Thinking about the long term

A draft piece on why Social Policy Bonds could address long-term problems 

Because our governments and their paymasters in big business have no sense of a long-term future, catastrophes such as environmental collapse or nuclear conflict are going to become more likely unless we find ways of:

• Giving people a chance to decide on our long-term goals because, I suspect, most us have a longer-term outlook than government, 
• Targeting those goals, and
• Rewarding the people who achieve these goals most efficiently, whoever they are and however they do so.

Efficiency is important. In economic theory, and on all the evidence, markets are the best way of allocating society’s scarce resources to achieve targeted goals. Ideally, we’d inject market incentives into the achievement of our goals. That’s difficult to imagine in today’s policymaking environment, dominated by lawyers, big business, lobbyists and others with their own interests to pursue – including resistance to any change. So it’s important not to take today’s institutional structures, including that of government, as a given. Our goals should shape our institutions; not the reverse.

One possibility would be to contract out the achievement of our goals to a corporation. It would be paid only when our goal had been achieved. This could work for narrow, short-term goals, where the costs of achieving the goal can be estimated. But our most important goals are long term, and for these goals, a single body would, at best, require a huge premium over its expected cost of achieving the goal. More likely, since we are talking about goals that could take decades to achieve, any single entity would not take on such a huge commitment.

(It’s a fact that people working for charitable organisations do work to achieve these long-term goals. But such efforts, though admirable, are small in scale and, because there are few financial incentives, they are likely to remain so.)

If we are going to reward outcomes then, we need:

•         to reward people along the path to goal achievement, so that they can exit, with profits, before that point; and
•         to find ways of sharing the risks inherent in long-term commitments between different operators.

A single company?

One option would be to set up a company solely to achieve this outcome and to sell shares in it. The motivation would be provided by a large sum, kept in escrow, that would be paid out to the company once the goal has been achieved. The shares would rise and fall with progress toward or away from the targeted goal. A disadvantage of this is that there would be no link between those who would profit from progress toward goal achievement and those working towards goal achievement. Shareholders would be passive investors, and all decisions as to how to allocate funds for goal achievement would be made by the directors of the single company. Directors would be promised a share of the payout or would own shares. The problem is that the directors would be making all the decisions as to where to allocate funding for the various projects. With such a huge overall goal, they would not have sufficient oversight to keep up with progress on all those projects; nor to determine which are the most promising, and which it would be more efficient to terminate. Again, because of the necessarily large size of the company, it is unlikely that it would be subject to the market discipline through the possibility of takeover. On the plus side, the market prices of the shares, on flotation and beyond, would supply useful information as to how much progress is being made.

We need to motivate all who are working to achieve the goal all the time. One big company can't do this; so we need a way that doesn't require a large, overseeing organisation.

Social Policy Bonds

The problem remains: how to inject market incentives into the achievement of society’s long-term goals. I propose that we begin, again, with a large sum in escrow that would be paid out when the goal has been achieved. I propose that, shares in a company being sold, bonds be issued on the open market. Each bond would entitle the holder to a share of the payout once the goal has been achieved. The bonds would be tradeable at any time until redemption. Bondholders would benefit either by being passive investors, hoping for progress toward achievement of the goal, or they would be motivated to become, or to sell their bonds to, active investors, who would work to increase the probability of early achievement of the goal, and so benefit from a rise in the value of their bonds. Some sort of tacit or explicit co-ordination between bondholders and, possibly, aggregation of the bonds into a few hands, would lead to the creation of a new sort of organisation; one of protean structure with the sole aim of achieving the targeted goal quickly. Anybody or any entity, public- or private-sector could hold the bonds.

One potential disadvantage of the bonds is that there will be no necessary or direct link between the progress that each operator (body working to achieve the goal) makes toward goal achievement and the consequent rise in the value of its bonds. Indeed, it’s possible that despite the efforts of an operator, there may be movement away from achievement of the goal, so that the operator’s bonds fall in value. From the operator’s view, that would be unfortunate, but from society’s view it’s positive, in that the bigger the gap between the bond’s price and its redemption value, the greater the incentive for other investors to buy the bonds and work toward achieving the goal. It’s possible that at the lower levels of the subcontracting pyramid, operators would be paid for their time, rather than their performance. The risk of underperformance would be borne by those higher up the pyramid, who stand to gain most when the goal is achieved.

But what if nothing works, and the bonds stay at a low level despite the best efforts of investors? That could happen if events outside any bondholder’s control occur: a plausible scenario, if we target such goals as reducing the impact of natural disasters. The goal would remain unachieved; the funds would remain in escrow. Backers of the bonds could increase the motivation to achieve the goal either: by boosting the funds in the escrow account and increasing the redemption value of each bond in circulation correspondingly; or by boosting the funds in the escrow account but issuing more bonds with redemption terms identical to those currently in circulation.

