Wednesday, July 06, 2016

Social bonds are a failure

Last year the National government had the brilliant idea to financialise misery, through "social bonds", complex financial instruments which basically boil down to "paying the finance industry a pile of cash to be an intermediary in contracted-out social services". It was a stupid idea, susceptible to all the failure modes we see in private prisons: cherry-picking, stat-juking, lowball targets and Ministers incentivised against admitting failure, and the government was trying to make it even stupider by guaranteeing high returns, effectively removing nay incentive to perform from the contract. So its good news that negotiations over the scheme have collapsed:

The government's first social bond has collapsed, with negotiations breaking down and the provider walking away.


The first was to be a programme to help people with mental health problems get into the workforce, and the plan was to put employment consultants in GP practices.

But the provider, Wise Group, confirmed yesterday that it had withdrawn from the scheme.

It would not make any further comment saying it had been directed to refer inquiries to the Ministry of Health.

I guess the government wasn't offering them enough guaranteed profit for these parasites to think it was worthwhile. Meanwhile, they've already flushed $1.6 million on negotiations, but that's a tiny amount compared to the cost of letting the finance industry fuck up mental health provision. And it is far, far better that the scheme fails now than when it is actually responsible for the real lives of real people.

Meanwhile, we should all remember that the finance industry is parasitical on the real economy and serves no real purpose. Like the hippo arse-leech, it survives by inserting itself into the squishy parts of the real economy and sucking. Involving it in government services (or anything) is inherently inefficient because of parasitic load (or what economists call "rent-seeking"). We should be trying to eliminate it, not turn over government to it.