We don't like being held in contempt

Concluding their study of daily life in colonial Latin America, Ann Jefferson and Paul Lokken write of the conflict between the Roman Catholic Church  and those advocates of political and economic liberalism associated with Enlightenment thinking:

Conservative leaders often succeeded in rallying support for their program from native peoples and other marginalized members of society because liberal advocates of  “progress,” much like Spain’s “enlightened” Bourbon reformers in the late 18th century, generally made clear their disdain for the supposedly backward aspects of popular culture. Daily Life in Colonial Latin America, Ann Jefferson and Paul Lokken, August 2011

I think the authors are onto something here; something that applies as much to today's politics in western democracies as those of 200 years ago in the newly independent countries of Latin America. In the absence of a policymaking system that engages ordinary people, we react emotionally to the candidates and parties on offer. When we sense disdain from a political party, we vote for the other lot. The smugness of elites can be seen across the entire range of the spectrum, and our reaction to that combination of condescension and contempt explains much of contemporary politics.

We need a policymaking system that encourages us to further our understanding of the policy choices on offer - not the personalities, the sound-bites, the images or the rhetoric. We can do this by formulating those choices in terms of outcomes: outcomes that are meaningful to all of us; outcomes that we can understand and put into some order or priority.

Social Policy Bonds are one way in which we can specify such outcomes, and have people vote for those they support. A bond regime would be a way of bypassing the neuroses and insecurities of the people in power and those who manipulate them. By targeting outcomes with which people can identify Social Policy Bonds could bring about more public participation in the policymaking process. That is an end in itself (see here (pdf) for example), as well as a means by which decisions become acceptable even to those who opposed them. Importantly too, there's more consensus about outcomes than about the supposed means of achieving them. A bond regime would focus policy debate on our social and environmental goals, and which ones shall be prioritised. The process itself would generate more mutual understanding and less of the anger and contempt that are such a feature of today's policymaking

As well, a bond regime would encourage us to think long term: our goals are far more stable than the ways in which we think we can best achieve them. They are also more transparent as would be their funding. Corporations, their lobbyists and the people in power whom they influence all have an interest in obscuring how funds are allocated, and in failing to monitor whether policies succeed or fail (see Why States Believe Foolish Ideas: Non-Self Evaluation by States and Societies, by Stephen Van Evera (pdf)). With government, big business and now, increasingly, the judiciary determining our economic and social environment, what hope is there for the rest of us? The gap between ruler and ruled is becoming ever wider. Social Policy Bonds could help close it.

For general information about Social Policy Bonds see here. For more about Social Policy Bonds and buy-in see here.

They've weaponised complexity

When people's wishes clash with vested interests it's the vested interests (aka 'the deep state') that win every time. Our political systems are too complex, arcane or corrupt for ordinary people to stand a chance. One result is obvious: ever-rising income and wealth inequality. It's been seen as a problem for years, but where are we now? From yesterday's New York Times:

[T]he 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data. The Rich Really Do Pay Lower Taxes Than You, David Leonhardt, 'New York Times', 6 October

It's not only the US. Here Martin Lukacs writes about Canadian Prime Minister Justin Trudeau:

In late 2018, this avowed friend of labor legislated away the right to strike of a postal union that wanted safer working conditions; this champion of equality gave profitable multinational corporations giant hand-outs, maintaining multibillion-dollar subsidies to oil companies and granting $10.5 billion in tax breaks on the heels of similar measures by Trump; and this advocate of women’s rights set a record selling weapons to the theocratic, patriarchal Kingdom of Saudi Arabia, even as their war on Yemen escalated. Private wealth continued to soar, without any discernible benefit to the public good. Much-needed universal social programs like childcare or the extension of healthcare to cover the costs of medicines in Canada—which are the second highest of any country—never materialized. Justin Trudeau, Liberal Let-Down, Martin Lukacs, NYR daily, 7 October

Voting makes little difference. And, while we don't really know the intentions of the people in power, I suspect that whoever they are doesn't make much difference either. The vested interests are too powerful. They have perpetuated a policymaking process that effectively excludes influence from people outside their exalted circle. They have weaponised the complexity and obscurity of our systems of government for selfish ends.

