Why Social Policy Bonds have gone nowhere

I used to think that Social Policy Bonds, which aim to bring about socially desirable outcomes, would please all policymakers, no matter their ideological bent. The bonds would inject market incentives (pleasing the 'right) into the solution of social and environmental problems (pleasing the 'left'). They'd improve efficiency and stimulate promising innovatory approaches. But - apart from adoption of the non-tradeable version - the concept hasn't taken off. Partly, I think, this is because the bonds are mainly about achieving long-term goals, such as the slashing of crime rates or improved water and air quality, and policymakers do not think that far ahead. Other reasons are:

• Social Policy Bonds would require politicians and bureaucrats to relinquish their powers to allocate funding. The exercise of this power is often an end in itself, but it also allows politicians to channel resources into activities or people that they favour, regardless of their efficiency.   

• Many in power are constrained by their ideology. An idea that combines market incentives and government intervention to solve social problems was, I realise now, never going to appeal to the idealogues.  
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• There's also a particular strain of leftism that disdains anything that smacks of profit, capital gains or financial incentives more generally. It's not always articulated, but it's a sort of subterranean contempt for commerce; a contempt that can survive only in the public sector and its offshoots in broadcasting and academia. Something like Social Policy Bonds, where people can get rich by helping others isn't ideologically pure enough for those who think that way.

There is also the fact that Social Policy Bonds aren't a perfect solution: there could be friction caused by free riding, and there are other criticisms - see here for more. That said, I do think that they are better than current policymaking systems, trapped as they are by their short-term focus and the whims and limitations of those in control. They're also better, in my view, than those ideology-driven programmes that are still occasionally propounded. 

My view now is that government is never going to look into anything as radical and threatening as Social Policy Bonds. The way forward is for those outside government with a long-term perspective and enough in the way of motivation and access to seed funding, to carry the torch. I've tried that approach with those philanthropic organisations that deign to give out email addresses, with little success. 

See also this web page.