Dealing with the unknown

Speaking ahead of an address to the Munich Security Conference, [Bill Gates,] the richest man in the world said that while governments are concerned with the proliferation of nuclear and chemical weapons, they are overlooking the threat of biological warfare. Bioterrorism could kill more people than nuclear war, Bill Gates to warn world leaders, 'The Telegraph', 17 February

One of the strengths of the Social Policy Bond principle is that we do not need to specify in advance the exact nature of the problem we want to solve. Many potential problems could arise from our denser, more linked, populations and higher technology. These are difficult even for a well-resourced government, or indeed any single big organisation, to anticipate, let alone do much to forestall. Hurricanes, tsunamis or pandemics are only a subset of a range of and disasters that threaten mankind. Others include the risks arising from new biological advances or scientific experiments that concentrate energy, or natural disasters such as asteroid impacts or volcanic super-eruptions. These threats are in addition to the 'known unknowns' of more widely understood catastrophes. Social Policy Bonds are versatile: depending on society's wishes, and the views of the bonds' backers, bonds could target any type of disaster that, say results in the deaths of 10 000 people within one week or its occurrence, however caused and in whatever part of the world.

Holders of such Disaster Prevention Bonds, would be able to redeem them only after a sustained period of, say, ten years, during which no such disaster has occurred. They would have incentives to anticipate potential disasters and to work to prevent them and mitigate their effects on human life. Today's disaster prevention policies are mostly carried out by bodies anticipating 'known' types of disaster, and mitigation strategies are often merely reactive. As well, few have the types of incentives that Disaster Prevention Bonds would put in place, that would reward the sustained absence of a disaster.

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.

Thinking strategically and taking responsibility

Garret Hardin, in his essay 'The Tragedy of the Commons', wrote:

[N]atural selection favors the forces of psychological denial. The individual benefits as an individual from his ability to deny the truth even though society as a whole, of which he is a part, suffers. The Tragedy of the Commons, 'Science', 13, December 1968

Governments supposedly serve society's interests by regulating and taxing individual and corporate activities that are essentially self-serving. It's a process that evolved over time and, while flawed, has proven evolutionary advantages over central planning. And, perhaps because central planning as practised by the Soviet Union and others has been totally discredited, our governments seem to have relinquished their role of thinking strategically on behalf of their citizens. They are subject to the same biases and incentives to deny the truth as individuals. Whether it's environmental disaster, or nuclear catastrophe, or less spectacular but just as grievous impacts of man's inhumanity to man, or financial crises or whatever, our governments take the easy route of waiting for things to happen and then reacting. 

It's inefficient at best, and could be calamitous at worst. Society is so interlinked and complex that major disasters of some sort are inevitable - and extremely difficult to foresee. But government should not then deny the real possibility that these events will occur: it could, and should, think strategically and on behalf of society. By issuing Social Policy Bonds it could reduce the likelihood of disasters, say, without trying to involve itself in how and when they are likely to occur.

For example: I'm reading Eric Schlosser's Command and Control, which tells alarming tales of accidents and blunders that came close to bringing about catastrophe. It's quite disturbing how little incentive the people in control, at all levels, had to think about the potential impacts on society rather than on themselves or the organization of which they were part. Social Policy Bonds that would be redeemed only after, say, 30 years of a complete absence of nuclear explosions, accidental or not, would be one way of giving people incentives to avoid such a disaster. A bond regime targeting such unforeseeable but plausible scenarios would make them less likely to occur and would do so as efficiently as possible. And by issuing Disaster Prevention Bonds government would be doing what it's supposed to do: looking out for all its citizens' interests by directing people's ingenuity into socially useful ends.