Reason and prejudice

According to Hugo Mercier, we've been reasoning about reason all wrong. Reasoning is very good at what it probably evolved to let us do—argue in favor of what we believe and try to convince others that we're right. Did reason evolve for arguing?, 'Point of Inquiry', 15 August

According to this theory (elaborated in the POI podcast), the function of reasoning is argumentative. If I have understood it correctly it says that we use reasoning to convince others of our beliefs and prejudices. So "reasoning works well as an argumentative device, but quite poorly otherwise." If we accept this theory, what would it mean for policymaking and policymakers? In an age of extreme specialisation, making policy, or choosing amongst alternative policies, will often be done only by perhaps a single person, who will decide not according to reason and logic, but according to his or her unchallenged beliefs. In this respect, the theory is similar to the that of natural selection. The implication of both theories is that policymakers, even experts, should have some humility.

Both theories support my contention that policy approaches should be subordinated to outcomes. Politicians in democratic countries are good at articulating social goals, and good at raising the revenue necessary for their achievement. But they are not so good at working out how to achieve these goals. Even with a public administration degree, they still won’t be perfect. They subvert natural selection, by favouring top-down, one-size-fits-all approaches, which are not always appropriate, and by failing to terminate failed approaches. And, if we accept Dr Mercier's theory, they are also likely to favour approaches that accord with their own ideology and a priori beliefs, rather than those that can be supported by evidence.

This is where Social Policy Bonds could help. Many goals are not amenable to the top-down approach. But a bond regime would reward successful outcomes however they are achieved. Governments could set social and environmental goals, without having to think of how to achieve them. That would require some humility, of course, as well as politicians' relinquishing some of their power. For that reason and others it's probably more likely that non-governmental actors - NGOs or philanthropists, for instance - will be the first to issue Social Policy Bonds.

Solitudinem faciunt...

Jean Bricmont and Diana Johnstone discuss the NATO intervention in Libya:

Despite the efforts of a few isolated individuals, there is no popular movement in Europe capable of stopping or even slowing the NATO onslaught. The only hope may be the collapse of the rebels, or opposition in the United States, or a decision by ruling oligarchies to cut the expenses. But meanwhile, the European left has missed its opportunity to come back to life by opposing one of the most blatantly inexcusable wars in history. Europe itself will suffer from this moral bankruptcy. Who Will Save Libya From Its Western Saviours?, 'Counterpunch', 16 August

There are no guarantees against this sort of madness, but western governments that are focused on bringing about the achievement of a few broad, well-defined, explicit social and environmental objectives would find it awkward to explain how taking sides in Libya could help their society's well-being...let alone that of any other society. It's clear that there's no internal mechanism to limit the scope of government, whether at home or overseas. Desperately needed is some discipline that would re-orientate government so that it concentrates on outcomes that are meaningful to ordinary people. The accumulation of sovereign debt in the developed countries is the most obvious and ominous symptom; but the pointless, destructive and barely opposed intervention in Libya is a particularly poignant example.

It's obvious really

It's obvious that governments should spend within their means, shouldn't debase the currency, and shouldn't destroy the environment and social cohesion. But today's policymakers operate in a fog of obscurity and micromanagement. They are preoccupied with ideology, activities, institutional structures, spending plans, image and news management. In such an environment, it's too easy to lose sight of principles. Attention spans shorten; the focus shifts from the long term and crucial to the short term and flippant. Problems that can't manifest themselves as dramatic tv footage are neglected.

Expressing policy in terms of broad, desirable goals, as Social Policy Bonds do, could get us out of this predicament. We could issue bonds that become redeemable at the end of a sustained period of, for instance, world peace, fiscal continence, contained inflation and unemployment, and low levels of environmental destruction.

It's unlikely to happen. Governments just don't think like that. It's unfortunate that, at a time when governments are big, democratic and influential enough to articulate society's goals accurately and to raise the revenue to achieve these goals, they cannot relinquish their control over how these goals shall be achieved. Instead, they centralise more and more, as if power is an end in itself. Big government doesn't have to be remote, one-size-fits-all, rigid, error-prone and a threat to the well-being of mankind and every other species. But, because it fails to measure success in terms of explicit, meaningful outcomes, that's precisely what it has become.

Who cares about policy?

Mick Hume writes that political life in the UK:

...becomes less about what you believe in or achieve, and more about how you appear, where you are seen and who you consort with. Personal image and style become all-important. That is why we find ourselves in a bizarre situation where a Tory prime minister can, on a given day, get more stick in the media for refusing to tip an Italian who did not deliver cappuccino to his table than for failing to deliver anything much in the way of a government programme. How British politics became trivial pursuits, Mick Hume, 3 August

Mr Hume talks about our celebrity political culture, which is partly a result of the lack of any ideological underpinnings to political parties. For me, though, ideology is at least as removed from society's well-being as celebrity. In either case, the interests of ordinary people are removed from the political agenda. Politicians are driven by ideology or by their wish to associate themselves with celebrities, either as an end in itself, or as a means of staying in power, or to distract the masses from matters of substance.

