Another way of subsidising the rich

Environmental policy now seems focused almost exclusively on greenhouse gas emissions. Almost anything that might reduce the net emissions of those gases that are currently thought to be the instigators of global warming is lauded and, indeed, subsidised, regardless of its impact on land use, water quality, child labour, and the viability of public transport.

And inequality. Take Norway, which is...

...constantly being hailed as a frontrunner in the promotion of electric cars. It is true that there has been a real boom of BEV [battery electric vehicle] sales in the country – due to generous government subsidies. However, the overall picture is not so rosy - one might even consider it tragic. Namely, in 2010, there were 2,308,000 cars, while by 2022 this number jumped to 3,105,000 – in a country with a population of 5.4 million. During this period, the number of internal combustion engine (ICE) cars did not decrease at all. ... Many [Norwegians] think that it would have been more useful to invest more in public transport and encourage cycling and walking. Subsidies for electric cars have also increased social inequalities by primarily benefiting the wealthier individuals who usually bought one or more additional cars to the already existing one(s). Electric cars are a dead end, András Lukács Aydan Gurbanova, 'The Ecologist', 16 April

There's something really cynical about this. If we are serious about wanting to reduce our impact on the climate, then we need to enact policies that reduce our impact on the climate. We need also to take into account the negative externalities of our policies, not only on distribution (of income or wealth), but also on the environment more generally. 

My suggestion is that we focus on the outcomes that we want to achieve, rather than the supposed means of achieving them. The fundamental question is whether we want to change the climate, or to reduce the adverse impacts of climate change. We could, for example, aim for a range of social, physical, biological and financial indicators (insurance claims for instance); all of which must fall within an approved range for a sustained period in order for our climate goal to be deemed achieved. The tunnel vision focus on greenhouse gas emissions won't do anything to bring about such a broad range of goals. In fact, despite vast expenditure of bureaucratic energy, technical advances, coercion and subsidies it's even failing to reduce greenhouse gas emissions: 

'Climate activism became a big public cause about halfway along this graph. Notice any effect?' From Riding the Climate Toboggan, John Michael Greer, 6 September

Our scientific knowledge about the impacts of, and optimal solutions to, climate change is constantly expanding, and we need policies that allow for that. My suggestion is that we reward those who achieve an array of meaningful climate-related targets by backing and issuing Climate Stability Bonds. These would stimulate research into, and implementation of the diverse, adaptive approaches that will be necessary to bring about an efficient solution to the climate change problem.

Betting markets and benign manipulation

Zachary Basu writes about the 'explosion of legalized gambling' in the US, which 'has set the stage for a provocative new frontier in the world of risk-taking — betting markets for everyday events, ranging from Taylor Swift streams to hurricanes hitting major U.S. cities.'

Punters...

...can bet on hundreds of real-world events — whether the Fed will cut rates, the high temperature today in Miami, Oscar nominations, the outcome of Supreme Court cases — on Kalshi, the only federally regulated exchange dedicated to event markets.... Some ethics experts have raised concerns about the integrity of betting on natural disasters and other markets tied to human suffering, as well as those that could be subject to manipulation. America the slot machine, Zachary Basu, 10 April

If there were a market that promised huge rewards for successfully predicting, say, a halving of the number of people killed by natural disasters in the US, then you can see how it would be in punters' (otherwise known as 'investors'') interests to do whatever they can to improve US citizens' resilience to such disasters. And that explains how I came up with the idea of Social Policy Bonds: the aim is to reward not so much the successful prediction of future events, but successful efforts to influence future events to the benefit of society. Hence, in this example, Disaster Prevention Bonds.

The Social Policy Bond principle is a beneficial form of the manipulation to which Mr Basu refers, which can manifest itself in the sports world as match fixing. With governments (unsurprisingly) and philanthropists (disappointingly) taking only tiny steps in the direction of rewarding successful achievement of beneficial outcomes, perhaps another approach would be to set up a market with Kalshi for a relatively unambitious goal. Those who stand to lose money from, say, high crime rates in a particular city, such as insurance companies, could bet that crime in that city will not halve in the next five years. Punters on the other side of that gamble, and would be motivated to do all they can to make sure that such a halving does occur. Everybody would gain from this benign form of manipulation. Such is the Social Policy Bonds differ only in that those setting up the bet would aim to reduce all forms of losses, not only those that can be valued monetarily.

