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.