They can get away with this because our political discourse centres on sound-bites, personality, and image. Actual policymaking is an entirely distinct process: much of it focuses on the structures and funding of government bodies, law and regulation; all of which are opaque to non-professionals - which is to say, ordinary people. The public. The rest of us. The only people who now really understand policymaking are those who are paid to do so, and the only people who influence it are those who have the millions of dollars necessary to pay them.You might even think the system has been specifically designed to keep ordinary citizens out of it.

So I suggest that policymaking instead focus on outcomes, rather than the alleged means of achieving them. Outcomes that are meaningful to ordinary people, so that we can engage with discussion about them, their funding, their relative importance. Such discussion would be more accessible than current policymakers' emphasis on legal pathways, funding arrangements, institutional structures and composition, and other arcana.

Meaningful outcomes: they form one essential element of the Social Policy Bond idea. The other is the injection of market incentives into their achievement: rewarding those who achieve our goals according to their efficiency in actually achieving them. The idea might sound outlandish at first hearing: handing over the solution of our social and environmental problems to investors. But our goals would be discussed and articulated by government - something that democratic governments are quite good at doing. Only their achievement would be subject to the market, which economic theory and all the evidence suggest is the most efficient way of allocating society's scarce resources. No doubt the Social Policy Bond idea could do with some discussion and refinement. But the real question is: what is the alternative? To continue as we are doing, where the gap between vested interests and ordinary people grows ever wider, risks, in my view, social collapse.

For more about Social Policy Bonds see the Social Policy Bonds homepage.

Harlem trendsetters

Years ago John Fund asked:

“If you had a financial windfall and wanted to help the poor, would you even think about giving time or a check to the government?” Source

A story from the current Economist reinforces the sentiment behind that question: 

Harlem is a neighbourhood in upper Manhattan that was once a byword for poverty, crime and urban failure. It was a place where, as recently as 1980, black men had a lower life expectancy than in Bangladesh. Large parts of it look different today. Life expectancy has soared, and the neighbourhood has improved dramatically. Although a considerable share of children there—35%—remain poor, their life chances still look much better than a generation earlier.

That is in no small part because of the efforts of the Harlem Children’s Zone (HCZ), a non-profit group which has “adopted 100 blocks” and set itself the goal of breaking the intergenerational chain of poverty by providing good parenting advice, healthy food and education. New parents who attend the zone’s Baby College learn about proper nutrition and reading habits for their infants. Older children can attend free, full-day pre-kindergarten and some go on to attend the HCZ network of charter schools. Their impressive initial results are seen as a national model. The zone serves 14,000 children and 14,000 adults at a cost of just $4,600 per person per year (raised from a mix of public and private sources). That is not a large sum of money, points out Anne Williams-Isom, the zone’s boss. “We spend $167,000 on an inmate in Rikers [jail]. How much can enterprise and philanthropy help alleviate American poverty?, 'Economist', 26 September

When I first came up with Social Policy Bonds I thought that government bodies, at any level, would be the issuers. They have far more resources than private charities, non-governmental organisations and philanthropists.

It's true that they, along with other donors, back most of the Social Impact Bonds currently being issued in about 25 countries. But they have shied away from issuing SIBs that target long-term, large-scale goals like raising life expectancy or universal literacy. Imagine the possibilities if government funded such bodies as the Harlem Children's Zone, with their ambitious goals that can be reached only after many years.

