best hopes for nuclear deterrence lie in having leaders who are, or who appear to be, irrational (pdf).

Where do we go from here? The technology to develop and deliver nuclear weapons (which also doesn't sound right - they're not for fighting, they're for killing whole populations) can't be wiped from our collective memory - except by their use, which would wipe out our collective memory and all of humanity and most other life besides.

Under the current system, while the total number of weapons has shrunk, the number of countries that own them has risen. The knowledge and materials needed to build them are widely, and increasingly, available worldwide. There's little to deter state and non-state actors, from doing their best to acquire them.

Numerous actors are making efforts to prevent nuclear proliferation. They aren't, though, rewarded in ways that are linked to their success or otherwise in their mission. This does not mean that they aren't working as hard as they can, nor that they are not sufficiently motivated. It means that they have fewer resources at their command with which to continue with their current efforts and to explore other, perhaps more effective, approaches.

My suggestion is that, with the need for diverse, adaptive approaches, interested governments, NGOs, and others collectively back and issue Nuclear Peace Bonds. These bonds would reward the sustained achievement of nuclear peace, however it's brought about, and whoever helps achieves it. Effectively, the bonds would be paying people to stop other people initiating mass annihilation. It's some way short of ideal, but it is better than where we appear to be heading. Ms Jacobsen continues:

What if deterrence fails? “Humanity is just one misunderstanding, one miscalculation away from nuclear annihilation,” United Nations Secretary-General António Guterres warned the world in the fall of 2022. “This is madness,” he says. “We must reverse course.” How true. The fundamental idea behind this book is to demonstrate, in appalling detail, just how horrifying nuclear war would be.

Another way of subsidising the rich

Environmental policy now seems focused almost exclusively on greenhouse gas emissions. Almost anything that might reduce the net emissions of those gases that are currently thought to be the instigators of global warming is lauded and, indeed, subsidised, regardless of its impact on land use, water quality, child labour, and the viability of public transport.

And inequality. Take Norway, which is...

...constantly being hailed as a frontrunner in the promotion of electric cars. It is true that there has been a real boom of BEV [battery electric vehicle] sales in the country – due to generous government subsidies. However, the overall picture is not so rosy - one might even consider it tragic. Namely, in 2010, there were 2,308,000 cars, while by 2022 this number jumped to 3,105,000 – in a country with a population of 5.4 million. During this period, the number of internal combustion engine (ICE) cars did not decrease at all. ... Many [Norwegians] think that it would have been more useful to invest more in public transport and encourage cycling and walking. Subsidies for electric cars have also increased social inequalities by primarily benefiting the wealthier individuals who usually bought one or more additional cars to the already existing one(s). Electric cars are a dead end, András Lukács Aydan Gurbanova, 'The Ecologist', 16 April

There's something really cynical about this. If we are serious about wanting to reduce our impact on the climate, then we need to enact policies that reduce our impact on the climate. We need also to take into account the negative externalities of our policies, not only on distribution (of income or wealth), but also on the environment more generally. 

My suggestion is that we focus on the outcomes that we want to achieve, rather than the supposed means of achieving them. The fundamental question is whether we want to change the climate, or to reduce the adverse impacts of climate change. We could, for example, aim for a range of social, physical, biological and financial indicators (insurance claims for instance); all of which must fall within an approved range for a sustained period in order for our climate goal to be deemed achieved. The tunnel vision focus on greenhouse gas emissions won't do anything to bring about such a broad range of goals. In fact, despite vast expenditure of bureaucratic energy, technical advances, coercion and subsidies it's even failing to reduce 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

Our scientific knowledge about the impacts of, and optimal solutions to, climate change is constantly expanding, and we need policies that allow for that. My suggestion is that we reward those who achieve an array of meaningful climate-related targets by backing and issuing Climate Stability Bonds. These would stimulate research into, and implementation of the diverse, adaptive approaches that will be necessary to bring about an efficient solution to the climate change problem.

Betting markets and benign manipulation

Zachary Basu writes about the 'explosion of legalized gambling' in the US, which 'has set the stage for a provocative new frontier in the world of risk-taking — betting markets for everyday events, ranging from Taylor Swift streams to hurricanes hitting major U.S. cities.'

Punters...

