Pro-social welfare

This month Michael Norton’s fantastic Tedx talk ‘How to buy happiness’ was posted on the Ted website. The central thesis of Norton’s talk was that money can indeed buy happiness, when you don’t spend it on yourself and he had research to show that ‘pro-social spending’ can benefit you, your work, and other people.

Norton cites a simple experiment done by the British Columbia University which neatly compared two randomly assigned college undergrad groups in Vancouver. Individuals in the first group were each given an envelope with money in it (either $5 or $20) and instructions to spend the money on themselves (i.e. gift for self, bill, expenses) by 5pm of that day. Individuals in the second group were each given an envelope with same amounts of money in it and instructions to spend the money on somebody else (i.e. charitable donation, gift for others) by 5pm.

The researchers phoned the participants at the end of the day to find out what they spent the money on and how happy they were now. Firstly they found that people who spent for themselves bought consumer goods (i.e. make-up) and drinks (i.e. coffee), and people who spent for other people either donated the money (i.e. homeless), or bought a gift for others (i.e. toy or coffee for others to enjoy). Most impressively though the researchers established that those who spent money on other people got happier, whilst those that spent money on themselves experienced no change in their happiness level. The other effect they found was that the amount of money doesn’t matter that much – it didn’t matter whether the individual spent $5 or $20, what really matters was the fact they actually spent it on someone else rather than on yourself.

California Work Opportunity and Responsibility to Kids (CalWORKs) welfare-to-work program serves all 58 counties in the state and is designed to assist welfare recipients to obtain or prepare for employment. We know that many (long term) welfare recipients of state benefits experience low levels of well-being and personal self-esteem and we know, from past studies in California by the nonpartisan Urban Institute act, that in itself is a major barrier to re-entering the labor market.

So, could CalWorks try using the State Aid card accounts (the same card accounts which between 2007 and 2010 were used by benefit claimants to draw $69m of welfare money from ATMs outside of the state – $11.8m alone in Las Vegas) to increase CalWorks recipients spending on other CalWorks recipients? For example CalWorks could partner with Starbucks so that say 2% of total monthly welfare put on that state aid card could only be used in a starbucks buying coffee for someone else. Perhaps this would fuel increased reciprocal exchanges (exactly the sort of actions that we know strengthen neighbourhoods) and help tackle the sort of social isolation / low self-esteem that really inhibits long-term welfare dependants from re-entering the labour market?

Of course there is the risk with such a ‘use it or lose it’ approach to spending public money on someone else that it could lead to both welfare recipients being happy just to lose it, and non-welfare recipients being anything but happy with their taxes going on coffee. However with a bit of imagination, the state could introduce a challenge so non-use of the allocated fund each month would have a negative consequence for all Californians. For example, it could be announced that all the unused funds each month will be transferred to Starbucks branches in Washington DC and be offered up as a subsidy for any Federal government bureaucrat based around Capitol Hill! So perhaps the state could galvanise all of society to support a ‘spend on others’ scheme on the West Coast?  Based on Norton’s research it really could be in all of society’s interest.

A mutual media

The UK is currently in the grip of a media frenzy about, ironically enough, the media. The fall out from the illegal hacking of private mobile phones by Rupert Murdoch’s best selling Sunday newspaper, The News of the World, has resulted in a judicial enquiry raising more serious concerns about the power media moguls have over state politicians. The allegation being that owners of the mass media use their considerable influence to extract concessions from state decision makers that are in their own (commercial / ideological) interests regardless of the negative or positive impacts on wider society.

Whether you disagree with this suggestion (like Rupert Murdoch) or you do not (seemingly all Murdoch’s past editors!) it now seems largely irrelevant as most people in the UK seem to have lost trust in the institution of the media to promote and protect the interests of society. The lack of faith in media ethics in the UK is worrying for society (and dare I say it a little bit hypocritical of a nation that craves inside gossip about the private lives of celebrities, nobody is forced to buy the sunday paper or go online to the Daily Mail). The media can play a crucial role in both holding the state to account and reflecting society’s values and emotions if done effectively. If a perceived problem of rotten ownership of the media puts that at risk, then the state has a legitimacy to intervene and reform the system – but how could it do it?