I think the main reason Social Policy Bonds haven't been issued is that, unlike SIBs, they are tradeable. This means that the bodies that would receive funding for their projects need not be the same throughout the lifetime of the bond, which could be decades for remote goals such as the elimination of poverty or the achievement of universal literacy. A government that issued Social Policy Bonds would therefore be relinquishing its power to choose the recipients of funds. Under a bond regime the allocation of funds would be up to the market, which would have incentives to choose only the most efficient operators and to terminate failed projects. Bodies currently favoured by government would, if they were inefficient and incapable of adapting, lose their funding under a Social Policy Bond regime. That is a contrast today's funding arrangements. In conventional policy, outstanding failure is rarely penalised (and often rewarded). Even under a SIB regime, inefficient operators, while they wouldn't maximise their returns, wouldn't see their existence be threatened.


Under both conventional policy and SIBs there is the possibility that even bodies as the HCZ well-meaning, hard-working and idealistic as they are at the beginning of their mission, become inefficient. The tendency is for any organisation, be it a trade union, religious body, university, public sector body or monopolistic private sector corporation, to become inefficient or corrupt; forgetting its ideals and devoting most of its energies to self-perpetuation. Examples abound: only today for instance, we read of the huge salaries being paid to top charity employees. Just one recent example:

Former Labour Foreign Secretary David Miliband is being paid almost $1 million a year to run a humanitarian charity that receives massive sums from British taxpayers. His astonishing pay package as chief executive of International Rescue Committee has soared to $911,796 (£741,883) ... according to the US-based organisation’s latest tax return. Million-dollar Miliband!, mailonline, 1 October

Social Policy Bonds would eliminate that risk. They would generate a new type of organisation - one whose survival would depend absolutely on its efficiency, and whose composition and structure would adapt to changing circumstances. This organisation would be a formal or informal coalition of bondholders, whose every activity would be devoted to achieving society's targeted goal with maximum efficiency. It's unlikely that governments will take the lead here; they are far more comfortable dealing with established players. What about philanthropists? I haven't made much headway there - they probably filter out messages from unconnected members of the public. However, I did publish this article in one of their journals last year. I'm not aware of any follow-up....

For more about Social Policy Bonds see my main page here. For why I am ambivalent about Social Impact Bonds see here and here.

It's too dam complicated

Some things are too complicated to understand, even for experts, let alone policymakers.

Dams have been thought a good way of reducing greenhouse gas emissions while satisfying our ever-increasing demand for electricity. Indeed, dams built in cool, dry places probably do reduce emissions per watt compared to fossil fuel generation. So, in 2012 the Intergovernmental Panel on Climate Change (IPCC) said that, taking into account construction and operation, hydroelectric power produces less than 3 percent of the warming of fossil-fuel power plants that burn coal, oil or natural gas. But, as Daniel Grossman writes:

That is true for some dams, such as those built in relatively cool, dry places with relatively little vegetation, which rots and turns into greenhouse gases. But the IPCC report ignored dams built in lowland tropical forests, where luxuriant jungle produces an unusually large amount of emissions. Daniel Grossman, the Sunken Rainforest, 'New Scientist', 21 September

In tropical dams, microbes digesting submerged trees produce methane as well as CO2. An expert based in Brazil says that "hydroelectric dams in
tropical lowlands are a climate disaster."

Why do we continue to make policy about systems that are too complex for us to understand? Partly it's historical. A century or two ago the link between the cause of a social or environmental problem and its effect would be more obvious. Effective policy could be made accordingly. But today the complexities have grown so profoundly that even the direction of causation isn't always clear. Policymakers, though, still make policy based on hunches or scientific knowledge that necessarily becomes out of date.

My suggestions is that, instead of making policy about complex but important issues as if we know what's going on, we should target outcomes, rather than the ways in which most experts currently think is the best way of achieving them. So, instead of targeting, say, 'proportion of electricity generated by renewable resources', we target for reduction the negative impacts of adverse climatic events. A Climate Stability Bond regime would leave it up to motivated bondholders to work out the most efficient ways of achieving our climate goal; and they would do so in ways that both generate and act on the basis of rapidly expanding scientific knowledge. They would have incentives to look more closely and on a continuing basis at, for example, where dams can help achievement of our goal and where they would hinder it.

