The good people at antiwar.com took just a few hours to reject this brief essay, so I'm free to post it here. For followers of my work there's little new. Readers who wish to know more about applying the Social Policy Bond concept to war should please see this page and the links thereon.

Incentives for peace

We are, understandably, not quite rational about war. We regard its opposite, peace, as an ideal: as unattainable as it is desirable; something to aspire to from afar - something that will never actually happen. War appears to many of us, as it did to the ancient Greeks, to be part of the natural order of things. I think we can do better. What I am suggesting is that we put in place incentives for people to end war; to bring about permanent world peace through diverse, adaptive and efficient approaches.

We have to focus on our ultimate goal: sustained world peace. ‘Sustained’, because ceasefires, truces and other short-term measures often just postpone conflict. Our goal is peace that lasts for generations. We need to reward the successful achievement of this goal, rather than activities that are supposedly aimed at achieving it. There are too many people with a vested interest in keeping conflict going. While almost everyone would like to see a permanent end to war, there are too many in positions of power or influence who are half-hearted about peace, who feel threatened by it or who, for whatever reason, actively promote violence.

Ideally, then, we need a way of promoting peace that can modify or circumvent these people's uncooperative or obstructive behaviour. We need to mobilise the interests of the vast majority of people who want peace. We need to find ways of converting, bypassing, distracting, or undermining those opposed to our goal.

Ideally too, we would use market forces. In economic theory, and on all the evidence, markets are the most efficient means yet discovered of allocating society's scarce resources. But markets have been undermined, corrupted and abused such that they are nowadays mainly invoked only to defend extremes of wealth and poverty, or to further degrade the environment. So it is important to remind ourselves that competitive markets can serve society, rather than billionaires and large corporations.

World Peace Bonds

World Peace Bonds are a new way of channelling the market's incentives and efficiencies into what must be our highest priority: the permanent end of violent political conflict.

My suggestion is that a combination of NGOs, philanthropists, governments and ordinary citizens 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. 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. Importantly, the bonds would make no assumptions as to how to bring about 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.

Some years ago I envisaged a tradeable version of the now widely deployed Social Impact Bonds, which are increasingly accepted as a way of stimulating suppliers of social services to do better. World Peace Bonds, because they would be tradeable on the open market, would be closer to my original idea. People would buy bonds only if they expect to make a profit on them. If they're tradeable, 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 several decades.

Buyers of the bonds would work together, tacitly or otherwise, to improve the prospects for peace in the long term. As they did so, the market price of their bonds would rise, and they could realise a gain in value of their assets. This is the key: as the level of violence falls, so the bond price would rise. Bondholders would have incentives to do what they could to achieve peace, then to sell their bonds at a higher price to those who will take the next steps to our ultimate goal.

The bond’s backers, who supply the bonds’ redemption funds, 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 a sufficiently-funded World Peace Bond regime would stimulate research into, and implementation of, ever more cost-effective ways of achieving peace.

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. The crucial point is that bondholders have more freedom and incentive to explore and carry out such diverse, adaptive and long-term initiatives than governments or other international bodies.

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, whether financially or emotionally. There are enlightened, hard-working, people and organisations currently working for peace, but their ability to deploy resources effectively is constrained. The funding of the United Nations and other publicly-financed conflict-reduction bodies is conditional on their carrying out a range of activities limited by the bureaucracy and insecurities of 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. Some of their approaches will be more effective than others but in the current environment nobody has incentives to find out which. World Peace Bonds, in contrast, would explicitly reward movement toward a sustained peace outcome, however it is done, and whoever does it. They would focus on an identifiable 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.

Buy-in: just as important as efficiency

In my efforts to promulgate Social Policy Bonds I’ve usually emphasised their efficiency, which arises from a number of sources, including their harnessing of market forces, their encouragement of diverse, long-term approaches, and their capacity to adapt to changing circumstances. All these attributes are, in my view, essential if policymakers are going put in place systems that solve our urgent social and environmental problems.

