Money isn't everything

In chats with friends about deploying Social Policy Bonds to counter religious or ideological extremism, I'm often told that the fanatics just won't respond to financial incentives so, the reasoning goes, a bond issue aimed at reducing conflict would be unlikely to succeed. I think the premise is correct: fanatics are motivated entirely by their beliefs. Money doesn't come into it. But I think the conclusion is false: financial incentives can work to eliminate conflict; fanatics are found in any bar, campus or on any street corner. Without backing, either direct or indirect, from others, they do not ascend into positions of influnce. The further one goes from the fanatical centre, the more one will find supporters of the extremists who are amenable to financial incentives. Social Policy Bonds can motivate these people to withdraw their support from the fanatics and, possibly, to channel their support into goals that are more congruent with those of society. A bond regime wouldn't change the beliefs of the extremists, but it would decouple them from positions of influnence. At its most simple level, a bond regime could act as a counterbalance to all the financial incentives that exist to create and continue conflict: those that motivate, at some level, arms manufacturers and brokers, and the interests of those who think they will gain if the conflict resolves in their favour. Money isn't everything, but Social Policy Bonds targeting conflict for reduction could channel the urge to acquire it into socially beneficial activities.

Terror: too much too late

There is one simple solution to the problem of terrorism: kill lots of people, of which some are certain to be terrorists. Choose a terrorist-rich area, and if you kill everybody within it, then you can be sure no terrorists will originate from there ever again. It's a cruel policy and also a stupid one, in that it's likely to create resentment outside the killing zone, which will generate more terror later. Of course you can enlarge the killing zone, create a desert, and call it peace, but you cannot do that indefinitely, and the costs to everybody rise hugely as your killing zone expands. Unfortunately, politicians, the military and the public want a simple solution, and the Tacitean desert approach seems to be the policy of choice in today's world. It's the 'too much, too late' option, which, arguably, has led to numerous devastating wars.


I have another idea. Let's recognise that there is no simple solution. That it's likely that only a combination of different approaches, varying with time and over geographical area, will work, and that our goal is a sustained period during which terror will not occur. There are initiatives now that can help achieve that goal, But they're not co-ordinated and are heavily outweighed by the reactive policies of governments under pressure to 'do something' when an outrage occurs. Almost all the incentives on offer are to those with a strong interest, conscious or not, in keeping conflict going. This means the military, the men of religion, the ideologues on all sides, and the millions of intimidated and frightened ordinary citizens.

We need to put in place a system of countervailing incentives; one that encourages diverse, adaptive approaches, and one that will reward people who oppose or undermine the interests that generate conflict. We should focus on the long term, so that our goal would not be undermined by policy changes or unconsidered reactions to outrages. One way of doing this would be by issuing Conflict Reduction Bonds. These could be backed by any combination of governments, non-governmental organizations, philanthropists and ordinary citizens, whose funds would reward the achievement of a sustained period of global (or regional) peace. Incentives under a bond regime would cascade down into all sorts of initiatives, glamorous or not, high level or low level, bottom up or top down, old-fashioned or innovative: efficiency in reducing the prospects of conflict would be the sole criterion for the allocation of funds. For more see this previous post, or my papers on applying the Social Policy Bond concept to conflict reduction.

How to avoid societal collapse

We haven't evolved to think long term and globally, according to Joseph Tainter, author of The Collapse of Complex Societies. In a recent and fascinating podcast interview Dr Tainter sees the collapse of the Roman empire as a template for societal collapse: 

Everything the Roman government did in the short term was rational. Everything they did made sense at the time they did it. It's the long-term consequences that they couldn't foresee. ... It's the long-term cumulative effects that do the damage, and these are unforeseeable. Societal Complexity and Collapse, 'Omega Tau', 13 October

It is this lack of an over-arching objective that is (and, I suspect, always has been) missing from policy. At almost every level of policymaking we do not explicitly target the crucial goal of societal survival. We cannot anticipate and so we cannot, with our conventional policymaking process, forearm ourselves against all possible threats to society. That's because conventional policymaking relies on some body (usually, at the national level, government) trying to anticipate threats and then work out the best ways of dealing with them. But the most potent threats are those likely to be long term in nature and to arise from outside the purview of the policymakers - precisely the qualities that evolution has not equipped us to tackle.

What we can do though is this: target societal survival, whichever threats to it might arise, and reward people for achieving it, however they do so. We don't know what these threats will be and we don't know who will be best at nullifying them nor how they will go about doing so. But, under a Social Policy Bond regime, we don't need to know any of those things. We issue bonds, at the national or global level, that target the avoidance of such calamities as violent political conflict (war or civil war) or other disasters, natural or man-made. These bonds, floated on the open market, become redeemable for large sums, after a long period of societal survival. Policymakers don't need to identify specific threats, nor debate about their significance or relative priority. Investors or would-be investors in the bonds would do all that, and would be motivated to do so continuously, throughout the targeted time period: which could be two or three decades in length (after which, similar bonds could be issued for a further period).