Either would work, but the second option is better: if bondholders anticipated that there might be a swelling of the redemption funds, they might refrain from actively trying to achieve the goal, waiting instead for the larger payout.

It’s likely that operators with a good idea will be able to maximise their gains not only by buying bonds, but by buying futures or call options in the bonds; or by borrowing from bondholders to implement, or speed up the implementation, of their promising goal-achieving activities.  

Big bondholders would probably subcontract at least some of the work required to achieve the goal. They could do this in collusion (tacit or formal) with other large bondholders. Smaller operators could approach big bondholders with requests for funding; their rewards might be fully or partially conditional on a rising bond price. At all times, the market price of the bonds and movements in that price would provide information of great value to investors, would-be investors and policymakers.

Financial incentives aren’t everything. And people working to achieve goals might not be motivated by thoughts of personal gain, but many already working for charities or NGOs and who are already working hard to achieve social and environmental goals would be grateful for funds received from bondholders that they could use for other purposes than their own financial renumeration. A Social Policy Bond regime should boost the funding the most efficient of these organisations, which they could use to expand the scope of their activities by employing more people, for example, or expanding their scope.

There would be many benefits from such an approach. Apart from the efficiency gains that would result from allowing non-public-sector bodies to compete for the work, there'd be:

•   a long-term approach to policymaking, with much greater stability of policy goals,
•  more transparency about these goals,
•  more buy-in from ordinary citizens, and
• more widespread appreciation of the notion of trade-offs inherent in policymaking.

While government would relinquish some of its powers, especially over the funding of public-sector bodies, it would still have the responsibility of articulating society's wishes coherently, and in raising the revenue for their fulfilment. These are functions that our democratic governments can do well; they are not so good at efficient achievement of long-term societal outcomes. Under a bond regime, that would be done by market forces: in economic theory - and on all the evidence - the most efficient means of deploying society's scarce resources. Social Policy Bonds would represent a radical transformation from current policymaking systems; but it's one that is now practical, has huge advantages, and would close the gap between government and the people.

Social Policy Bonds and direct democracy

There aren't many examples of direct democracy whereby 'people vote on policies and laws themselves, instead of electing politicians to do it on their behalf.' In a representative democracy, we elect people to make those decisions. There used to be many practical reasons for this: canvassing opinion was technically difficult and expensive, education levels were low, governing is complicated and requires many people to set up systems and oversee them. As well, people in government genuinely believe they can do a better job of governing than ordinary people and, for that reason and others less edifying, do not want to relinquish their power. But with rising educational levels, government becoming ever more powerful and intrusive, and with the widening gap between our elected representatives and ourselves, I think it may be time to reconsider how certain decisions are made - and who makes them. 

Many of the biggest decisions that government could make, are made implicitly, reactively or without deliberation. Decisions about how much to spend on health versus defence, for example. Short-term considerations dominate. But the broad, long-term policies that fall out of the current system need not actually be made by politicians and bureaucrats. It's now feasible that they be made by those who are most affected by them: that is, ordinary citizens. 

I've written much about Social Policy Bonds and how they would direct the market's incentives and efficiencies into the achievement of society's long-term goals. (For more, see here.) But the other main feature of a bond regime is that it would oblige us to frame policy in terms of these goals, and it reward the achievement of these goals rather than activities or bodies that are supposed to achieve them. 

Policy expressed in terms of broad outcomes, with the decisions about who shall achieve them and how they shall do so left open, could be best made by ordinary citizens. Most of us nowadays are fairly well educated and could inform ourselves about broad policy goals, and choose which of them should have higher priority. So, under a bond regime, government, in its new role as synthesiser of the public's policy priorities, could present us with a range of policy goals, with approximate costings that we could rank (see Efficient costing of objectives in Chapter 5 of my book for why they need only be approximate). 

We'd be able to choose between various goals. For instance, at the national level, we could choose to target a reduction in crime; or an increase in physical health; or reduced unemployment; or improved air quality. Approximate costs could be given, along with targeted percentage changes. We could then rank them according to which we'd like to see most. 

There would be many benefits from such an approach. Apart from the efficiency gains that would result from allowing non public-sector bodies to compete for the work, there'd be:

• a long-term approach to policymaking, with much greater stability of policy goals,
• more transparency about these goals, 
• more buy-in from ordinary citizens, and
• more widespread appreciation of the notion of trade-offs inherent in policymaking.

