Interesting article in the Guardian today about IDS’s social impact bonds and their magical capacity to fix ‘Broken Britain’:
But the plan put forward yesterday by Iain Duncan Smith, Oliver Letwin and Labour MP Graham Allen to issue “early intervention bonds” to solve the infinitely complex problems of families in trouble flaps away into delusion.
Here is the fantasy. Poverty and social dysfunction, addictions, depression, crime, teen pregnancy and illiteracy cause expensive crises. One person can cost scores of thousands a year in prison, courts, rehab and A&E overdose visits. But what if the very clever people in the City could roll all that sub-prime behaviour into an investment product? It’s as clever as a credit default obligation. With a wave of a wand, the risk from all that bad stuff can be placed with investors instead. Social investment bonds could evaporate poverty and its consequences at no cost to you or me. These people can be monetised to turn a profit for all. Amazing.
Nick Clegg, speaking in the City recently, explained that if investors paid for preventative work up front, the state would repay them later out of money saved. He called for “creative ways to bridge the gap between initial investment and the long-term returns”, praising the City as “one of the most innovative financial services centres in the world”. Duncan Smith, writing in the Guardian last week, quoted private equity investor Sir Ronnie Cohen as predicting that social impact bonds are “the wave of the future” and “the new venture capital”.
Leaving aside the pragmatic vacuity of the proposal, not least of all, as Polly points out, the question of how the fuck you produce and implement the metrics to make this system work – perhaps the Government should reconsider its cuts to social science teaching, given this will need a veritable army of soc sci graduates to make it work – what’s fascinating about this is the extension of financialization it represents.