Social survival is perhaps our most important goal: it's worth targeting it explicitly and motivating people to find the most efficient ways of ensuring it. We cannot and should not look to government to take care of threats to our survival. But we can - and should - set in place a regime that explicitly targets our long-term survival and rewards its achievement. With Social Policy Bonds we can do that.

The root causes of war: don't bother

A Social Policy Bond regime makes inescapable the need to think about what we want to achieve. This should be an essential discipline, but in some instances it's never followed. There's much obfuscation - deliberate or not - and far too much attention given to identifying supposed 'root causes' at the expense of effective policy.

Take violent political conflict. It's still going on, killing, maiming and making homeless millions of people every year. The numbers so affected might be falling, but that says nothing (short pdf) about possible major violent future events. We could spend years analysing past outbreaks of war, but still never get close to identifying root causes in ways that forestall future outbreaks. Society is just too complex, diverse and fast-changing. Policymakers should begin by specifying society's desired outcomes, rather than distracting or indulging ourselves by trying to identify root causes - except perhaps for simple, relatively static, policy environments.

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. Conflict Reduction Bonds are the means by which I propose we begin to end all war for all time. It's not idealism. It's giving incentives to motivated people to find solutions, rather than simply to turn up to work for a bureaucracy, corrupt or not.

Scary

 Max Fisher concludes his long piece, How World War III Became Possible:

We may have escaped the Cold War, but we have not escaped the nuclear threat, which not only remains but is growing. The sense that this danger is resigned to history books, common in Washington and other Western capitals, is precisely part of its danger. It is another echo of the months and years before World War I, when the world drifted unknowingly toward disaster.

In April of last year, just after Russia had annexed Crimea, the London-based think tank Chatham House published a report on the dangers of unintended nuclear conflict. It was not pegged to the events in Ukraine, and at that point few people, including the report's authors, saw Crimea as the potential beginning of a larger conflict. Even still, it was dire in its warnings. "The probability of inadvertent nuclear use is not zero and is higher than had been widely considered," it stated. "The risk associated with nuclear weapons is high" and "under-appreciated." Their warnings were widely ignored. As the report itself noted, the world has concluded, wrongly, that nuclear weapons no longer pose an imminent threat. Attention has moved on. But the seeds of a possible war are being sown in Europe. How World War III Became Possible, Max Fisher, 29 June

You don't have to agree with all Mr Fisher's contentions to be scared by his discussion about how Russia and NATO might be sleepwalking toward devastating conflict. Still less should we be concerned to allocate blame. Probably there are faults on both sides, but trying to weigh them so as to have an opinion about which side is worse than the other is something a self-indulgence; understandable perhaps, given how powerless we ordinary people feel.

But I'd say we can do better than watch and debate on the sidelines. I cannot suggest a way out of any impending nuclear conflict, but what I do suggest is that we offer incentives for people to find ways of avoiding such a conflagration. Rather than leave everything to the politicians, ideologues, military men and the war-gamers, we could encourage people to back Conflict Reduction Bonds that will be redeemed only when there has been a sustained period of nuclear peace. Backers could include any combination of governments, international organizations, non-governmental organizations and philanthropists, and their funds could be swelled by contributions from the rest of us.

The maintenance of nuclear peace is a goal that is ideal for solution via Social Policy Bonds:

• it has an unambiguous, verifiable metric
• existing policy doesn't seem to be working
• nobody now knows the best ways of achieving the goal
• the goal is long term
• the goal is likely to require a multiplicity of diverse, adaptive approaches.   

Of course, the bond approach can run in parallel with existing policy, such as it is. It's likely to strengthen the hand of those whose activities seem to be working, as well as encourage new approaches, including those beyond current conception.

Tried, tested and failed

Concluding a piece about the growing dangers arising from nuclear proliferation the Economist says:

But for now the best that can be achieved is to search for ways to restore effective deterrence, bear down on proliferation and get back to the dogged grind of arms-control negotiations between the main nuclear powers. The unkicked addiction, 'the Economist', dated 7 March

My question is twofold: who will do the searching and what incentives will they have to get it right? On present trends we can be pretty sure that responsibility for a nuclear exchange-free world will fall to nationalist politicians, corrupt bureaucrats (national or United Nations), well-meaning bureaucrats (same) or well-meaning, dedicated but underfunded people working for non-governmental organizations. The same people, in short, who have collectively brought us, let's be factual, to the brink of nuclear catastrophe.

