An interesting idea and one to consider as an alternative to the rampant privatisation agenda pushed by both major sides of politics in the Western world:
Help the unemployed! Cut spending! Provide a safety net! No new taxes! America expects the impossible of government right now, if campaign events are any indication. But what if government could do all that without spending a dime up front? A recent plan from England may prove an inspiration for penny pinchers, bleeding hearts, and rational economists alike.
It’s called a social impact bond, and here’s how it works: Social entrepreneurs or community groups are loaned money by private investors to try out solutions to social problems. If the solution works, the government pays whoever invested in the solution a share of whatever spending is saved. In other words, as one writer put it, “It’s a way of transferring public sector savings to private investors who are willing to put money into preventative initiatives early on.”
The social impact bond launched earlier this summer in England and it is a global first in government spending, mainly because the government doesn’t spend anything until they get results. And “results” means both cost savings as well as meeting a social goal. Win-win all around if it works, and if it loses, the investors are out, not the government.