The Social Policy Bond principle would stimulate, diverse, adaptive iniatives: projects that would take into account the differing and changing circumstances that any single conventional body, such as government at any level, just cannot.

Overwhelming complexity doesn't just affect big global problems. Here, Dr Malcolm Kendrick writes:

[I]n truth, almost all diets are perfectly healthy. Vegetarian, paleo, keto, vegan (with a few essentially nutrients thrown in, so you don’t die), HFLC [High Fat Low Carb], etc. In fact, the only non-healthy diet would be the one recommended by all the experts around the world.Namely, High carb, low fat (HCLF). The ‘eat well plate’, ‘the food pyramid’ – whatever it is now called. Stay away from that, and you will be fine. What causes heart disease (blog) part 65, Dr Malcolm Kendrick, 23 September

Government and their scientist advisors, would serve us better by showing a bit of humility. Targeting outcomes, rather than the ways they currently think we'll achieve them, would be a good start.

Government+big business+judges vs. the people

Christopher Caldwell writes:

Once the judiciary rules politics, all politicians are just talkers....The transfer of competences from legislatures to courts is a superb thing for the rich, because of the way the [British] constitution interacts with occupational sociology. Where the judiciary is drawn from the legal profession, and where the legal profession is credentialed by expensive and elite professional schools, judicialization always means a transfer of power from the country at large to the richest sliver of it. Why hasn't Brexit happened?, Christopher Caldwell, claremont.org, 15 August

Mr Caldwell is writing in the context of Brexit, but this insight applies more broadly. I've often railed against the widening gap between politicians and the people they are supposed to represent. The gap between ordinary citizens and the judiciary is at least as wide. We, the public, have even less buy-in when decisions are made by judges rather than politicians. What happens with contentious issues on which ordinary people have no say? Here, the Economist writes about the abortion debate in the US:

Why did the two sides become so polarised? The main reason is the way abortion was legalised. In many countries, abortion laws were voted for by elected politicians or in referendums. In America, a seven-to-two majority of justices declared abortion a constitutional right. Anti-abortionists question the interpretation of the constitution that produced that ruling and are furious their voices were not heard. Abortion advocates remain fired up by the knowledge that Roe could yet be overturned. What explains Donald Trump’s war on late-term abortions?, the 'Economist', 24 August

Buy-in is important and, with big government, complex societies, and our emphasis on how policy is made and who makes it rather than outcomes, there's very little buy-in remaining at the national level. Corporations, politicians and, increasingly, the judiciary define the economic and social environment in which we live.

Social Policy Bonds, by targeting outcomes with which people can identify could bring about more public participation in the policymaking process. That is an end in itself (see here (pdf) for example), as well as a means by which decisions become acceptable even to those who opposed them. Importantly too, there's more consensus about outcomes than about the supposed means of achieving them. A bond regime would focus policy debate on our social and environmental goals, and which ones shall be prioritised. The process itself would generate more mutual understanding and less of the anger and contempt that are such a feature of today's policymaking.

As well, a bond regime would encourage us to think long term: our goals are far more stable than the ways in which we think we can best achieve them. They are also more transparent as, with Social Policy Bonds, would be their funding. Corporations, their lobbyists and the people in power whom they influence all have an interest in obscuring how funds are allocated, and in failing to monitor whether policies succeed or fail (see Why States Believe Foolish Ideas: Non-Self Evaluation by States and Societies, by Stephen Van Evera (pdf)). It's even more difficult to believe that our new policymakers - the judiciary - will be any more responsive to the needs and wishes of ordinary citizens. With government, big business and now the judiciary determining our economic and social environment, what hope is there for the rest of us? The gap between ruler and ruled is becoming ever wider. Social Policy Bonds could help close it.