Transcending identity geopolitics: Conflict Reduction Bonds

Gideon Rachman asks:

What is it that causes some tragedies and conflicts to command the world's attention and others to pass almost unnoticed?

The tragedies of Ukraine, Gaza and Israel all get far more attention than wars and humanitarian calamities in the rest of the world. ... [L]ast week the UN warned that "Sudan will soon be the world's worst hunger crisis" with 18mn people facing acute food insecurity. It highlighted an ongoing conflict that involves "mass graves, gang rapes, shockingly indiscriminate attacks in densely populated areas" and more than 6.5mn displaced people. War and the rise of identity geopolitics, Gideon Rachman, 'Financial Times', 27 March

The answer appears to be something Mr Rachman calls identity geopolitics. But for my purposes, the 'why' doesn't really matter. A higher priority is, I believe, to target for reduction all deaths and depredations caused by human conflict, impartially; that is, without regard to people's identity, beliefs, or where they live. We have limited conflict reduction resources, and they should be deployed where they can relieve the most human suffering. When thinking rationally and compassionately, I believe most of us would agree. 

One way of doing this would be to issue Social Policy Bonds to target conflict and the results of conflict. The bonds could target conflict in a particular region (the Middle East, for instance), or the entire globe, or (simpler to monitor), nuclear conflict specifically, depending on the source, magnitude and interests of those funding the bonds. I will admit that the idea of issuing bonds targeting something the ancient Greeks and others have deemed an inescapable aspect of human nature seems overly idealistic at first sight. But incentives can direct our goals and behaviour in unimaginably varied directions. Financial incentives, as offered by the bonds, aren't the only way of influencing our behaviour but, if they are sufficiently large and embedded in a very long-term vision, they could attenuate some of the more negative human traits that lead to deadly conflict. If that sounds far-fetched, consider the power of financial incentives to foment conflict: without weapons at every level of sophistication, tragedies of the scale at which we are seeing today would simply not occur. Manufacturers supply weapons in such copious quantities precisely because of the financial incentives on offer. 

The links in the previous paragraph lead to pieces explaining how the bonds would work. In my view, issuing bonds with the goal of peace sustained for several decades would have two huge benefits:

• They would bring about more more efficient allocation of conflict-reduction resources, so minimising the human suffering that conflict brings about, including that measured in terms of deaths, injury, or homelessness.

•  For that reason, people would be more inclined to invest in conflict reduction, in all its aspects, many of which will be innovate and that we cannot anticipate. 

Greater effectiveness of peace making, and more resources devoted to peace making: I think it's worth a try.

Defining and rewarding peace

How do we define 'peace' in such a way it could be meaningfully targeted by such applications of the Social Policy Bond concept as World Peace Bonds or Middle East Peace Bonds? 

It seems difficult at first. Peace, in the sense of absence of open conflict reigns, by definition, in the years before wars break out. But the opening sentence of Liddell Hart's History of the First World War gives a clue:

Fifty years were spent in the process of making Europe explosive. Five
days were enough to detonate it.

A World Peace Bond regime would be targeting long-term peace. Bondholders therefore would be rewarded when they reduce the probability of conflict before it becomes lethal. As with most Social Policy Bond applications, our overall goal will be a set of subordinate goals, each of which has to be satisfied before the bonds will be redeemed. So, one such sub-goal could be to ensure that the 'number of people killed within 24 hours of an act of violence' falls below 5000 for a period of several decades. But this condition would have to be satisfied at the same time as others, such as the lethality of weaponry held by actors. 