Ideology, celebrity, or the interests of the rich and powerful: in every case the drivers of our politics are not delivering meaningful outcomes to ordinary people. Social Policy Bonds, aside from their efficiency, could re-orientate politics entirely towards the achievement of social and environmental outcomes. Under a bond regime, politics would focus on the targeting of such outcomes, their relative priority and their cost. All actions set in train by such policymaking would be subordinated to the achievement of these outcomes. Ideology, celebrity and other nonsenses - currently absurdly important - would be seen, accurately, for what they are: self-indulgences.

Complexity used to favour the rich

Government and big business have interests that often conflict with ordinary people and smaller businesses. They habitually use complexity to benefit themselves, at the expense of small, local enterprises and natural persons.

...leading members of the [US] Senate are seriously considering giving the most profitable companies in the world a total tax holiday as a reward for their last seven years of systematic tax avoidance. Hundreds of billions of potential tax dollars would disappear from the Treasury. And there isn’t a peep from anyone, anywhere, on this issue. We’re seriously talking about defaulting on our debt, and cutting Medicare and Social Security, so that Google can keep paying its current 2.4 percent effective tax rate and GE, a company that received a $140 billion bailout en route to worldwide 2010 profits of $14 billion, can not only keep paying no taxes at all, but receive a $3.2 billion tax credit from the federal government. And nobody appears to give a ****. What the hell is wrong with people? Have we all lost our minds? Corporate tax holiday in debt ceiling deal: where's the uproar? Matt Taibbi, 22 July

Complexity, obscurity, and just the plain boredom of the policymaking process are being exploited by powerful interests. They can get away with this, because policy is expressed in terms that are so incomprehensible or vague that they deter outsiders - that's those of us who should be in uproar - from getting involved.

Social Policy Bonds would be different. They would target explicit goals that are meaningful to ordinary people: cutting the crime rate, reducing unemployment, reducing pollution, for instance. The public would take an interest because it can understand outcomes. The bonds could close the gap between the public and the policymakers, which is now not only wide, but widening. Perhaps disastrously so.

The EU: a top-down, one-size-fits-all institution

Frank Furedi writes:

From its inception, the EU was an elitist managerial project that was able to construct and promote its agenda without having to respond directly to popular pressure. Decisions are never arrived at through public debate, and the majority of EU laws are formulated by the hundreds of secret working groups set up by the Council of the EU. Most of the sessions of the Council of Ministers are held in private, and the EU’s unelected European Commission has the sole right to put forward legislation. Why the EU is so clueless about the Euro crisis, 20 July

It's arguable that global crises require global solutions, and EU-wide crises require EU-wide solutions. But I would argue that solutions need to arise from below, rather than imposed from above. They need to be diverse and adaptive. Big government, while necessary to articulate our goals and to raise the revenue for achievement, is rarely best placed to achieve them. The decision-making bodies of big government, such as those that Mr Furedi writes about, might be well meaning and hard-working, and they might even perform adequately when a crisis requires a big, one-size-fits-all, top-down solution. But they tend to be remote, and unresponsive to local circumstances and changing events. The entire EU exercise and, in particular, the Euro, are the apotheosis of big, remote government. They might well be neither responsive nor diverse enough to go on for much longer.

It's too late for the EU, but a Social Policy Bond regime would distinguish between the (1) the articulation and revenue-raising part of government, and (2) the achievement of social and environmental goals.

Targeting GNP: the logical conclusion

Gross National Product, in the absence of any other explicit indicator, is often targeted implicitly; as if GNP, or GNP per head, indicate anything meaningful to ordinary people. This is one example of what happens when governments insist on targeting GNP.

Taking command of the long term

Greece has 800,000 civil servants, of whom 150,000 are on course to lose their jobs. The very existence of those jobs may well be a symptom of the three c’s, ‘corruption, cronyism, clientelism’, but that’s not how it feels to the person in the job, who was supposed to do what? Turn down the job offer, in the absence of alternative employment, because it was somehow bad for Greece to have so many public sector workers earning an OK living? Where is the agency in that person’s life, the meaningful space for political-economic action? She is made the scapegoat, the victim, of decisions made at altitudes far above her daily life – and the same goes for all the people undergoing ‘austerity’, not just in Greece. Once Greece Goes..., John Lanchester, 'London Review of Books' online, 30 June

We live and work within a policy framework decided by people at high altitude. Or perhaps 'decided' is too purposeful. Policymakers are only a little less victims of the system within which they operate than ordinary workers. They have few definite, long-term objectives to work for. Perhaps the maximisation of economic growth (or growth per head) which, if it considered at all is assumed to generate enough resources to solve every sort of problem - even those it creates. Other guidelines are even more vague or rarely articulated. The avoidance of social upheaval; the avoidance of 'too much' pollution, or unemployment, or crime, or whatever. Because these guidelines are vague, or seldom made explicit, they have the status of declarations of intent. All this means that society's actual long-term guidelines are either decided by default, or subject to the manipulation of the powerful; including large corporations, government agencies, and the largest trade unions.