For general information about Social Policy Bonds see here. For more about Social Policy Bonds and buy-in see here.

It's not just dog-food

There is probably more human ingenuity going into devising new ways of selling dog-food than avoiding nuclear war or eradicating poverty or achieving universal literacy. But it's not just dog-food:

For decades, increasingly large numbers of America’s smartest and hardest-​working businesspeople have toiled in extractive pursuits, and the result is an economy that benefits an increasingly smaller percentage of its participants. Many structural reforms are necessary to change this. With regard to education, it is time to reform the top MBA programs. These schools shape our business culture, and, in so doing, exert an outsized influence on the business practices and the career pursuits of some of our most talented young people. The schools should begin with an explicit renunciation of shareholder capitalism. The Financialization of the American Elite, Sam Long, 'American Affairs', Fall 2019

By 'extractive pursuits' Mr Long means 'value extraction and short-term financial speculation'. There's nothing wrong with people choosing to make a career of financial shenanigans (see here for another example) or advertising dog-food. They're not greedy. They have children to bring up, elderly parents to look after.... These intellectual giants are simply reacting rationally to the incentives on offer. But it's a shame for the society that a high proportion of the smartest people on the planet their goals cannot meet their individual goals by helping to solve our huge, urgent social and environmental problems.

Social Policy Bonds are a way of aligning the incentives smart individuals face with those of society. They work by channelling our self-interest into the solution of our social problems. They do so by injecting market incentives into the solution of these problems. In economic theory, and on all the evidence, markets are the best way of allocating society’s scarce resources. So it is unfortunate that, largely for historical reasons, we leave the achievement of national and global social and environmental goals to a command-and-control mechanism that is often inefficient and open to abuse.

Sure, a Social Policy Bond regime would probably see some enrichment of wealthy corporations or individuals, but only as a side-effect of their achieving society's agreed social and environmental goals. The incentives of the people owning Social Policy Bonds and the people they employ would exactly align with those of society. All their activities would be aimed at achieving society's goals as efficiently as possible.

 

A Social Policy Bond regime represents a new departure. It would not reward people merely for undertaking activities that sound worthy, nor for belonging to organisations whose ostensible aims are to help people but are, in reality, less edifying. Rather, a bond regime would reward the achievement of society's goals. Yes, it would divert some of society's scarce resources, including brainpower, away from marketing pet-food or maximising short-term share prices or other super-sophisticated, zero-sum financial manipulation. But we are talking about the potential solution to some of mankind's biggest and most urgent problems: poverty, climate change; even the ending of war. I think it's a worthwhile trade-off.

How to prevent crime

 Dr Elliott Barker asks how we can prevent crime:

There should be a clear recognition that the only meaningful measure of success in child rearing is an adult with highly developed capacities for trust, empathy, and affection. It follows that the current worship of child rearing practices that evoke the highest possible I.Q., or the child with the greatest possible number of factual crumbs by the lowest age, or the child who can play the cello best at the earliest age should be suspect. How Do We Prevent Crime?, Dr Elliott Barker, the Natural Child Project

The question is not whether we believe (as I do) that we can reduce crime and other social pathologies by taking Dr Barker seriously but whether people have sufficient incentive to investigate how valid his argument is and then to act on their research. I don't think they do. Crime is today largely seen as a matter for policing and punishment. There may or may not be academic research pointing the validity of Dr Barker's arguments. But even if there is, who has the incentive to examine this research, check its validity and act on the results? Very few, and almost nobody with the financial clout to influence the way we bring up our children. Of course, there is good work being done by people such as Dr Barker, and eventually some of their findings do percolate through to a few dedicated researchers and parents. But work on the scale necessary to see widespread changes? The bodies, including government, that could fund such work are far too focused on the short term. And who thinks long term these days?

