Epilogue - Social Policy Bonds

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The text on this page forms the Epilogue to my book, Market Solutions for Social and Environmental Problems. It was written in late 2008, and describes how people had, till then, reacted to the Social Policy Bond idea

The Social Policy Bond concept has had an unusual fate for an unusual idea. It has been in the public domain for about 15 years, and it has not been so far been adopted anywhere, to my knowledge. But neither has it been dismissed outright. It tends to provoke initial enthusiasm amongst economists and decision makers, but then to be forgotten as day-to-day issues demand immediate attention. Robert Shiller, Professor of Economics at Yale University, wrote to me at the end of 1996, praising the Social Policy Bond idea, saying that it creates ‘a large interest group for the solution of important problems. The political and other effects of creating such an interest group could be incalculable.’ An earlier draft of this book elicited extreme comments at both ends of the range from the two referees: one dismissed the text as an irrelevance. The other called the idea ‘original and ingenious’ and ‘a substantial contribution to debate about public policy’.

The Social Policy Bond concept is perhaps a difficult one for people to grasp. It does not fit neatly into any ideological box. In channelling market forces into the achievement of social and environmental goals, it can be seen simplistically, as a ‘right-wing’ way of achieving ‘left-wing’ objectives. Unfortunately, rather than appealing to both sets of ideologues it seems to appeal to neither!In April 2002, I presented a paper on the bond concept to joint meeting of the Agriculture and Environment Committees at the Organisation for Economic Cooperation and Development (OECD) in Paris. At the meeting delegations from most of the OECD’s member countries made comments on the paper. These were mostly along the lines of ‘this is very interesting — but unworkable in practice.’ Perhaps one of the delegates articulated the deeper feelings of those present, who were overwhelmingly government employees: ‘if this gets adopted we'll all be out of jobs!’ My OECD paper went no further.

I am pleased though that, at the time of writing, certain private individuals have taken the initiative and are proposing to issue their own Social Policy Bonds. They are considering floating bonds for projects as diverse as boosting voter registration, raising literacy in developing countries and developing open-source software. Enthused by the bond concept, they are raising funds, or preparing to put up their own funds, to redeem bonds targeting objectives that they specify. I am heartened and encouraged by their efforts.

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