With a goal for peace that must be sustained over fifty or more years, metrics that target for elimination the use of deadly violence become more closely aligned with what we actually want to achieve. With such a decades-long outlook, bondholders would have incentives not merely to prevent the outbreak of violence, but also to prevent the precursors to violence. For example: the Cold War ended peacefully, but if World Peace Bonds issued in the year 1950 had targeted a period of sustained peace of just ten years then bondholders would have profited, despite the accumulation of ever more horrific atomic and nuclear weapons, during the period that preceded the Cuban Missile Crisis of October 1962. If the same bonds had been issued with a target of fifty years of sustained peace, then bondholders would have been motivated to reduce tensions, including by such means as reducing the weapons pile-up, or fostering better relations between the US and USSR. A ten-year goal would see the original bondholders making profits while the prospects for peace looked ever darker. A fifty-year goal would have seen the value of their holdings collapse before and during the Crisis.

The point is that rewarding peace sustained for a decades-long period encourages longer-term thinking. By choosing to target a decades-long period of sustained peace, we should do much to eliminate the much less quantifiable - but hugely important - precursors of violence.

Even more appealing as a target would be nuclear peace. A goal such as 'fewer than 500 people killed by a nuclear device within one month of its detonation over a period of fifty years' would be even simpler to define robustly, and could be a top priority for organisations, or philanthropists perhaps, who wish to ensure nuclear peace, but have no means or wish to get involved in achieving it.

Black Out nights, climate and war: the need for verifiable goals

Stephen Bush writes about 'Black Out' nights in the US and UK, which are intended to encourage more black people to attend theatre performances by inviting an 'all-Black-identifying audience'. Mr Bush's opinion about this form of segregation is similar to mine (negative), but he is also ...

...struck by an equally important and more widespread problem: that no one involved either has any idea if the scheme works or any plan for measuring it. Even worthwhile causes need a metric for success (paywall), Stephen Bush, 'Financial Times', 11 March

He concludes:

All of us who criticise Black Out nights because we don't like the principle at stake are also guilty of failing to ask the first question we should pose to anyone doing anything, no matter how worthwhile. And that is: how, exactly, will we be able to tell if you've succeeded or failed?

It's a common failing, and one that is most grievous when it's made by policymakers. My previous post refers to an article written 22 years ago by Stephen van Evera, and I don't think things have improved since then. It's one of the reasons that I have posed Climate Stability Bonds as an alternative to the current focus on reducing greenhouse gas emissions as the sole solution the climate change problem. We can target emissions fairly accurately, but we cannot reliably link any changes in emissions to changes in the things that matter to us. We need to specify exactly what are those concerns, and set up reliable measures of progress towards addressing them, before imposing heavy regulatory and financial costs on society. That's one reason, I believe, that despite heroic efforts (alongside those costs), nothing in the way of greenhouse gas emission has been achieved.

'Climate activism became a big public cause about halfway along this graph. Notice any effect?' From Riding the Climate Toboggan, John Michael Greer, 6 September 2023

It seems that charities and activists are following the government's lead: declaring grandiose, lofty-sounding goals that just happen to be so vague as to resist effective monitoring. Speaking out against initiatives that may well be futile and certainly cannot be shown to be successful, such as Black Out nights or, indeed, agreements to cut greenhouse gas emissions is, in today's politically polarised scene, risky. Potentially even more disastrous for humanity than the climate change circus is the failure to set and reward verifiable goals for eliminating deadly conflicts: wars and civil wars and their consequences. There are well-meaning, hard-working people working for bodies ostensibly aimed at reducing conflict levels, but nobody is in a position to judge how effective are any of their myriad approaches.

A Social Policy Bond regime would not allow policymakers to get away with specifying goals that can't be measured. So, for example, we need to identify what exactly we want climate change policy to achieve. Our goals in that area could be defined in terms of a range of physical, ecological, social and financial indicators, all of which would have to fall within an approved range for a sustained period before the policy would be deemed successful, and holders of Climate Stability Bonds rewarded. That period could be decades long. All of this would be a sharp contrast to today's approach, which has as its sole goal a reduction in greenhouse gas emissions, which even if it were to be achieved, does not speak to the concerns of ordinary people, which is one reason why it has gained no real traction. Similarly, with conflict. Targeting broad, verifiable, meaningful, long-term outcomes, such as sustained period of a more benign climate or world peace would not only be more effective than any current efforts to solve global problems; it would enjoy more public support and hence more buy-in; essential if we are to successfully meet the huge challenges humanity faces, of which climate change and war are two of the most urgent.