This is exactly what Lord Justice Leveson, who is heading up the judicial enquiry, has been tasked with recommending at the end of his hearings. Perhaps though Lord Leveson could be advised to take a well-earned break one weekend from the trials and tribulations of the process and fly over to Barcelona. While there he should take a trip to the Noucamp, home to Barcelona FC one of the most famous and successful soccer clubs in the world. It is also one of the sporting world’s biggest mutual – it is owned by 150,000 members all of whom have an active (voting) stake in the running of the club.

In 2009 the Birbeck sports business centre gave an interesting presentation arguing that the mutual ownership and governance structure of FC Barcelona does not appear to hamper its ability to compete in financial (and sporting) terms. In recent times there have been other leading mutual brands that have outperformed shareholder owned companies not just in terms of profit and growth but more impressively consumer confidence in that brand. This cuts across all sectors in the UK including retail (John Lewis department stores) and finance (The Co-operative bank).

So if Lord Leveson is contemplating how to restore society’s confidence in the media, as well – one might argue – as attempting to get society to have a greater stake in and take more responsibility for the media it consumes, then potentially a new mutual model (or even just part mutual) of ownership should be considered. Many would argue the transition from media oligarchy to media co-operatives would be just too difficult. This is short-sighted though and lacks the sort of vision that helped the smooth transition of google from private company to public listing.

For example, a visionary like Rupert Murdoch might be tempted to sell membership of one his papers such as the highly popular daily The Sun to its readership by adding the one-off membership price to the cost of the paper. So, say on Monday next week instead of the Sun costing £0.50 it would cost a one off £5.00, but for that extra £4.50 the reader paid on that day they are given (via some txt message registration confirmation) a life time (voting) membership of the Sun – say each year they could vote in/out the editor and president of the newspaper.

In return the reader membership have the power to de-select the editor in the same way the proprietor now holds that power. Not only would this strengthen accountability of the paper to society, it may also improve the financial sustainability of newspapers by giving members an added incentive to support their paper – if the members don’t buy the paper (even if the price has to increase to remain viable) then they lose the asset which they now own: this creates an incentive for members to advocate readership to non-members.

Open to innovation

Last month at the Stanford Graduate School of Business, marketing Professor Kate White of the University of British Columbia shared some brilliant studies done in Calgary showing that “communication that cognitively makes sense to people makes it easier for them to understand how to recycle – and therefore more likely to do it.” For those fascinated by the potential of behavioural economics to support society make better decisions that are in the long term interest of all, it is well worth watching on YouTube.

For avid readers of the SSI Review and addicted viewers of Ted talks, such brilliant insights – ranging from the small scale practical to the transformational paradigm shifts – are it seems increasingly accessible and implementable in civil society. However, it would be interesting to know how open state policy makers are to Professor Kate White’s ideas, moreover does such a person with active solutions see the state as an ‘opportunity’ to mainstream the ideas from their research or as a ‘barrier’?

Let’s explore this further. The Department of Resources Recycling and Recovery (CalRecycle) is responsible for waste management and recycling in the state of California. CalRecycle’s vision is to inspire and challenge Californians to achieve the highest waste reduction, recycling and reuse goals in the nation. They have been doing lots of great stuff and the state has an impressive recycling rate of 65%. But they’re keen to do more. So, what mechanism could firstly incentivise Kate White herself to transfer the research into operation to help CalRecycle pursue its vision, and secondly why would the Director of Calrecycle take on the risk and hassle of outsourcing something they do (say their waste management & waste prevention poster designs) when their existing path is already yielding impressive results?

Well, some form of state ‘challenge’ could potentially provide the answer to both questions. CalRecycle saves waste management costs if waste is reduced – this is the main outcome the organisation wants to achieve. So Calcycle could ringfence 10% of its total budget as an incentive fund to people and organisations who can prove their intervention has reduced the amount of landfill waste produced in a given city or county. Now would Kate White, perhaps together with a team of entrepreneurs, now see a potential new business opportunity that could both make money and have a positive social impact? If the answer if yes, then such a mechanism which aligns state incentives with the development and application of social innovation outside of the state would have win-win benifits: both the state and society would be better off.