Social Policy Bonds targeting crime could be one answer. Under a bond regime, we could target a long-term halving of crime rates, sustained for a period of, say, thirty years. A combination of government, NGOs and philanthropists could back these bonds, which could be swelled by public contributions. Once issued, bondholders would form a de facto coalition, whose composition would most probably change over time, but all of whose activities would be aimed at achieving the targeted reduction in crime rates at lowest cost to society.

Long-term thinking and the notion of a coherent society that persists over decades: any attempt to improve social welfare and the environment requires both these qualities. They're not at all prevalent but policies like Social Policy Bonds that need them to work can also create and encourage their proliferation.

Who thinks long term these days?

Social Policy Bonds haven't gone very far. It's true that their non-tradeable variant, Social Impact Bonds are being issued around the world and are the subject of much academic outpouring. (Academia.edu tells us that there are more than 190 000 papers mentioning 'Social Impact Bonds'.) But Social Policy Bonds? None have been issued that I'm aware of, and they generate little in the way of literature - apart from my own work, of course.

There are several reasons. One is that, while the tradeability of Social Policy Bonds sounds like a technical issue, in political terms it's a bit of a time-bomb. It means that whoever issues the bonds doesn't get to choose who will be rewarded for achieving the targeted goals. In this, Social Policy Bonds are quite different from the SIB model, under which only chosen service providers will benefit from investing in the bonds. These are generally existing service providers. This obviously limits the scope for innovation and the efficiencies it would bring about. Existing service providers have a vested interest in maintaining current ways of doing things. (Indeed, combined with the inherently short-term nature of SIBs, lack of tradeability creates a perverse incentive not to be too efficient, lest issuers of future SIBs targeting the same social problem consequently tighten their efficiency criteria.) In our current political systems there are few incentives to allow new, potentially much more efficient, operators into solving our social and environmental problems. The inherently short-term nature of SIBs mirrors too neatly the short-term goals of politicians and current service providers.

Other reasons for the absence of Social Policy Bonds? One that I've experienced is the disdain of those on the political left for anything that smacks of profit or capital gains, especially in the provision of benefits to the disadvantaged. A sentence from a recent post by Charles Hugh Smith sums it up: we substitute self-​righteousness for problem-​solving. The thinking is as simplistic as it is injurious to the disadvantaged: 'markets are right wing and therefore bad'. I am still hopeful though that there will come, in time, a government, a non-governmental organisation, or a group of philanthropists who will take a long-term view, forgo the pats on the back by established bodies in the public and private sectors, and put the interests of their country, our environment, or the world above their own.

For more about why I am skeptical of Social Impact Bonds see here and here.

How to make capital gains ethical

A conference nearly three years ago looked at the ethics and morality of Social Impact Bonds. A concise summary of some of the issues discussed raised the question of:

...moral dilemmas that can arise when we place a financial value on social outcomes, and begin to see interventions in the light of the money they can save rather than on their inherent public value. Will it lead to us prioritising certain policy areas simply because they can save us money? Are we giving away too many decisions to unaccountable consultants and investors – and do the service users themselves get a say in any of this? Is it right that investors can gamble on the fortunes, or misfortunes, of others? Social Impact Bonds: are they ethical?, James Ronicle, 28th September 2016

Social Impact Bonds (SIBs) are a non-tradeable version of my original conception: Social Policy Bonds. Tradeability matters more than you might think. As I've explained here and here, when the bonds become tradeable the range of goals that we can target expands greatly, and our time horizons stretch much further into the future. The qualitative effect of a bigger range means that our social and environmental targets can embrace outcomes that a narrower, shorter-term target will exclude. Take for example recidivism rates, targeted by SIBs in the UK and elsewhere. Whereas a SIB regime will reward their reduction, even a large number of such SIBs would do nothing for the long-term health of society as a whole. For a start, narrow, short-term goals increase the likelihood of effective manipulation - a simple example springs to mind: investors in the bonds could subsidise superior legal representation to an offender accused of a new crime. But, more importantly, when we embrace broad, long-term goals, there is no need to prioritise 'certain policy areas simply because they can save us money'. Under a Social Policy Regime there need be no conflict. The policy 'areas' we can prioritise are large enough to include everybody.
It's not so different in other policy areas. SIBs currently target, for instance, academic performance among at-risk three- and four-year olds in Utah, or the number of housing units for the homeless in Massachusetts. Very laudable but, again, apart from these narrow goals being susceptible to crude manipulation (by fiddling test results for instance), they also reward the shifting of resources from untargeted goals to those that will generate short-term gains for bondholders.