Less obvious, but just as important, would be a bond regime's transparency: the bonds would target outcomes that are meaningful to ordinary people. So: if we are targeting national levels of crime, instead of arguing over funding, structures and operations of police forces, or surveillance cameras, or street lighting, etc, a bond regime would target crime, as experienced by the country's citizens. Yes, there would be arguments about how to weight different crimes, and how to define crimes in terms that could be robustly quantified, but the important point is that ordinary people understand the outcome and can (if we want) participate in the targeting process. As well, there's more consensus over outcomes than the supposed means of achieving them. 

Even if we take no real interest in the targeting process, our having the opportunity to make a contribution gives us something critical - but sadly missing - in today's political environment: buy-in.

This would apply even if our views are over-ridden by others: at least, we'd have been consulted. If people have the chance of participating in such discussion, we shall come to understand the limitations and trade-offs that are intrinsic to public policymaking. This means quite a few things, but to my mind buy-in is the most important. It could reconnect citizens with our policymakers; it would entail the sharing of responsibility and concern for policy initiatives.

This matters hugely when government has to do things that hurt people's narrow, short- or medium-term interests: improving our air and water quality, for instance. The current system discourages buy-in because it's difficult and tedious to follow. As such, it's easily influenced by the wealthy or powerful, be they in the private- or public sector, who can afford to pay people to follow the process. The lack of transparency does much to widen the gap between politicians and the people they are supposed to represent. Social Policy Bonds, because of their focus on outcomes, would help close that gap.

Pdfs of past blog posts

Posts on this blog from October 2024 to yesterday, 21 March 2025 can now be downloaded as a pdf from here.

All posts on this blog from December 2004 to yesterday, 21 March 2025 can now be downloaded as a - large - pdf file from here. 

Whipping up a tempest

From the current Economist: 

Mr Trump is expanding his threats, promising to hold Iran to account for the Houthis' attackes and warning them of 'dire' consequences. Yet his approach is only hardening the mullahs' hearts. They may seize the chance to rally their embittered people against a common enemy and go for confrontation and a nuclear momb. Israel might then join the fray. The Houthis would come to their patron's [Iran's] aid and fire again at Gulf cities and oil terminals. It is all too easy to imagine the worst. America’s strikes on the Houthis could whip up a regional tempest, the 'Economist', 20 March 2025

Indeed. I keep returning to the possibility of a nuclear exchange, because it would be a catastrophe in its own right, as well as a terrible portent. We could rely on some combination of world governments to make nuclear conflict less likely but, in today's political environment, I think we should look for a complementary solution. 

My suggestion is that we issue our own (pdf) Nuclear Peace Bonds. All it would take would be for some interested philanthropist to put up the funds, and let the market for the bonds do the rest. Of course, once the ball got rolling, contribution from other bodies and members of the public could be solicited, which would swell the total redemption rewards. Even governments, if they could put aside their short-term interests for a moment, could add to the pot. 

The goal of sustained nuclear peace would actually make an ideal target for the Social Policy Bond idea. One, because it's a complex, long-term goal that will require diverse, adaptive solutions. Two, it's an easy goal to verify. And lastly, it's a goal that, on all the evidence, including that of the above excerpt from the Economist, is unlikely to be reached under current policy. The idea would be to issue bonds that reward a sustained period of nuclear peace. This could be defined, as, say the non-detonation of a nuclear device that kills more than 100 people for 40 years - the long time period is necessary so that systems are put in place that work in the long term. With sufficient backing the bonds would help offset and (one hopes) outweigh the incentives currently on offer to the military-industrial complex and to ideological and religious fanatics.

Those billions of us who would benefit from nuclear peace are presumably a massive numerical majority, but we currently have few means of channel our wishes effectively. The tendency is to assume that governments will do what's necessary, with the support of hard-working, well-intentioned people in the private sector. But the rewards to all these people are not linked to their success. This is unhelpful in itself but, more importantly, it discourages investors who, seeing little opportunity to benefit from working to reduce nuclear conflict, will focus instead of less edifying enterprises. Most important of all is that our current strategy is just not working.

