25 August 2012

The US election: who cares?

Who cares about the US election circus? More from Predator Nation:

[An] effective response to internal industrial decline [in the US] and foreign challengers required major changes in American government as well as industry. It required major improvements in the educational system, aggressive pressure to force incompetent industries to reform, ... and a variety of regulatory changes. But those measures had no focused, powerful, well-financed interest group to lobby for hem. Charles H Ferguson, Predator Nation, May 2012
What did those powerful interest groups decide to do? Mr Ferguson continues:

...to start using money to get what they wanted. But only what they wanted, individually - not what the country as a whole needed. Indeed, what was good for their company's profits was quite often bad for the nation.
Most voters probably know, at some level, that the politicians have not the slightest interest in the long-term well-being of the nation and its citizens or, rather, that they cannot afford to rule as if they have. The problem is self-reinforcing. It cannot reform itself. The people and the politicians live in different worlds and those worlds are moving away from each other. 

Despite recent interest (here for instance), I have no illusions about the likelihood of Social Policy Bonds being issued by national governments, but I will continue to put the idea forward as a possible solution. A bond regime would target outcomes that are meaningful to ordinary people: things like better health, lower pollution, or reduced risk of disasters, however caused. By focusing relentlessly on outcomes, rather than the current array of vague or unspecified targets, the bonds could shame governments into catering to the needs of all their citizens, rather than the wealthy and powerful. That's because governments would have explicitly and publicly to declare the outcomes that the bonds would target. And, because political debate would centre on these outcomes, rather than activities, outputs, funding arrangements, laws, regulations, personalities and hairstyles, it's far more likely that ordinary people would participate in the policymaking process. Under a bond regime we, the non-powerful, general public could still, as we are now doing, acquiesce in our tax payments being used to bail out a corrupt financial sector, or subsidies huge industrial and agricultural conglomerates and fossil fuel extraction and consumption. But, in that unlikely event we'd at least be doing so with our eyes open. Even that would be an improvement over the current system built, as it is, on deception.

17 August 2012

Should teachers be paid?

Charles Ferguson, discussing the activities of people gaming the US financial system, writes:
we seem to have reached an unhappy position in which a substantial fraction of our most intelligent and articulate citizens either sit at Bloomberg terminals or jet around the world in very expensive tailor-made suits “ding deals” that, judging by the recent record, have no purpose except to put more money in their own pockets, and that on a net basis are economically detrimental to the rest of the population.  Charles H Ferguson, Predator Nation, May 2012
Surely we can do better than that? People sometimes argue that Social Policy Bonds are a means by which investors make money out by doing what they should be doing anyway. It is true that some wealthy bondholders could become even more wealthy by first buying Social Policy Bonds, then doing something to achieve the targeted objective, then selling the bonds. If that seems reprehensible, it is far better than the reality that Mr Ferguson describes above. 

It might not even be that individuals will amass huge fortunes under a bond regime, even if they do successfully achieve society’s goals and profit from their bondholding. The way the market for Social Policy Bonds works would mean that excess profits could be bid away by competitive would-be investors. The market would convey a huge amount of information, openly, that will indicate the constantly varying estimated costs of moving towards a targeted goal. 

The sums of money at stake might be huge, particularly for Social Policy Bonds that target apparently remote, national or global goals, but there’s no particular reason to assume that, in the long run, it would be shared out any less equitably than, say, teachers’ salaries. Those are other examples of people making money by undertaking a socially useful activity. There are perfectly logical arguments against paying for teaching or nursing services but they don’t sound very convincing these days.

11 August 2012

Campbell's Law

The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor. Campbell's Law
I've blogged before about Mickey Mouse micro-targets. Such targets are in common use today, and they obey Campbell's Law because they are so narrow that people can fulfil them in ways that conflict with society's best interests. Broader objectives, a feature of Social Policy Bonds, would help, because then people would have fewer opportunities to withdraw resources from the fulfilment of untargeted social goals to goals that are targeted. Broader goals also reduce the relative costs of monitoring compliance. But even so, it is best to think of metrics that actually are, or are inextricably correlated with, what we actually want to achieve. There are some things you can do to minimise the risk of gaming the system. For example: if our target is universal literacy in a country, we could take reading tests at a random sample of 50 out of a possible 1000 locations in that country. Similarly for pollution or crime, for examples. There might be other ways of targeting metrics without specifying in advance exactly what they are, so that people have to do the job, rather than game the system, in order to profit from holding Social Policy Bonds. But there will probably always be a need to see that people are complying with the spirit, not just the letter, of any target. That said, some targets would be pretty difficult to game: for instance, the goal of having no people killed by a military nuclear explosion over the next thirty years.

04 August 2012

Who needs political parties?

Given that keeping your seat means spending a fortune on television advertising and other forms of campaigning, changing your views on a matter of great interest to your sponsors is likely to be political suicide. Stop this culture of paying politicians to deny climate change, George Monbiot, 2 August
Mr Monbiot is referring to seats in the US Senate, but the principle applies to all the democratic countries and to issues other than climate change:
 [A] political system which imposes no effective cap on campaign finance leads inexorably to plutocracy: governance on behalf of the richest people and corporations. 
Perhaps our system of representative democracy can be fixed, and perhaps reforming the way political parties are financed is one way of doing it. But, just as likely, the problem is intrinsic to politics in which parties dominate. Every institution, whether it is a political party, government agency, religious body, university or whatever, has as its over-arching goal that of self-perpetuation. It can easily be persuaded to evade or subvert its stated objectives for the cash necessary to stay in existence. We could try tinkering with the way political parties are financed, or we could try something different:

Under a Social Policy Bond regime organizational structures, and the people within them, would be entirely subordinated to outcomes. And people would decide directly on the outcomes they wanted to achieve. Consider our current system: people vote for individual politicians who say they will do certain things that may or may not achieve certain outcomes - usually safely in the long term. (But who monitors progress?) These people's careers usually depend, individually or as members of a political party, on some source of external funding. The scope for manipulation of these would-be politicians is obvious. So why not have people vote directly for outcomes, rather than people who, if they are made to justify their actions at all, can get away with vague promises that their decisions will at some indefinite point achieve some unquantified and uncosted goal?

Social Policy Bonds wouldn't distract ordinary people by issues such as personalities or short-term activities: they would focus our attention exclusively on outcomes and their costs. We could target such goals as the avoidance of disasters caused by climate change (or anything else) without having to try to keep up to date with our rapidly expanding scientific knowledge. We should not even have to decide on which institutions would best be able to achieve our goal: the way the bonds work would reward only the most efficient projects, or combination of projects, whatever they are and whoever initiates them. And perhaps just as importantly, wealthy individuals or corporations would find that the way to become even wealthier would be to direct their resources into achieving society's broad, long-term goals, rather than their own narrow, short-term interests.