In the UK the coalition government has been pushing hard to open up more state service provision to non-state providers, however such moves have proved challenging for the incumbents to drive through as outlined beautifully this week in this FT analysis article. It appears the British, rather than focusing on ‘outcomes’, are path dependent on closed state monopolies simply because the stability of such institutions provides a psychological reassurance regardless of  whether it crowds-out social innovation and regardless of the inevitable ‘less for less’ path dependency such managed decline will result in. Far better for the state to embrace new demand-side reforms of their service provision so that supply-side provision is opened up to the mass of innovation and resource that currently exists, or could be activated, in society.

X-factor politics

Yesterday the Hansard Society, a UK organisation dedicated to increasing engagement in politics, published its annual audit of political engagement. For the (active) state optimists and (big) society romantics out there it’s sadly very hard to put a positive gloss on its main findings that show distrust between state and society has never been greater. “The number of people saying they are interested in politics has fallen by 16 points to 42 per cent, the lowest ever total. The number saying they are knowledgeable about politics is down 9 per points, the number saying they are certain to vote down 10 points.”

Such negative attitudes will have negative consequences for the vital trust required for a positive relationship between the UK state and society as the report’s co-author, Dr Ruth Fox, says: “The public seem to be disgruntled, disillusioned and disengaged. Thus far, [UK] coalition politics does not appear to have been good for public engagement. Worryingly, only a quarter of the population are satisfied with our system of governing, which must raise questions about the long-term capacity of that system to command public support and confidence in the future.”

Now the big question is what can we do about this? It’s too easy to get lost in self-pity about the present or nostalgia about the past, so let’s park that fatalistic negativity from the start. For sure systems of both representative and participatory government are far from perfect anywhere in the world (with the exception of Porto Alegra of course!) but let’s also look at the huge opportunities both the state and society now have to bring about a transformation change in the very way political engagement can be done.

Firstly, there is the technological revolution that is continuing apace. Whether we like it or not we’re all increasingly connected with each other and the flows of information, while currently overwhelming for many, are rapidly speeding up. Think twitter, txts, email, etc. However we are only at the tip of the iceberg of what both the state and society can do with social media to make our politics better. For example political social media very much works around networks at the moment, but when individuals start really connecting and more effectively collaborating on their street, their neighbourhood, their district en mass then the power of society to push and prod the state will dwarf that which was previously driven by a ballot box. This will happen – the real challenge is whether state actors and institutions can transform to embrace or resist these pushes and prods.

Secondly, there are cultural innovations that are successfully reshaping social attitudes and that – whether they like them of not – the political classes rapidly need to learn from. Look at the global success of The Apprentice – every kid it seems, regardless of background, now sees enterprise as really cool and their is a huge appetite to learn more about entrepreneurialism. Look at the success of talent shows such as …Got Talent and X-Factor. The audience feels engaged and that it has a stake in the show; they empathise and relate to those performing. More impressively the supposedly apathetic youth appear the most motivated to participate not just with their opinions but with their mobile phones: they txt repeatedly, and in their millions, to save their idol. I guarantee you political engagement is far more consequential to society than this years winner of x-factor, so let’s hope we come up with some original platforms for mass engagement, before the likes of Simon Cowell tap into the potential of such latent demand for their own purposes.

Genuine optimism about the future western democracy can come from a real belief that there will eventually be a tipping point between state and society. Society will demand ever more of the state, through which we will all realise the state is nothing without the pro-active engagement of all society; the more disconnected the state becomes from society the weaker it will become. New platforms, which will require some real original thinking along the way and that can transform our current outdated models of participation will flourish. Ultimately the political classes of the future has to be all of us if society is to have the state it needs. Or to use the language of X-factor: “We’re all on a journey …Believe it!”

Operation twist for society

On the 11th April the former San Francisco Fed chief, and now Ben Bernanke’s top lieutenant in Washington, Janet Yellen gave a speech saying the Federal Reserve is “quite willing and committed to take whatever actions are necessary” to achieve its economic goals. To date this has involved two bond-buying programs totalling $2.3 trillion to stimulate the American economy – a process known as quantitative easing to economists or simply ‘Operation Twist’ to everyone else. Essentially the Fed prints more money to buy long term government debt held by the banks, which in turn gives the banks liquidity (more cash) to lend to businesses so they can grow and employ more people.