Pournelle's Law

The Economist quotes Sir Keir Starmer:

Policy churn is the 'single most important reason' for the [UK's] economic malaise. Sir Keir Starmer: bureaucrat first, politician second, the 'Economist', 24 February

There is some truth there, but what explains policy churn? Pournelle's Iron Law of Bureaucracy tells us that: 

[I]n any bureaucratic organization there will be two kinds of people:

First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration.

Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc.

The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.

I've written (here, for example) about the swerving of organisations away from their ideals and ultimately becoming self-perpetuation. I think it applies to every type of organisation, public- and private-sector. In my understanding, policy churn follows from this: it's a result of politicians wishing to retain control over their bureaucracies. Whereas, under a Social Policy Bond regime, the incentives to achieve society's targeted goals would cascade downwards, under our current political systems the incentives of our publicly-funded bodies are to maintain their income in an environment that, thanks to policy churn, is  constantly changing. The result is the short-term thinking and learned helplessness of our bureaucracies. A bond regime would encourage the creation of a new type of organisation: one whose structure and every activity would be entirely subordinate to society's targeted goals.

In no-strings philanthropy I trust

The Economist writes:

[T]he great expansion of higher education has coincided with a productivity slowdown. Whereas in the 1950s and 1960s workers’ output per hour across the rich world rose by 4% a year, in the decade before the covid-19 pandemic 1% a year was the norm. Even with the wave of innovation in artificial intelligence, productivity growth remains weak—less than 1% a year, on a rough estimate—which is bad news for economic growth. A new paper by Ashish Arora, Sharon Belenzon, Larisa C. Cioaca, Lia Sheer and Hansen Zhang, five economists, suggests that universities’ blistering growth and the rich world’s stagnant productivity could be two sides of the same coin. ...

Businesses had more responsibility for achieving scientific breakthroughs: in America during the 1950s they spent four times as much on research as universities. ...[W]hen it came to delivering productivity gains the old, big-business model of science worked better than the new, university-led one. ... Free from the demands of corporate overlords, [university] research focuses more on satisfying geeks' curiosity or boosting citation counts than it does on finding breakthrough that will change the world or make money.  Universities are failing to boost economic growth, the 'Economist', 5 February

To me, this speaks to the value of incentives. Research of the type done by universities is similar to the way that our social and environmental goals are pursued: they are done by large organisations whose employees are not rewarded in ways that correlate with their success. Those who work for government or government-dependent bodies are, consciously or not, disinclined to rock the boat. The funding of these bodies is hardly, if at all, linked to their success in coming up with problem-solving initiatives. Sadly, most of our important social and environmental goals fall under the remit of such government-dependent bodies. These include the elimination of poverty and crime, the reduction of environmental depredations and, on a global level, the solution to such trans-national problems such as over-fishing and war. Research is just one of the activities that government has brought into its purview, with the disappointing results that Arora et al relate. 

How is it that government constantly expands its remit? There is the sense that some things are too important to be left to the private sector, and that only government can be impartial as to the allocation of funding. This sense pervades such critical debates as to whether the UK's National Health Service should be partly or completely privatised. That debate rarely considers health outcomes or, indeed, any outcomes at all: instead, ideology and vested interests set the debate's terms. Some concerns are genuine: markets have been abused and undermined such that they, in many cases, are rightly discredited in the eyes of the public. 

Social Policy Bonds could combine the best elements of both the public and private sectors. Under a bond regime, government could articulate society's wishes and raise the revenue for their fulfilment; these are things that democratic governments can do well. But where they perform badly is in actually achieving society's goals, largely because of the incentive structures they put in place: the structures that reward activity regardless of outcome. The effect of a Social Policy Bond regime, however, would be to contract out society's goals to those best placed to the achieve them. In economic theory and on all the evidence, that is what competitive markets do best. An obstacle in the way of implementing the Social Policy Bond concept is the unwillingness of government and its funded bodies to relinquish their control over activities ostensibly directed at the public good. Rather than wait for government to do that, perhaps the best hope for a no-strings philanthropist to get the ball rolling....