...can bet on hundreds of real-world events — whether the Fed will cut rates, the high temperature today in Miami, Oscar nominations, the outcome of Supreme Court cases — on Kalshi, the only federally regulated exchange dedicated to event markets.... Some ethics experts have raised concerns about the integrity of betting on natural disasters and other markets tied to human suffering, as well as those that could be subject to manipulation. America the slot machine, Zachary Basu, 10 April

If there were a market that promised huge rewards for successfully predicting, say, a halving of the number of people killed by natural disasters in the US, then you can see how it would be in punters' (otherwise known as 'investors'') interests to do whatever they can to improve US citizens' resilience to such disasters. And that explains how I came up with the idea of Social Policy Bonds: the aim is to reward not so much the successful prediction of future events, but successful efforts to influence future events to the benefit of society. Hence, in this example, Disaster Prevention Bonds.

The Social Policy Bond principle is a beneficial form of the manipulation to which Mr Basu refers, which can manifest itself in the sports world as match fixing. With governments (unsurprisingly) and philanthropists (disappointingly) taking only tiny steps in the direction of rewarding successful achievement of beneficial outcomes, perhaps another approach would be to set up a market with Kalshi for a relatively unambitious goal. Those who stand to lose money from, say, high crime rates in a particular city, such as insurance companies, could bet that crime in that city will not halve in the next five years. Punters on the other side of that gamble, and would be motivated to do all they can to make sure that such a halving does occur. Everybody would gain from this benign form of manipulation. Such is the Social Policy Bonds differ only in that those setting up the bet would aim to reduce all forms of losses, not only those that can be valued monetarily.

Transcending identity geopolitics: Conflict Reduction Bonds

Gideon Rachman asks:

What is it that causes some tragedies and conflicts to command the world's attention and others to pass almost unnoticed?

The tragedies of Ukraine, Gaza and Israel all get far more attention than wars and humanitarian calamities in the rest of the world. ... [L]ast week the UN warned that "Sudan will soon be the world's worst hunger crisis" with 18mn people facing acute food insecurity. It highlighted an ongoing conflict that involves "mass graves, gang rapes, shockingly indiscriminate attacks in densely populated areas" and more than 6.5mn displaced people. War and the rise of identity geopolitics, Gideon Rachman, 'Financial Times', 27 March

The answer appears to be something Mr Rachman calls identity geopolitics. But for my purposes, the 'why' doesn't really matter. A higher priority is, I believe, to target for reduction all deaths and depredations caused by human conflict, impartially; that is, without regard to people's identity, beliefs, or where they live. We have limited conflict reduction resources, and they should be deployed where they can relieve the most human suffering. When thinking rationally and compassionately, I believe most of us would agree. 

One way of doing this would be to issue Social Policy Bonds to target conflict and the results of conflict. The bonds could target conflict in a particular region (the Middle East, for instance), or the entire globe, or (simpler to monitor), nuclear conflict specifically, depending on the source, magnitude and interests of those funding the bonds. I will admit that the idea of issuing bonds targeting something the ancient Greeks and others have deemed an inescapable aspect of human nature seems overly idealistic at first sight. But incentives can direct our goals and behaviour in unimaginably varied directions. Financial incentives, as offered by the bonds, aren't the only way of influencing our behaviour but, if they are sufficiently large and embedded in a very long-term vision, they could attenuate some of the more negative human traits that lead to deadly conflict. If that sounds far-fetched, consider the power of financial incentives to foment conflict: without weapons at every level of sophistication, tragedies of the scale at which we are seeing today would simply not occur. Manufacturers supply weapons in such copious quantities precisely because of the financial incentives on offer. 

The links in the previous paragraph lead to pieces explaining how the bonds would work. In my view, issuing bonds with the goal of peace sustained for several decades would have two huge benefits:

• They would bring about more more efficient allocation of conflict-reduction resources, so minimising the human suffering that conflict brings about, including that measured in terms of deaths, injury, or homelessness.

•  For that reason, people would be more inclined to invest in conflict reduction, in all its aspects, many of which will be innovate and that we cannot anticipate. 

Greater effectiveness of peace making, and more resources devoted to peace making: I think it's worth a try.

Defining and rewarding peace

How do we define 'peace' in such a way it could be meaningfully targeted by such applications of the Social Policy Bond concept as World Peace Bonds or Middle East Peace Bonds? 

It seems difficult at first. Peace, in the sense of absence of open conflict reigns, by definition, in the years before wars break out. But the opening sentence of Liddell Hart's History of the First World War gives a clue:

Fifty years were spent in the process of making Europe explosive. Five
days were enough to detonate it.

A World Peace Bond regime would be targeting long-term peace. Bondholders therefore would be rewarded when they reduce the probability of conflict before it becomes lethal. As with most Social Policy Bond applications, our overall goal will be a set of subordinate goals, each of which has to be satisfied before the bonds will be redeemed. So, one such sub-goal could be to ensure that the 'number of people killed within 24 hours of an act of violence' falls below 5000 for a period of several decades. But this condition would have to be satisfied at the same time as others, such as the lethality of weaponry held by actors. 

