A Test Of Social Impact Bonds In NYC
Last month, there was a not widely noticed article, “Goldman to Invest in City Jail Program, Profiting if Recidivism Falls Sharply”.
This experiment will be watched all over the US. I’ve worked with MDRC in the past and they are a reputable organization, with considerable expertise in programs to provide “transitional employment” to traditional private sector employment (including ex-offenders, juvenile delinquents, welfare recipients and drug addicts). They have been mostly known for running major social experiments. So this experiment may have a somewhat higher probability of success than an initial reading would imply.
However, the social bonds strategy raises a variety of fundamental issues about public services. These are only some of the questions (and I’m not even sure that this list is all that clear):
- If such a program is so important, why isn’t the government paying for it? Is this just a short-sighted way around raising public funds for a necessary program?
- If this strategy grows to be a major source of funding for social programs, what potential abuses might grow with it? (The Clinton-Bush program of expanding home ownership also seemed like a good idea before it got out of hand, ultimately leading to the largest financial bust in 80 years.)
- If this strategy becomes the major source of funding for government programs, does the market decide what public goods/services can be funded?
- It would seem that some of the risk is being shifted to private financial organizations, but the reality may different once these bets fail to pay off. Will this become another form of socializing risk, when that was not the original intention?
Clearly this is an interesting experiment in public finance. What’s less clear are the ways that the social programs are themselves experimenting with new ways of doing things, better use of technology, etc.
By the way, I’ve already heard people discuss using the social bonds approach as a way of financing broadband for economic development.
© 2012 Norman Jacknis
Protection is a public service and one that can only effectively be carried out with the support and consent – and participation – of the people. We’ve read stories about how Twitter played a key role in responding to wildfires or iPhone applications show a community map of registered sex offenders and crime areas.
But in public safety, especially, there is a unique source of participants – one that is especially important in these days of tighter state/local budgets. In California, for example, there are nearly 190,000 sworn active public safety officers (police and fire). However, there are nearly a million retired and former officers. This represents, on average, nearly 15 million years of skills and experience walking the streets. This population of people never lost their purpose or their desire to contribute – they just ran out of time!
How can we harness this trusted population? A local government could create an “opt-in” network of these experienced citizens. Typically, public safety training records are centralized through a central state body. A database comparison of the records can be matched against the ‘opt-in’ application.
Once accepted, the officer will receive instantaneous alerts on his cell phone, based on its GPS location, about reported problems. When a problem is reported, the public safety dispatcher would have the ability to examine a geo-spatial screen and discover how many people are in a particular area and who best to solicit or notify.
Governments across the country should enable this skilled population to support public safety problem-solving, in order to identify, recognize, and address problems much faster.
With Jeff Frazier, Cisco IBSG
© 2012 Norman Jacknis