There are various steps along the way to moving toward this - radically different - form of democracy. Some forms of direct democracy are already in use: referenda or proposals initiated by citizens in eg Switzerland or New Zealand, subject to their being supported by a significant number of signatures. A less familiar example is: 

...Taiwan’s experiment with deliberative democracy, which has generated fast and flexible policy responses to many issues, including social media. ... Taiwan’s minister for digital affairs ... has been central to this deliberative democracy initiative. She points to the island’s success in tackling deepfakes and disinformation by inviting 447 citizens to discuss appropriate responses. These 45 citizens’ assemblies suggested community notes should be attached to suspicious posts, that social media companies should share liability for deepfake scams and that their services should be progressively “throttled” until they complied with such requests. As a result of collective efforts, Taiwan’s Ministry of Digital Affairs reported a 96 per cent fall in online scam ads last year and a 94 per cent reduction in identity impersonation. Want to solve deepfakes? Ask citizens what to do, John Thornhill, 'The Business Times' (Singapore), 30 January 2026

I think we can now be entrusted with deciding on bigger issues, such as deciding on the relative importance of health versus defence but also goals that are currently not explicitly or meaningfully quantified and for that reason and others remain untargeted: one example would the numbers of people made homeless by natural disasters over a period of, say, 30 years. A bond regime would require that government take a hands-off approach to the achievement of these goals, and let all bodies, public- or private-sector compete for funding on the basis of efficiency, at all steps along the way to achievement. 

While government would relinquish some of its powers, especially over the funding of public-sector bodies, it would still have the responsibility of articulating society's wishes coherently, and in raising the revenue for their fulfilment. These are functions that our democratic governments can do well; they are not so good at efficient achievement of long-term societal outcomes. Under a bond regime, that would be done by market forces: in economic theory - and on all the evidence - the most efficient means of deploying society's scarce resources. Social Policy Bonds would represent a radical transformation from current policymaking systems; but it's one that is now practical, has huge advantages, and would close the gap between government and the people. 

Pay or pray for world peace

Professor Dominic Lieven, in a letter to the editor of the Financial Times, writes about the origins of the First World War:

Far more than any other individual, it was the German chancellor, Theobald von Bethmann Hollweg, whose miscalculations led to war. These miscalculations were rooted in a deeply pessimistic analysis of the probable future European geopolitical developments, which owed something to personal anguish caused by the death of his wife shortly before the assassination of the Habsburg heir at Sarajevo. America's declining empire: more Vienna 1914 than Suez 1956, Dominic Lieven, 'Financial Times',. 27 January 2026

It's scary how much the life of every human on the planet depends on the psychological make-up and stability of the very few individuals who lead our countries. Just as scary is that it's accepted that the systems that give these people such power are rarely challenged. How far have we advanced since the days of von Bethmann Hollweg, whose state of mind and mood swings arguably caused the catastrophe of World War 1, with consequences that blighted the entire twentieth century? Not much really, except that we can now imagine that a similarly disturbed individual could cause hundreds, rather than tens of millions to die.

We need to cut out the middleman - politicians and their policies - and instead vote directly for the outcomes we wish to see. This could be done by issuing Social Policy Bonds that would reward investors for achieving these goals, and at every step along the way. At first, targeted outcomes could be modest, and set at the national level. They could include such goals as increasing the health of the population by five percentage points, or reducing crime rates by 20%. Politicians could do something useful, and translate our wishes into coherent, actionable, policy goals. They would also raise the revenue that would be used to redeem the bonds once the targeted goal had been achieved. 

But what about the possibility of war? A bond regime could target the sustained absence of conflict, supplying incentives for the people who influence those in positions of power, to avoid war or face being removed from office. This could work at the national or global level. In the long run, a carefully crafted World Peace Bond regime would see incentives cascading downwards from the goal of world peace through all levels of all political systems, reducing the likelihood that the people at the top will inflame conflict. 

Avoiding violent political conflict - war and civil war - should be our first priority. Sadly, the incentives currently on offer make such violence more likely rather than less. A bond regime, at first reading, might seem outlandish but the alternative is simply 'business as usual' ie, rely on hope, and pray that the people in power resist their instincts and those of their ideologically motivated advisors and refrain from using their military might to impose their will on others. It's a scenario judged 'alarming' by the Economist, as well as me:

To an alarming degree, war and peace now depend on the whims of a handful of vain old men. Vladimir Putin is determined to add square miles to Russia, no matter how many Russians die or are impoverished in the process. Whether or not China invades Taiwan hinges on Xi Jinping, who craves a chapter in the history books and a chance to honour his late father, who was once the official in charge of reclaiming the island. Mr Trump is the least predictable of all, wielding American firepower willy-nilly to give short-lasting dopamine shots to his own ego. A chilling but plausible scenario: What if Putin wins?, 'the Economist', 22 January 2026 

I'd rather see a system, like a bond regime, that would reward people who work for and achieve peace in ways linked to their success in doing so. This would expand the numbers of people and the range of activities directed towards the ending of war. As well, the bonds would channel market forces - in economic theory and on all the evidence, the most efficient way of allocating society's scarce resources - into achieving peace as cost-effectively as possible. The alternative means continuing to place the fate of millions of people in the hands a tiny number of people who are just as subject to frailty, delusion and instability as the rest of us. 

