Just listen to Matthew Hooton and apply market-based technology to solve complex social problems
Families affected by a complex mix of intergenerational poverty, colonisation, illness, trauma and abuse are the subject of great concern and debate/discussion. The personal, social, economic and productivity costs and consequences become more painfully apparent every day.
This is highly inconvenient for the adherents of neoliberal free market policies. The theory is that if government gets out of the way, reduces benefits and taxes, regulations and controls, and gets pesky government spending down to under 30% of GDP, then free markets will deliver a first world economy- a rising tide that lifts all boats aka ‘trickle down’.
Neoliberals like Rodney Hyde 1991 when asked to predict where we would be in ten years said in the Dominion Post ‘government would become a pipsqueak’ as market economy Nirvana would arrive under the Rogernomic reforms. Like many other right wing commentators, Rodney had once read Milton Friedman’s ”Free to Choose” and froze his economic thinking at Econ 101 level.
To such neoliberals, technocratic solutions are the answer to all life’s messy and complex problems. Thus last week, the astonishingly naive article by Matthew Hooton, (another Friedmanite) offers social investment/social bonds as the solution to family dysfunction.
Before examining this flavour of the month neoliberal panacea, it is worth reminding ourselves that we have been there before and found at great cost to the social fabric, technocratic solutions work well in theory but not practice.
For example, technocratic solutions dominated the 1991 Budget. User Pays for everything with social assistance tightly targeted to only the poor via new technology was supposed to save so much money we could have Roger Douglas’s flat tax of 23%. Low and targeted assistance would provide the incentive to paid work and, of course, work was the way out of poverty. But the inherent flaw was that targeting everything to confine social assistance to the poor causes high and anomalous clawbacks (Effective Marginal Tax Rates, EMTRs ). An extra dollar is earned makes a family no, or only slightly better off. No worries said Roger Douglas we can solve that. Diagrams were presented in 1991 Budget “Welfare that Works” to show how aggregating all social assistance on a smart card would enable a uniform bleed out and avoid overlapping clawbacks (high EMTRs) when extra income was earned.
Following the publication of the ‘solution’ in 1991, ten economists were appointed to the Change team on Targeting Social Assistance and worked for 6 months to make the smart card technocratic solution work. They failed, government quietly walked away and society was left with the crippling EMTRs of Rogernomics. As I wrote in the Daily Blog:
Unfortunately, while aggregating assistance onto a family-based ‘smart card’, abating at one rate worked in theory, the technocrats could not make it work in practice. One of the problems was that the typical modern family did not resemble the assumed nuclear family model. Another was that the scale of assistance to be targeted, even with the 1991 welfare benefit cuts, meant assistance would be paid well up the income scale even with a very high single rate of abatement. The integrated solution that had been used to justify the low flat-tax user-pays approach had quietly disintegrated leaving the unresolved welfare mess of a plethora of high and overlapping abatements.
In the Herald this week Matthew Hooton demands that Nicola Willis immediately implements a social investment approach. It appears his confidence is based on the fact he once wrote about social investment and the actuarial approach in 2010. The three main points to his argument are set out:
- Nicola Willis has a moral and fiscal obligation to implement social investment by 2025.
- Social investment targets services to those most at risk, improving lives and reducing costs.
- Delays stem from politicians demanding perfection, but imperfections can’t excuse further procrastination.
Hooton asserts
To the extent social investment would help those who wouldn’t otherwise receive it – and stop money going to providers who don’t improve lives – procrastinating for another generation would be unconscionable. Finance Minister Nicola Willis, also Social Investment Minister, has a moral and fiscal obligation to get on with it.
Instead of analysing why it is so difficult to use this approach he claims it should not be perfected before being implemented “the perfect is the enemy of the good.” But the real reason it has not yet got off the ground and hopefully will not, is that once you get over the hype and look at practical implementation, all the alarm bells ring.
Hooton says we already know ‘that early interventions are better than trying to fix broken lives later on.’ But he argues that this social investment insight needs to be ‘applied more rigorously’. That means finding those most at risk of failing by applying algorithms based on indicators that are corelated with worse outcomes.
Government agencies will then target their services to those the algorithms suggest need more help, rather than spread their efforts more randomly and thinly….There are fewer such people than sometimes thought, but they are also those who cost taxpayers the most through their lives.