So we find, and not only in Greece, explosions in public sector employment, and public debt. We'd all be better off society's longer-term goals, including debt levels, were openly debated and made explicit. They need not be absolute, but there would be incentives for people to achieve them.

Social Policy Bonds, because they are tradeable, could be used to target long-term goals, including guidelines within which, say, debt, or crime, or pollutions must lie. Societal goals, such as limited debt levels, are more stable over time than the supposed ways of achieving them, and we could all benefit if they were targeted explicitly. Outcomes targeted under a bond regime could include those whose origins are uncertain or contested. Just because policymakers don't know all the causes of crime, or climate change, say, does not mean that they cannot explicitly target them and, in effect, contract out the work of identifying cause and effect to a motivated private sector.

Subsidising planetary destruction

The International Energy Agency does valuable work in quantifying the subsidies to fossil fuel production and consumption.

We estimated that consumer subsidies [for fossil fuels] were worth US$ 312 billion in 2009. In the current economic climate, this is a significant amount of money which could be used to more directly tackle priorities such as poverty alleviation, health or education. Our modelling also showed that if subsidies are reformed by 2020, global energy demand could be reduced by 5%. This has significant implications for energy markets and efforts to combat climate change. International Energy Agency’s Senior Energy Analyst Amos Bromhead in conversation with 'Subsidy Watch', April 2011

It's scandalous that these subsidies continue. They transfer funds from the poor to the rich. They do nothing to help the poor that could not be better done by more-targeted assistance. And they subsidise environmental depredation. In this, energy subsidies have much in common with agricultural subsidies, still continuing decades after their lunacy was exposed and quantified. One example from last year:

What could be more outrageous than the hefty subsidies the U.S. government lavishes on rich American cotton farmers? How about the hefty subsidies the U.S. government is about to start lavishing on rich Brazilian cotton farmers? If that sounds implausible or insane, well, welcome to U.S. agricultural policy, where the implausible and the insane are the routine. Our perplexing $147.3 million–a-year handout to Brazilian agribusiness, part of a last-minute deal to head off an arcane trade dispute, barely even qualified as news .... If you're perplexed, here's the short explanation: We're shoveling our taxpayer dollars to Brazilian farmers to make sure we can keep shoveling our taxpayer dollars to American farmers — which is, after all, the overriding purpose of U.S. agricultural policy. Why the US Is Also Giving Brazilians Farm Subsidies, by Michael Grunwald 9 April 2010

The gap between the governments we have and the people they are supposed to represent hardly looks like closing. Ordinary people, along with planet Earth, are left behind in the policymaking process. We have to put up with whatever comes out of the bargaining between interest groups, be they large corporations, government agencies, trade unions or (so-called) religious bodies. For reasons social, financial and environmental, such a policymaking process cannot last much longer. If we are lucky, there might be time to turn towards making policy as if outcomes mattered.

Government by the rich, for the rich

House keeps farm subsidies, cuts food aid as it passes food and farm spending bill 'Washington Post', 16 June

This should be no surprise. We have known for decades that farm subsidies are insane; that they transfer income from the poor to the rich and that they do much to destroy the natural environment and animal welfare. But our corrupt political systems are incapable of stopping them. Much easier to cut food aid to those who count for nothing under the current regime: the poor at home and overseas. This is government for the rich by the rich. It makes a mockery of democracy.

If we made policy as if outcomes mattered, such lunacy would not survive. The tiny number of people who benefit from it can do so only because policymaking is an arcane process focused on procedure, funding, structural and institutional arrangements and other concerns entirely removed from those of ordinary people.

That's where Social Policy Bonds would differ: under a bond regime, projects, funding, and activities would all be orientated towards achieving specified social goals. The connection between policy and targeted outcomes would be explicit and inextricable. The public could engage with policymaking, so goals would have greater buy-in. The current farm subsidy regime is a symptom of a much bigger problem: that of the disconnect between policymakers and the people they represent. Social Policy Bonds, with their focus on meaningful outcomes, could re-connect policy with the public.