We need to reward those who achieve nuclear peace at least as much as those working to undermine it. We don't know exactly how to reduce the chances of a nuclear exchange, nor who will be best placed to do so, over the long period during which our goal is to be achieved, but we have no excuse for not encouraging people to find out. Nuclear Peace Bonds would apply the Social Policy Bond principle to this goal. Investors in the bonds would form a protean coalition of people dedicated to achieving it as efficiently as possible. Their goal would be exactly the same as society's. Human ingenuity knows no limits. Currently, too much of it is devoted to relatively unimportant or socially questionable goals. Nuclear Peace Bonds would channel our ingenuity, and stimulate more of it, into minimising the risk of a global catastrophe. 

My short piece on Nuclear Peace Bonds is here. The links in the right-hand column of that page point to papers on similar themes: Conflict Reduction, Disaster Prevention, and Middle East Peace

Nobody takes a panoptic view

Peter Gøtzsche writes:

In 2024, PubMed indexed 1,728,666 articles. Compare this with the little progress there is in healthcare from year to year and consider also that most research results are unreliable or outright false. Ridiculous names for predatory journals (clicking the link will download a docx file), Peter C Gøtzsche, Institute for Scientific Freedom, 7 March 2025

This is exactly the sort of overview we need to take in health and other policy areas: a comparison of the resources devoted to a goal and the actual outcomes achieved. Unfortunately, few people have the incentive or capacity to make such comparisons. Professor Gøtzsche himself has been vilified for questioning the role that the pharmaceutical industry plays in psychiatry. Yet taking a panoptic view makes it clear that there's something very wrong with the world's healthcare. It's not just healthcare:

From 2004 to 2014, aid spending increased by 75%. “There was a real feeling,” says Stefan Dercon of the University of Oxford, “that if there was a time things were going to get going, this was it.” Things did not get going. From 2014 to 2024, the world’s 78 poorest economies grew more slowly than in the decade to 1970, when aid was first emerging. This is perhaps unsurprising, given earlier studies. In 2004 William Easterly of New York University and co-authors found that, from 1970 to 1997, aid was just as likely to shrink the world’s poorest economies as to help them grow. Aid cannot make poor countries rich, the 'Economist', 6 March 2025

Again, how many people take this sort of overview, and what influence do they have over policy? Very few, and negligible, I'd say. Arguably, the same failings occur in education in some of the rich countries. Certainly they apply to climate change if we take greenhouse gas emissions as an indicator of policy success:

Why are we so hopeless at making effective and efficient policies? One answer is that we rarely evaluate their effectiveness:  

[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

Another answer is that our policies do not adapt to changing circumstances, nor are national policies sufficiently adapted to different regions. From the same article in the Economist: 

[D]isillusioned economists have turned to the work of Esther Duflo, a Nobel laureate at the Massachusetts Institute of Technology, who uses randomised controlled trials to study interventions. Yet she has come to a dispiriting conclusion: there is no reason why what works in one neighbourhood will do so in the rest of a district, let alone on another continent. In one Indian village, for instance, giving women pensions made their granddaughters (if not their grandsons) healthier; in another, handouts failed to improve health or even raise household consumption. Ms Duflo’s findings chime with other research....

Especially for long-term goals, we need policies that are diverse and adaptive. Social Policy Bonds, as well as injecting market incentives into the solution of our social and environmental problems, would encourage investors to explore different approaches, to refine those that are most promising and, importantly, to terminate failing approaches. 

For more about how the Social Policy Bond principle could be applied to health, see here. For how it could be applied to development see here.

Government of the people, by the bureaucrats, for the bureaucrats...