It's a billionaire's world

George Monbiot writes: 

The World Inequality Report...2026 shows that about 56,000 people – 0.001% of the global population – corral three times more wealth than the poorest half of humanity. ... In the UK, for example, 50 families hold more wealth than 50% of the population combined. You can watch their fortunes grow. In 2024, Oxfam’s figures show, the wealth of the world’s 2,769 billionaires grew by $2tn, or $2,000bn. The total global spending on international aid last year was projected to be, at most, $186bn, less than a tenth of the increment in their wealth. Governments tell us they “can’t afford” more. In the UK, billionaires, on average, have become more than 1,000% richer since 1990. Most of their wealth derives from property, inheritance and finance. George Monbiot, Money talks, 23 January 2026

There is, possibly, a case to be made for huge disparities in wealth in a world without poverty, where the wealth is channeled into the relief of poverty, and where the wealth is accumulated through ways that benefit society or, at least, are not destructive of society. In such a world, philosophical discussions about desirable wealth distributions would be interesting and likely to be inconclusive, with good arguments to be made on all sides. But we don't live in such a world. There is poverty (7.5% of the world's population is estimated to be living in 'extreme poverty') and other afflictions that could be alleviated with a more equal distribution of wealth. There is some philanthropy, but:

Forbes once again investigated the lifetime philanthropic giving of every member of The Forbes 400. In total, these billionaires—worth at least $3.8 billion each—have donated an aggregate $319 billion to charitable causes over their lifetimes. [H]owever, America’s richest people are still not all that generous, relatively speaking. Their collective charitable giving equals just 4.6% of their total wealth—and that’s down from 5% last year. Three-quarters of them have given less than 5% of their fortunes away, including 40% who have donated less than 1% of their riches. America’s richest billionaires keep getting richer. They’re not donating much more, Ella Malmgren, 'Forbes', 9 September 2025

What about the sources of great wealth? Inheritance is one; in many countries, it's relatively easy to minimise with legal strategies like trusts, gifts, and charitable donations to minimize inheritance taxes. Rising property prices also have much to do with rising inequality, widening the gap between those who inherit wealth and those who, in many countries, can never own their own homes, however hard they work. As well, it's relatively easy for large corporations to influence the policy environment to discriminate against small businesses and undermine competition; another source of wealth accumulation at the expense of wider society.

All this is not necessarily objectionable. I just think it unlikely that it soaring wealth inequality - its randomness, and its co-existence with rising inequality and extreme poverty - reflects society's wishes. My guess is that it conflicts with them. It's come about because we don't choose policy outcomes: even in democratic countries we choose politicians, political parties and base our choices on ideology, looks or reported and often distorted media images. Any correlation between what sort of society people actually want, and the society that arises, is almost accidental. Politicians and the elites can get away with this, because they can talk vaguely about economic growth, as if achieving that will mean that poor people will inevitably benefit. It mostly did in the past, but doesn't today:

Despite experiencing economic growth post-2020, a third of 160 countries analysed witnessed a surge in extreme poverty. Sub-Saharan Africa is the most adversely affected region, with an average of 130,000 individuals per country moving into extreme poverty per percentage point of GDP growth each year. Growth without gains, UNDP, 16 October 2023

The implicit target of most governments is growth in GDP or GDP per capita. As we are not used to thinking in terms of coherent, explicit and verifiable policy goals, GDP has become a de facto target, though its weaknesses as an indicator of well-being are widely known. 

My suggestion, then, is that we start thinking about the sort of society we want. We could, for instance, explicitly target poverty, and reward people for achieving it. Social Policy Bonds would channel the market's incentives and efficiencies into doing just that: on a global scale, a mix of governments, supra-national bodies, philanthropists and ordinary people could all contribute to a fund that would redeem Human Development Bonds. At a national level, we could target unemployment, health, literacy and other indicators of poverty that either are themselves, or are inextricably linked to, poverty and deprivation. The very obvious benefit of applying the Social Policy Bond concept in this way is that we'd be increasing social well-being as efficiently as possible: the market for the bonds would see to that. There are other, less obvious benefits: transparency and stability of policy goals, as well as buy-in. But, even more relevant for this discussion is that a bond regime would channel wealth and wealth creation into projects that benefit the whole of society. People could still become rich - or even richer, but under a bond regime the would do so by diverting their expertise and capital into projects that benefit everybody. A further consequence of this is that other activities: those of zero or negative social benefit, could be more heavily taxed. There's much more about Social Policy Bonds and their benefits in the papers and books linked to on SocialGoals.com. All my work on the bonds can be downloaded for no charge.