Many economists have deemed Operation Twist a success, and a third round of quantitative easing may actually be avoided if steady economic growth continues. Well if Operation Twist has stimulated the economy, could a similar state program stimulate a stronger society? Stronger societies are built through increasing interactions between individuals that in turn fuels evermore opportunity for reciprocal exchanges, that then allows individuals to bond, support and thrive together. So the primary focus of an Operation Twist for society would be on stimulating more social interaction.

Operation Twist for the economy involved giving newly minted money to the banks to stimulate the economy. We need an institution equivalent to banks that could be given money. If we take the golden state of California as our test bed, then the immediate contender would be the 58 counties, the local administrations, as they could administer the stimulus for us. So let’s say (in a dream world!) the Fed Reserve printed $580m to be divided equally among all 58 counties in California (let’s keep this simple and avoid per captia allocation) each county now has $10m of new money to blow on strengthening society, how should it do it?

Well here’s a counterintuitive answer: it should bank it! That may sound oxymoronic, but when you stop and think about US bucks you realise that they’re highly porous (spend where you like) and highly fungible (spend on what you like) with little regard for the impact on social value and cohesion. Sure a bundle of free money can be great at stimulating exchange for a short time within a county community but that money often doesn’t stay circulating within that community. We know if often leaks out to other places leaving individuals with no physical credits in hand to go and interact with others working in their community (the true impact on society of a ‘credit crunch’). Money on its own, as a stimulator of interaction between people, is often not a self-sustaining mechanism so bottom line is its true potential to strengthen our community bonds is severely limited sadly.

But that $10m stimulus now sitting in the bank could still serve a very significant purpose. It could now act as underwriter (‘a promise’) for 10 million county IOU vouchers that a county and its public employees (i.e. law enforcement officers) could issue to its residents in return for continued or additional pro-social actions (i.e. driving kids to a midnight basketball league game). All IOU voucher transactions could be electronic and done between mobile phones.

Now here’s the strengthening society part: for individuals to convert that IOU into a real $1 (which they could spend themselves, give to friends or family, or donate to a local group) that IOU needs to have been earned and exchanged at least three times between individuals before. (Theoretically the more times a single IOU voucher is earned and exchanged the more valuable it could become relative to real money: so if exchanged 6 times it could be worth $2, if exchanged 12 times it could be worth $4, and so on up until the voucher is cashed in. But given the stimulus has a limited reserve of $10m, there could be a greater draw to cashing in vouchers almost immediately for fear of the reserve disappearing before being able to cash-in greater value vouchers) This provides an incentive for everybody to pro-actively interact and exchange promises with each other (a kind of social bartering) in our neighbourhoods so that we can unlock the real cash.

In short this version of Operation Twist is an explicit financial challenge set by the state to society: if individuals effectively collaborate together then they can unlock an additional $10m for themselves. However, in reality Operation Twist is an implicit mechanism to build more relationship capital within communities that will long continue and strengthen society even after all the $10m is unlocked and spent. I’m sure there are many other and better versions of this kind of Operation Twist to consider, but regardless of this, a first order question to address is: do the innovators in the state and society have the vision and courage to consider a stimulus for society? That is very much an open question!

A more strategic state

Yesterday in the UK saw the publication of an excellent report by a Westminster Parliamentary committee called the Public Administration Select Committee into the importance of ‘strategic thinking’ by those running the state. There is lots of good thinking in the report itself and its recommendations are well worth a read, especially the call for a ‘national strategy statement’ each year prior to the annual UK budget statement (forcing the UK Treasury to justify annual tax and spend policies based on the long term strategic interests of society, rather than the state treasury’s narrow interests)

Rather boldly though, given the committee chairman Bernard Jenkin MP is a member of the majority party in the ruling UK coalition government, the report stated that at present (and under prior administrations) “Government policies are not informed by a clear, coherent strategic approach, and that poor strategic thinking also undermines clarity of presentation to the public.” Coming from a British politician that is right in the strike zone for a Government.