It's not just the identity of these people that's the problem; it's also that they have little financial incentive to maintain nuclear peace. They are not paid according to performance. So they have little incentive to explore innovative ways of forestalling proliferation or use of nuclear weapons that might do a better job than the existing, tried tested and failed methods.

I can't suggest 'ways to restore effective deterrence' but I can suggest a way that would encourage others to find such ways, and reward those that are successful. We could issue bonds that become redeemable only after a sustained period - thirty years, say - of nuclear peace. It would be up to the resulting coalition of motivated bondholders to explore the best ways of taking all the steps necessary to bring about that goal. These would probably include measures that existing bodies, because of their status or their short time horizons, do undertake nowadays, including, for example, building trust between schoolchildren of all nationalities and religions. Approaches encouraged by such Conflict Reduction Bonds would be diverse, because one single approach will not work, and adaptive, because the most effective measures are likely to change with time.  For a longer essay click here, and for the application of the Social Policy Bond principle to the Middle East click here.

Bertrand Russell anticipates Social Policy Bonds

Bertrand Russell (1872-1970) wrote: 

There is one peculiarly pernicious application of the doctrine that human nature cannot be changed. This is the dogmatic assertion that there will always be wars, because we are so constituted that we feel a need of them. .... If political organization were such as to make war obviously unprofitable, there is nothing in human nature that would compel its occurrence, or make average people unhappy because of its not occurring. Exactly the same arguments that are now used about the impossibility of preventing war were formerly used in defence of duelling, yet few of us feel thwarted because we are not allowed to fight duels. An outline of intellectual rubbish, first published 1943,from 'The Basic Writings of Bertrand Russell', Routledge Classics 2009

Incentives are important and so too is belief that we can end war. Of course, nobody knows how to end even a single conflict, but much human progress has happened serendipitously, with no overall plan. I think we can do better than that, and issue Conflict Reduction Bonds, for instance, which supply incentives for people to find ways of ending conflict that we cannot know in advance. The causes of war are many, complex and volatile. No organization as currently structured can possibly anticipate and address them. We need new types of organization that have incentives to research, adapt, and address all likely causes of war. War and any form of violent political conflict are too important to be left to government or the generals.

Eradicating war without blueprints

Richard English writes:

[T]o pursue the eradication of war would be as naïve as to pursue human or moral perfection; the effective curtailment of particular wars, or specific war-time brutality, almost certainly depends instead on recognizing our appalling capacity for (and even our historical tendency towards) justifying and practising violent atrocity. ...

For the prospect of establishing human behaviour along lines guided too closely by idealized blueprints probably exaggerates human capacity for improvement. Modern War, Richard English, 2013

I don't agree with the first clause; 'naive' implies that eradicating war will be impossible to achieve. I do agree that being 'guided too closely by idealized blueprints' will, in itself, not be sufficient to eradicate war, though it might be one necessary approach. This is where the Social Policy Bond principle enters the picture: we aim to eradicate war; we raise funding to achieve that goal, but we do not ourselves draw up blueprints as to how to achieve our goal, nor do we try identify who might best achieve it. Instead we issue Conflict Reduction Bonds (or Middle East Peace Bonds, or World Peace Bonds). These are no idealized blueprints: they are means by which motivate people to solve mankind's most grievous social problem.

Much that is good in this world has come about almost randomly, often as a by-product of some persons' pursuit of short-term financial gain. Or only after calamitous experience and exhaustion. I think we can do better: we can supply incentives for people to achieve social goals and let the market - the best way of allocating resources ever discovered - decide which approaches are best and which should be terminated. Idealized blueprints won't always work and, as Mr English also says, "most of our attempts to set out prophylactic measures and structures against modern war have seemed (and continue to appear) frequently doomed to blood-spattered failure." But sometimes, some of these approaches and institutions do actually work. A bond regime would encourage people to persist in those circumstances, and to explore, and refine other approaches too. I don't think that's naive.

Damn foolish things

Thomas Laqueur reviews The Sleepwalkers: How Europe Went to War in 1914, by Christopher Clark:

Many actors (the crowned heads of Europe, military men, diplomats, politicians and others), each with their own objectives, acting as rationally and irrationally as humans are wont to act, made decisions that foreclosed on others and collectively led the world into an unimaginable and un-imaged war. Some damn foolish thing, Thomas Laqueur, 'London Review of Books', dated 5 December

Millions of ordinary people had a vital interest in World War One not happening. Even when multiplied by what might have been thought a very low probability of its actually occurring, this should have represented a strong coalition in favour of peace. But there was no way this overwhelming wish for peace could have expressed itself. In those days the disconnect between policymakers and ordinary people was even wider than it is now. Calamitously, war broke out as the accumulated result of the perceived short-term interests of a tiny group of monarchs, aristocrats and generals.