The question nobody asks: are the cows actually better off?

The effort highlights a glaring cow-related contradiction in the BJP's [Bharatiya Janata Party's] Hindu nationalist ideology. The party says it wants to protect cows, which are associated with divine beneficence and venerated by Hindus. Yet its pro-cow policies, including bans on cow slaughter, appear to be detrimental to cattle welfare. They are thought to be causing an increase in stray cows, typically male calves and aged milkers which, having little commercial value, are let loose by their owners. Abandoned, they feed on plastic bags and other rubbish, cause car crashes and raid farmers’ crops. The Hindu right’s pro-cow policies are terrible for India’s cows, the 'Economist', 3 February

It shouldn't surprise us. The stated aim of a policy in today's policymaking environment need have no relationship to its result. The two may, as here, even be conflict. Collectively, we rarely hold the people who make a policy responsible for its outcome. In the private sector it's different: there are the disciplines of the market and competition, and reliable, visible, constantly readable indicators of the success or failure of an enterprise. But in the public sector: 

 [G]overnment bureaucracies non-self-evaluate. At a minimum, agencies with evaluative responsibilities are not invited to evaluate - they are kept out of the loop, their opinions unsought. At a maximum, government agencies actively suppress their own internal evaluative units and are discouraged from evaluating the beliefs and policies of other agencies. Why States Believe Foolish Ideas: Non-Self-Evaluation By States And Societies (pdf), Stephen Van Evera, Massachusetts Institute of Technology Political Science Department and Security Studies Program, 2002

So politicians can get away with selling their policies according to what they say they will achieve. In the absence of data we choose politicians who have lofty-sounding goals, or who look good on camera. We vote for people, or personalities, or out of tribal loyalty to political parties. 

A Social Policy Bond regime would be different. We'd vote for social and environmental outcomes, rather than the people or policies who say they'll achieve them. Politicians would retain their roles of articulators of society's wishes and revenue raisers, but their role of allocating finance and determining the structure of bodies charged with achieving society's goals would be diminished. Those decisions would be taken by bondholders, who would make them according to the sole criterion of efficiency in achieving the targeted goal at minimum cost. Bondholders would face the discipline of the market: if they are inefficient, their bonds would be bought up by more efficient operators. A transition to such a regime should be made gradually, partly for pragmatic reasons, but partly also to give existing bodies a chance to evaluate and improve their performance. (I discuss such a transition in my book.) There would be a gradual focus away from politicians and their antics, and more on the elements that make up society's well-being. So rather than be swayed by such rhetoric as how a particular policy would be good for cows in India, say, we'd look instead at whether things are actually improving for cows. Such a way judging is perfectly acceptable in the private sector; extending it to goals currently the remit of the public sector, could greatly benefit society.

Nothing to report

There's very little happening with the Social Policy Bonds idea. At least, I'm not aware of any progress. In many ways we seem to be going backwards. With climate change, for instance, there appears to be less focus on defining the outcomes we want to achieve, and more on such surrogate indicators as numbers of electric vehicles on the road or generating capacity of wind and solar installations. Other environmental problems receive even less attention. Nuclear and non-nuclear weapons continue to proliferate. Our politicians are judged less by their achievements or competence and more according to soundbites, personality and tribal identity. Outcomes - verifiable meaningful outcomes - are rarely cited now as goals of policy. Politicians hang on to power for its own sake, or because they can't find better jobs, or because it gives them immunity from prosecution for corruption or war crimes. A capable, aspiring, idealistic man or woman would hardly choose to go into politics, where the entirety of your private life and those of your family are scrutinised by those looking to sell a story. There are more suitable positions in the private sector, NGOs or religious bodies. 