The consequences of this lack of coherent strategic thinking, at the heart of the state, has had direct consequences for the shape and direction of UK society. A brilliant editorial in the UK wide newspaper, The Daily Telegraph, explained that the state has wasted a golden opportunity to undertake a fundamental review of what the state should and should not be doing, with the cost now being that what drives the policy is not a desire to rethink the role of the state from first principles, which is what it should be, but an ad-libbed attempt by the Government to salami-slice budgets in an attempt to live within its means”

How can we get the state to think more strategically about the society we all want? Well firstly we need to make sure key state actors want to think strategically! The most candid and insightful bit of oral evidence documented in the report came from a former senior civil servant who used to run an actual ‘strategy unit’ for a past British Prime Minister. According to Gill Rutter  “there is only any point in working in a strategy unit if there is demand for strategy …If they [politicians] felt it was necessary to have an underpinning clear narrative that they were judged by over the longer term, there might be more demand to think in that way in Government”

This is crucial. The state must have an “underpinning clear narrative” about where society is and where it is going otherwise it will never be able to help strengthen it. We know that without a state purpose, society is more likely to drift than strengthen. So, perhaps central governments such as the UK should actively consider breaking down the barriers to the development of a clear narrative and coherent strategy: what the Jenkin report called “departmental silos”

In Westminster the secretaries of state (i.e. home affairs, education, health) all sit in their own distinct organisations based along a busy street leading from the Houses of Parliament up to Trafalgar Square called Whitehall, yet rather than collaborating on a single narrative and common goals they and their many civil servants compete against each other to maximise their own agendas and spending resources. Well, there is a simple first step here to strengthen the coherence of the Westminster government: take all the secretaries of state out of their departments and put their desks all under one roof. Encourage them to work (and commission work from departments) together in the strategic interests of society, rather than in the narrow interests of their departments.

Mainstreaming social innovation with the public sector

Last week the CEO of Living Cities, Ben Hecht, wrote a very smart piece in the Huffington Post. In it Hecht rightly identifies the reason for the rise of “social innovation”, and the creation of the high profile White House Social Innovation Fund, is because “People have lost confidence in the institutions that they historically relied upon to solve our most pressing problems. Leaders have realized that if they want to change the status quo in their lifetimes, they need to stop waiting and start building their own solutions.” Absolutely! Inertia and path dependency may explain the state’s inability to drive the transformational change required to support society meet the challenges it faces, but it doesn’t excuse inaction by those who are passionate about strengthening society.

The result of this realisation (and frustration with the state) according to Hecht? “nonprofits created to fill gaps in a terribly broken system, such as connecting patients and their families with the basic resources they need to be healthy (HealthLeads) or providing urban young adults with the skills, experience and support that they need to reach their potential through professional careers and higher education (YearUp). Organizations like Echoing Green, Ashoka and New Profit, have accelerated the creation of a social sector innovation field by supporting the emerging leaders of these organizations with grants, business planning and connecting them to a network of similar ‘social entrepreneurs.”

However Hecht points out that if large scale change is our goal such social sector innovation is necessary, but it is simply not sufficient. Given the resources the state has and institutional advantages it enjoys over the social sector, the state has far greater potential to achieve large scale change: “public sector-led social innovation (“public sector innovation”) differs from social sector innovation in one absolutely fundamental way: it actually has a much better chance of having permanent, lasting impact from the outset. Many social sector innovations, like ones I’ve helped lead over the past 20 years, toil for years to build a successful model and then struggle for years thereafter to both get the attention of government and the adoption of the model by the public sector. In contrast, public sector innovation is undertaken with the assumption that if it is successful, it will go straight, “intravenously” into effect. No annual fundraising or advocacy necessary. The innovation and related funding will quickly displace the old way that government did business.”

Beyond the obvious implications that modern state institutions need to be both more innovative and more open to innovation as they  reform and evolve over the next few years, it maybe worth state reformists looking more closely at how the skill set of a Sacramento, Washington or Westminster bureaucrat can become fused with that of a social entrepreneur? A good place to start would be to look at the three instrumental dimensions Christian Seelos and Johanna Mair from Stanford PACS identify that can enable and trigger effective and efficient action: 1) creativity, 2) absorptive capacity, and 3) strategy.