Just what kind of indicators would an algorithm use to identify children/families at risk? Poverty/Ethnic status/sole parent? What about the first documented case of child abuse as a key red flag? Oh, we know that already and don’t need a neoliberal algorithm to know that family needs help. Wait on… what if the root of family disfunction is the socio-economic neoliberal policy environment? What if, over decades, as we now have no excuse not to know, the state has operated abusive practices that perpetuate intergenerational trauma and causes youth to go off the rails, end up in prison and gangs. Kathryn’s family might have been saved if outdated MSD relationship rules had not sent her to prison, destroyed her children’s lives, and then MSD hounded her for 16 years for a debt she should not have had.
An algorithm is only as good as its questionable assumptions but as well, can never ensure the appropriate help is actually given. Thus neoliberals like Matthew Hooton add the even more technocratic profit driven superstructure of social bonds to ‘incentivise success’.
Hooton has totally bought into this:
Social investment bonds will be issued to non-government organisations (NGOs) such as private trusts, church organisations, iwi and urban Māori authorities, which pay out in full only if the organisation delivers the predefined social gains they promised. The biggest advocates for social investment then hope investment banks, pension funds and other allocators of capital will come to the party, applying their skills in analysing whether Apple, Amazon or Tesla is most likely to create greater value to evaluate which NGO is likely to do the most social good. If they think drug programme X will do better than programme Y in getting people off meth, they can profit by investing in the former.
Good old neoliberal thinking—apply the skills of analysing companies and create a market for bonds where Hooton simplistically says “the NGOs that do the most good will get the most money”.
The mind boggles. Measuring the ‘most good’ is where the actuaries come in with their narrow calculus opening up the potential for endless disputes. Investors greedy for good returns will buy bonds from government who on-lend the money to favoured NGOs for specific contracts to deliver outcomes just for the algorithmically identified few. The better the expected social outcomes, the higher the expected interest return on the bond. Just imagine the fights over setting the rates, defining the project, defining outcomes, measuring outcomes, the time horizon taken, and how non-performance is treated. Could bondholders be denied even their capital back if the project is evaluated as a fail? Could they sue? Just where do you start with an idea whose purpose is to make a profit out of social misery.
But Hooton doesn’t see any problems and dangerously insists that Willis proceed with haste:
Willis is currently looking for people with skills in everything from social work to finance to appoint to her new Social Investment Board. She has promised to finally get social investment properly underway in her 2025 Budget. She ought to be held to that.
He correctly predicts potential for failure and the need for endless date collection and tinkering with the maths:
Some NGOs will find their programmes cut or closed with the money going to others that the algorithms suggest are more likely to improve lives. Some of these assessments will turn out to be wrong and the boffins will need to keep collecting data and amending their assumptions and maths accordingly.
Breathtakingly, Hooton applauds the recent ham-fisted ‘boldness’ of Minister Chhour who is going it alone without any of the infrastructure of social investment in place:
Ahead of Willis implementing social investment, the Minister for Children, Act’s Karen Chhour, has put her toe in the water, boldly cancelling more than 330 service contracts she says weren’t delivering what they promised and directing the money elsewhere.
Insultingly, Hooton refers to the ‘bleating providers’ who have been hung out to dry at the expense of families in desperate need. He then lets government off the hook—essentially telling them while social investment/bonds work in theory they will be messy in practice so just have ‘political courage’ and put up with the chaos:
Messiness will not be evidence of social investment failing but of it succeeding. No amount of further analysis will allow the Government to avoid the political consequences of that messiness. Moreover, social investment cannot deliver the utopia sometimes promised. It is neither more nor less than a powerful new tool to improve the allocation of resources to make lives better. Imperfections can’t be used as an excuse to delay getting those benefits and protect a status quo that is unquestionably worse.
Hooton hopes he ‘won’t need to write the column yet again in 14 years, or even in 14 months’. The shallowness of his NZH article hopefully means he will never again be allowed to promote himself as the expert on social investment.
Matthew should take up his true calling in life and become an owl.
Hooten has been talking shit for years and I doubt he has had one stupid idea put into practice by any of the last 4 governments of either colour.
Why media keep paying people like him is beyond me .
The question is not “why media keep paying people like Hooten,” but, rather, why the media don’t give his slot to people like Susan St John.
That is very kind Malcolm. In an ideal world the Herald might have sought a comment from someone like me. I love the that the Daily Blog will publish overnight without quibbling over length, style links etc. We all owe a huge debt to Martyn for keeping the show on the road with such vigour. And we owe a debt to you Malcolm for your biting and insightful cartoons. Could you please do one on social bonds or the crazy social investment approach?