One of the advantages of a Social Policy Bond regime is that it would oblige democratic governments to do what they do well: articulate society's wishes and raise the revenue to fund their achievement. Sadly, much of the choosing and prioritising of society's goals has shifted from our elected representatives to bureaucracy:  

Bureaucrats no longer saw their role as “looking for methods to fulfill responsibilities defined by the public through politics,” wrote University of Chicago historian Barry Karl in a 1976 essay, but rather as “fulfilling the demands of interests defined by their own growing expertise.” ...The “public good” is now explicitly defined by the bureaucracy, not elected leaders. Defending democracy means defending the right of bureaucrats to ignore elected leaders. Denizens of the Deep State, Bruce Gilley, 'The American Mind', 26 February 2025

Reasons why this shift occurred are not hard to find: politicians have to react, and be seen to react, to daily events. With frequent opinion polls, their time horizons are even shorter than the period between elections. Bureaucracy is more permanent. So we have the 'deep state', whose over-riding interest, as with all institutions, is self-perpetuation. Its goals are formulated, explicitly or not, without reference to - and perhaps in conflict with - public opinion. 

A Social Policy Bond regime would be different. It would take as its starting point those social and environmental goals that are of interest to a country's citizens. These goals would be long term in nature and meaningful to ordinary people, who could therefore participate in their selection and prioritising. As a result, we'd have greater public buy-in. That's in stark contrast to today's policymaking systems, in which debate centres around the supposed means of achieving unarticulated or vague goals rather than the goals themselves. By default, then, decisions as to what society wants and where it's going are made by bureaucrats. It's not healthy.

Betting on socially desirable goals

The Social Policy Bond idea materialised when I thought about how, when betting big money on an uncertain outcome you could use some proportion of your expected winnings to make that outcome more likely. Fixing horse or greyhound races that way would be illegal, but could the same principle be used legitimately for society's good? Perhaps new betting markets are a way in which we could effectively issue Social Policy Bonds.

Let's take a look at Polymarket, 'the World's Largest Prediction Market'. 

Today (27 February 2025) we see that you can bet on whether Timothee Chalamet will take his mother to the Oscars ceremony. This is a simple one-off event that's easy to verify. It's not difficult to imagine that, having placed a sufficiently large bet, a group of punters could persuade Mr Chalamet to bring about the outcome they desire, if necessary with the promise of a significant proportion of their expected winnings. One of the difficulties of the Social Policy Bond principle is that of setting up an experiment. The bonds have their biggest advantage over conventional policymaking when the desired social or environmental outcome is likely to be complex, long-term in nature and require the investigation of a range of diverse, adaptive approaches for its solution. Such socially desirable outcomes could include the slashing of crime rates, significant improvements in the physical and mental health of a country's citizens or, at the global level, a reduction in the adverse impacts of natural disasters. We can't test the efficacy of Social Policy Bonds against current policymaking aimed at achieving such outcomes. 

But what some high-minded philanthropists could conceivably do is to take out a large bet against a readily verifiable one-off outcome like, say, the detonation of a nuclear device that kills more than, say, 500 people within 30  years? They could then use their influence and funds, predicated on their winning the bet, to make such a detonation less likely. At first sight, this sounds tempting: indirectly channelling resources into the achievement of an unambiguously positive social goal. In net terms: yes; nuclear peace is hugely and unambiguously positive. But Polymarket is merely a platform that facilitates peer-to-peer trading, so that people are betting against each other. So for every $1 million bet on achieving nuclear peace, there would be people on the opposing side of that bet who would lose that much. If governments collectively decided to supply the funds that would be paid out on redemption of Nuclear Peace Bonds, then millions of taxpayers would, in effect, be paying for that outcome: a diffuse set of people, none of whom would benefit in any discernible way from a nuclear detonation. The Polymarket is different: it's likely there would be few people on the opposing sides of the bet of our philanthropists, and they could lose substantial amounts if sustained nuclear peace were achieved. They would be well placed and highly motivated, then, to co-ordinate efforts to foil any attempts to achieve that goal. 

Social Policy Bonds would be best issued to encourage goals that are not only almost universally desired, but that also do not create a small group of highly-motivated people who would oppose those goals. The goals I discuss are all like that, but it's also important that they be issued in such a way that any losses from successful achievement of the targeted goals would be spread so thinly that nobody would be motivated to take action to frustrate the targeted goal. So, for instance, halving crime rates could reduce the prospects for lawyers, jailors and nurses, but I don't think that would motivate them actively to oppose that goal. 

The quest for a way of experimenting with Social Policy Bond continues...