The situation hasn't changed that much. Short-term goals predominate still amongst politicians and the military. Corporations have more power than monarchs and aristocrats these days, but are at least as adept at ignoring or manipulating public opinion. To paraphrase Otto von Bismarck: it's no stretch to imagine a catastrophic war breaking out nowadays over some damn fool thing in the East China Sea, or the Korean peninsular or the India/Pakistan border or ....

One way of making effective our wish to avoid another calamity would be to issue Conflict Reduction Bonds. Governments, philanthropists, NGOs or ordinary members of the public could all contribute to the funding of such bonds, which would be redeemable only after a sustained period of no major political conflict. In so doing, we would monetise our wish for peace, and act as a counterweight to the forces that, deliberately or not, propel countries into catastrophic wars or civil wars. There's nothing inevitable about war: it happens because people react, if not rationally, at least humanly, to the incentives on offer. Conflict Reduction Bonds, by rewarding people for achieving peace, could tip the scales in the other direction, and lead to what must surely be one of mankind's most noble goals: the ending, for all time, of war.

Nothing new

Despite its radical-sounding novelty, there's nothing really new here:

The UN Security Council should assign itself the power to put a $50 million bounty on the head of a tyrant, defined as someone who is subject to an International Criminal Court (ICC) indictment for war-crimes/crimes against humanity and is a serving head of state. Holding tyrants personally accountable, Philosopher's Beard, 23 August

The Philosopher is writing about conflict in Syria and thinks he knows how best to end it. Of course, it's possible Bashar al-Assad of Syria were to die soon, then one particular conflict in Syria would diminish or even end. But it's not at all certain, and the Philosopher has about as much chance of being right about his particular brand of intervention as are policymakers generally.

Here's an idea: if we want to end any particular conflict, then let's pay people to end that conflict, rather than to do what we think, in our ignorance, at this moment, might end that conflict. Actually, I'd rather pay people to end all the conficts in Syria - and elsewhere - for all time, and to do so legally. Here's how that might happen.

Violence: incentives work

'People say that problems cannot be solved by the use of force, that violence, as the saying goes, is not the answer.' So writes Benjamin Ginsburg: 

That adage appeals to our moral sensibilities. But whether or not violence is the answer depends on the question being asked. For better or worse, violence usually provides the most definitive answers to three major questions of political life: statehood, territoriality, and power. Violent struggle—war, revolution, terrorism—more than any other immediate factor, determines what nations will exist and their relative power, what territories they occupy, and which groups will exercise power within them. Why violence works, Benjamin Ginsburg, 'Chronicle of Higher Education', 12 August

 As a result:

[M]ost regimes are the survivors or descendants of a thousand-year-long culling process in which those states capable of creating and sustaining powerful militaries prevailed, while those that could not or would not fight were conquered or absorbed by others. Similarly, when it comes to control of territory, virtually every square inch of inhabited space on the planet is occupied by groups that forcibly dispossessed—sometimes exterminated—the land's previous claimants. 

So violence isn't something that just happens: we are violent because it gains us territory and other resources. As such, it's amenable to change. That's where Social Policy Bonds can play a part. Like many other social and environmental problems violent political conflict has many causes and, quite possibly, looking for those causes and trying to deal with them is not going to be the most efficient or quickest way of shrinking the role of war or civil war in world affairs. The best, most cost-effective ways might well mean innovations of a sort that hasn't been attempted yet, or that offend our sense of justice but are much less bloody than current methods: bribing tyrants to fly away to their own private luxury island, with full security for them and their families, for instance.

Nobody knows what will be most efficient, though we can be pretty sure that the current system, which pays people for undertaking edifying-sounding but ineffectual activities, is doomed to fail. (Think: climate change.) Perhaps it's now time for world governments or, more likely, opposition parties, NGOs and other interested groups to form a coalition and issue Conflict Reduction Bonds, which will reward what we actually want to achieve: world peace. A coalition of interested parties, perhaps with the help of philanthropists, could invest a large sum, and call for contributions from the public. It could then issue bonds redeemable for something like $1million each once current levels of violent political conflict have fallen by, say 50 percent. Yes, we'd need to discuss how exactly to define exactly what we mean, and how to monitor progress toward our goal. But once that's done, we'd have, in effect, contracted out the achievement of peace to a motivated group of investors, whose structure, composition and initiatives are entirely subordinated to that goal. They might buy the bonds for a very low price, reflecting the market's view that reduction in political violence are hard to achieve and necessarily will take a long time to appear.

As with our biggest environmental problems, so our biggest social problem, political violence, is going to need an array of diverse, adaptive approaches if we are going to solve it. The current system is too cumbersome, monolithic and slow moving to work at anything like the speed, scale and efficiency that we need. The incentives to create mayhem are plentiful. Unless a Conflict Reduction Bond regime (or something like it) comes into being, world peace will remain as utopian and distant a goal as it is today.