With a goal for peace that must be sustained over fifty or more years, metrics that target for elimination the use of deadly violence become more closely aligned with what we actually want to achieve. With such a decades-long outlook, bondholders would have incentives not merely to prevent the outbreak of violence, but also to prevent the precursors to violence. For example: the Cold War ended peacefully, but if World Peace Bonds issued in the year 1950 had targeted a period of sustained peace of just ten years then bondholders would have profited, despite the accumulation of ever more horrific atomic and nuclear weapons, during the period that preceded the Cuban Missile Crisis of October 1962. If the same bonds had been issued with a target of fifty years of sustained peace, then bondholders would have been motivated to reduce tensions, including by such means as reducing the weapons pile-up, or fostering better relations between the US and USSR. A ten-year goal would see the original bondholders making profits while the prospects for peace looked ever darker. A fifty-year goal would have seen the value of their holdings collapse before and during the Crisis.

The point is that rewarding peace sustained for a decades-long period encourages longer-term thinking. By choosing to target a decades-long period of sustained peace, we should do much to eliminate the much less quantifiable - but hugely important - precursors of violence.

Even more appealing as a target would be nuclear peace. A goal such as 'fewer than 500 people killed by a nuclear device within one month of its detonation over a period of fifty years' would be even simpler to define robustly, and could be a top priority for organisations, or philanthropists perhaps, who wish to ensure nuclear peace, but have no means or wish to get involved in achieving it.

Black Out nights, climate and war: the need for verifiable goals

Stephen Bush writes about 'Black Out' nights in the US and UK, which are intended to encourage more black people to attend theatre performances by inviting an 'all-Black-identifying audience'. Mr Bush's opinion about this form of segregation is similar to mine (negative), but he is also ...

...struck by an equally important and more widespread problem: that no one involved either has any idea if the scheme works or any plan for measuring it. Even worthwhile causes need a metric for success (paywall), Stephen Bush, 'Financial Times', 11 March

He concludes:

All of us who criticise Black Out nights because we don't like the principle at stake are also guilty of failing to ask the first question we should pose to anyone doing anything, no matter how worthwhile. And that is: how, exactly, will we be able to tell if you've succeeded or failed?

It's a common failing, and one that is most grievous when it's made by policymakers. My previous post refers to an article written 22 years ago by Stephen van Evera, and I don't think things have improved since then. It's one of the reasons that I have posed Climate Stability Bonds as an alternative to the current focus on reducing greenhouse gas emissions as the sole solution the climate change problem. We can target emissions fairly accurately, but we cannot reliably link any changes in emissions to changes in the things that matter to us. We need to specify exactly what are those concerns, and set up reliable measures of progress towards addressing them, before imposing heavy regulatory and financial costs on society. That's one reason, I believe, that despite heroic efforts (alongside those costs), nothing in the way of greenhouse gas emission has been achieved.

'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 2023

It seems that charities and activists are following the government's lead: declaring grandiose, lofty-sounding goals that just happen to be so vague as to resist effective monitoring. Speaking out against initiatives that may well be futile and certainly cannot be shown to be successful, such as Black Out nights or, indeed, agreements to cut greenhouse gas emissions is, in today's politically polarised scene, risky. Potentially even more disastrous for humanity than the climate change circus is the failure to set and reward verifiable goals for eliminating deadly conflicts: wars and civil wars and their consequences. There are well-meaning, hard-working people working for bodies ostensibly aimed at reducing conflict levels, but nobody is in a position to judge how effective are any of their myriad approaches.

A Social Policy Bond regime would not allow policymakers to get away with specifying goals that can't be measured. So, for example, we need to identify what exactly we want climate change policy to achieve. Our goals in that area could be defined in terms of a range of physical, ecological, social and financial indicators, all of which would have to fall within an approved range for a sustained period before the policy would be deemed successful, and holders of Climate Stability Bonds rewarded. That period could be decades long. All of this would be a sharp contrast to today's approach, which has as its sole goal a reduction in greenhouse gas emissions, which even if it were to be achieved, does not speak to the concerns of ordinary people, which is one reason why it has gained no real traction. Similarly, with conflict. Targeting broad, verifiable, meaningful, long-term outcomes, such as sustained period of a more benign climate or world peace would not only be more effective than any current efforts to solve global problems; it would enjoy more public support and hence more buy-in; essential if we are to successfully meet the huge challenges humanity faces, of which climate change and war are two of the most urgent.