Government wallets are a little light
these days.
Deficits
are sitting at the highest levels in decades and public officials need to pay the
piper. And given the political risks of raising taxes, most governments are
instead looking to cut spending. Although most areas of public spending are
being trimmed, social programs aren't having the easiest go of it - in
particular, those experimental pilot programs.
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| Harper isn't rolling in it anymore (Image: CityTV) |
Experimental social programs are especially susceptible to
the austerity axe. The benefits they produce are generally difficult to measure
economically and are thus externalized. As a result, they can seem relatively
more expensive than their internalized brethren and even given the title of
unnecessary luxuries. Moreover, unproven programs are a tad risky, especially
for a government counting every penny. Environmental programs share the same
characteristics. The trouble, of course, is that just because something is
difficult to measure doesn't mean it isn't valuable. In many cases they may
actually save the government money. For example, relatively cheap anti-smoking
campaigns could save the health care system quite a bit by preventing the
public from smoking.
When governments don't pony up the cash
or resources, the slack is usually picked up by non-profits, charities,
churches or corporations looking to do a good deed. But these are far from
reliable sources. Much of the trouble is financial. As the economy struggles,
there is less money to go around. And those with money to spend are less likely
to put it towards something that doesn't pay direct financial dividends.
So what is an answer? Enter Social
Impact Bonds.