This is the key. Social Impact Bonds have to focus on narrow short-term goals that are easily measured. Social Policy Bonds, in contrast, can take a broader, long-term view. They can encompass the goals of society as a whole. Rewards to holders of carefully crafted Social Policy Bonds might still benefit wealthy investors, but only as a by-product of benefiting all of society.

There are bigger possibilities: one of the participants at the above conference asked:

...whether development bonds, where investment is made in developing countries, create a new form of colonialism, as the West profits from interventions in developing countries.

Again, there need be no conflict. Social Policy Bonds targeting, for instance, regional or global conflict, or disaster prevention could benefit both western investors and developing countries. Large capital gains, though widely and understandably viewed with disdain in today's society, don't have to be unethical.

 


For more on this last topic see my previous post. For more on the topic of rewarding people for performing the socially useful function of, for instance, teaching see my blog post here. All my essays on the bonds are accessible from the main Social Policy Bonds site.

Re-jigging the incentives

George Monbiot writes:

The largest fortunes are now made not through entrepreneurial brilliance but through inheritance, monopoly and rent-seeking: securing exclusive control of crucial assets, such as land and buildings, privatised utilities and intellectual property, and assembling service monopolies such as trading hubs, software and social media platforms, then charging user fees far higher than the costs of production and delivery. In Russia, people who enrich themselves this way are called oligarchs. But this is not a Russian phenomenon, it is a global one.  Corporate power still exists, but today it is overlain by – and is mutating into – oligarchic power. Killer clowns, George Monbiot, 'The Guardian', 26 July

Imagine a political system in which people became wealthy by helping to solve society's problems rather than by the anti-social activities about which Mr Monbiot writes. Human ingenuity and entrepreneurial skills, currently channelled into self-enrichment via destructive or frivolous activities, would be channelled instead into achieving society's goals.

Social Policy Bonds could usher in such a system. The bonds would reward the achievement of targeted goals that are inextricably linked to improved social and environmental well-being.There are many benefits to a Social Policy Bond regime. Efficiency is the main one, as the market for the bonds would ensure that the people who can do most to achieve society's goals do so at the lowest cost. The bonds will always be in the hands of the most cost-effective operators who can out-bid the less efficient investors. Another advantage of the bonds is stability: whereas the best ways of achieving our goals vary over time and according to geography, the goals themselves are consistent, and there is far more consensus about our goals than about the supposed means of achieving them. The bonds would create a stable policy environment, in which long-term goals, including very remote goals such as world peace, could be targeted. Another advantage of the bonds is transparency: clarity of goals should be a first, essential step in policymaking, but too often it's, perhaps deliberately, obscured by the arcane, legalistic tactics beloved by today's policymakers.

These are all valuable benefits. But there's another one, less obvious. Social Policy Bonds would constitute a way of making money that is inextricably bound up with achieving society's goals. A government could therefore choose to tax any gains from holding Social Policy Bonds more lightly than other, similarly lucrative but less socially beneficial, operations. It would then be explicitly recognising that not all profit-making ventures are equal. Some, though they might raise that very flawed indicator and de facto target - GDP -  contribute very little to social or environmental well-being, while others are destructive of both. This advantage of Social Policy Bonds might not seem important compared to the bonds' other pluses, but it could become increasingly significant as society grows more complex, resources more limited and we perforce become more concerned about meaningful outcomes than the short-term goals of big business and politicians.