So there's little to be optimistic about. The Social Policy Bond concept seems to be out of sync with today's realities. For the last thirty years I've been told that the idea is ahead of its time, but now I think it's behind its time, in that long-term goals are a yet lower priority than immediate concerns. The idea receives little attention now, and though such attention is welcome, it is invariably fleeting and unlikely to gain traction. 

I still think the bonds they could play a role where we are confronting big, urgent crises, such as war and nuclear war and the many global and regional environmental depredations. When it comes to war, right now almost all the financial incentives favour those who wish to foment conflict or who would benefit (at least in the short run) from it. We need countervailing incentives; incentives that would divert talented people from activities with little or negative social benefit, into improving the prospects for peace. It is disappointing that much of our undoubted human ingenuity is devoted to trading esoteric financial instruments, computer coding, advertising dog food etc, all of which would have their place if the probability of social and environmental catastrophes could be significantly lowered. I will carry on with publishing this blog, in the hope that, even if the ideas here and on my SocialGoals.com site are not taken  up immediately, they will be around for others to develop, refine and implement when I cease publishing.

Tantrums, bribes and world peace

Nobody seems to have high expectations for this year, beyond any personal hopes and dreams. War, fear of new pandemics, environmental tipping points, nuclear proliferation: the possibilities are frightening. Yet the ingenuity of our species knows no bounds. Each day brings news of discoveries in every field of the sciences, medicine, technology including IT... All driven by our curiosity, intellect, skills and hours of dedication and hard work. 

And - oh yes - by ample funding. Perhaps it's funding and the way it's allocated that explain the contrast between our boundless successes and the very real possibility that we are heading for at least one of a baleful array of potential calamities. We are collectively very happy to support research into activities that have identifiable winners, such as pharmaceutical companies, weapons manufacturers and also, to be fair, universities and research institutes. We are less happy to adopt the Social Policy Bond approach by targeting outcomes, such as world peace, however desirable they are, where humanity - the biggest beneficiary - cannot monetise its wishes. Such goals as world peace, if we believe them attainable at all are, we think, best worked towards by bodies that might have founded with idealistic goals and hard-working, well-meaning employees, but have (often) been ossified by routine and cynicism, such that their over-arching goal is now self perpetuation. Those bodies that have escaped that fate are pitifully under-resourced and make only localised impacts.

We pay teachers, don't we? They receive salaries, as do doctors, nurses, and people who care for others. But we are squeamish about paying people for things that we think should be pursued solely for idealistic reasons. Example: paying people not to kill each other is a long way short of ideal, but I believe that, if it's the only or the best way of avoiding deadly conflict, then we should encourage it. It is one possible approach that investors in World Peace Bonds could follow; an approach that we eschew, not because it's been tried and failed, but because (I surmise) it's too crude, or too defeatist (as in 'are we really so degenerate that we have to bribe adults not to have murderous tantrums?'), or perhaps because it's never been tried before. Tried, tested and failed will always beat new, might-not-work and disruptive. In large institutions of any sort, things must never be done for the first time.

World Peace Bonds would allow for the possibility that such unsubtle measures as bribing or otherwise undermining those who foment conflict are the most efficient way of bringing about peace. They would encourage research and experimentation of all potentially viable measures, and refinement and implementation of only the most promising ones. The goal is always to achieve peace as efficiently and speedily as possible and the way the bonds work would ensure that all activities, always, would be aimed at that goal. To this end, approaches would be necessarily diverse (what works in one part of the world won't work in another) and adaptive (what works in some conditions won't work in others). Such flexibility is beyond the imagination of any current organisation, be it private- or public-sector.

There are other advantages to this application of the Social Policy Bond principle: the bonds would take a long-term view, paying out only when the goal (world peace, in our example) had been achieved and sustained for a period of, say, three decades. They would divert funds away from socially neutral or negative activities as investors, with an eye only on their financial returns, would see the light. This does not mean that only self-interested investors would be rewarded: the gains from holding the bonds while working to achieve society's goals would cascade downwards, so that the number of, and rewards to all those working for bondholders would benefit, just as civil servants, teachers or workers generally, benefit from the success of their employers.