Susan you will never get a gig on the herald as you are way too intellegent for their readers who will never understand that the right has to have a massive number of oppressed people to pay the doners
Because she 1is a bitter communist with no real answers
Yes…Hooten would be great on the comedy hour….he’d have everyone in stitches except for Seymour, Van Velden, Clusterfuxon and Willis who would all be nodding sagely thinking that he was actually being serious..
I must admit seeing Hooton on TWG always makes me roll my eyes. He simply won’t shut up, constantly feels the need to have the last word, and has this aura of smugness about him. He’s one of those people that you hope to hell you don’t get cornered by at a party or in the pub because he would quickly sap your will to live.
It would be a huge mistake to let MH distract us and underestimate the stage 2 of ‘welfare that works’ he is so passionately promoting. Social investment is the plan for 2025 and that’s not long to go
Dead right, Susan. People need to stay on point.
Social investment is coming. And its failure will have wide-ranging negative social impact.
You get to the nub of it with “what if the root of family disfunction is the socio-economic neoliberal policy environment?” Providing enough healthy homes, a functioning mental health system, apprenticeships, food in schools, tax the wealthy, prison reform, free tertiary education …. these things would enable young people to climb above inter-generational constraints.
Imagine if there was a Government that could provide such things… crickets.
Steve Right on. Instead govt is busy destroying the social fabric. We can expect the adverse social outcomes to accelerate.
Yes! Love your question!!
I prepared this comment using Thomas Belmonte’s words from The Broken Fountain about the poor in centuries-old Naples at that time. (Later their old buildings went in an earthquake and the families were siphoned off to live in hotel rooms!) This is long but his experiences and findings and the clear thoughtful expression about the people and the culture they had developed, I think is wonderful.
I started thinking about the trickster side of our minds in society and the mention of tricksters from Thomas Belmonte RIP His Broken Fountain I read as part of a university course. It has stayed with me ever since. Here are some excerpts presented from jstor; if you want to add depth to your understanding of anything this link would be worth joining.
chapter nine: Conclusion: The Poor of Naples and the World Underclass
(pp. 137-144)
https://www.jstor.org/stable/10.7312/belm13370.15
HUMAN HISTORY IS tragic only because it is self-aware. Men can measure and lament the distance they have traveled from each other and themselves. They can know when they are fully human and sense when they are only pre-human. Or, as Ludwig Feuerbach has suggested, they can isolate and ignore the possibilities of their humanity, preferring to displace their finest human potentials onto the idea of God…
chapter eight: Reactions to a Disordered World
(pp. 123-136)
https://www.jstor.org/stable/10.7312/belm13370.14
THE GREAT ANARCHIST, Mikhail Bakunin, thought that poor folk like those of Naples, “being almost totally virgin to all bourgeois civilization,” would lead the world to true socialism.¹ But the poor are not, alas, “virgin” to bourgeois civilization. They deal in its currency and accept its terms as servants or tricksters. In other words, they are seriously compromised and hardly in a position to fashion the organizational weaponry which is a first prerequisite for any socialism…
chapter seven: The Triumvirate of Want
(pp. 103-122)
https://www.jstor.org/stable/10.7312/belm13370.13
…Poor people care about money to the point of obsession. But with the poor, money is for spending. It is for quick conversion into life. Since money and life are so closely interconnected in their minds, they…
chapter six: The Interpretation of Family Feeling
(pp. 79-102)
https://www.jstor.org/stable/10.7312/belm13370.12
AT FIRST I found it challenging to record the myriad details of life in Stefano’s household. But as time went on, the patterns revealed and repeated themselves. The shouting did not quiet down. The blows and kicks did not cease. The blindness and the bondage to the crudest emotions did not lessen, and I found myself increasingly exhausted after passing a few hours with them. Occasionally I felt constrained to leave them, and did not call upon them. They understood that on some level I was rejecting them and were offended. They had befriended me and shared their bread and…
chapter five: Family Life-Worlds
(pp. 51-78)
https://www.jstor.org/stable/10.7312/belm13370.11
FAMILY RELATIONS ARE two-faced. They are compounded of care and neglect, affection and abuse, love and hate. They are charged with sensual energy and yet they are defined as asexual. They allocate power to extremes of dominance and subordination, and yet within families (in contrast to more explicitly political formations) power-holders are vulnerable and easily wounded by those who have no power.
Family relations are loose and unspecialized, only to contain unwritten constitutions of rights and obligations. They are structured and formal, and relaxed and informal. They possess a tensile strength unknown elsewhere in society, but all families are destined…
chapter two: Fieldwork in Naples
(pp. 9-26)
https://www.jstor.org/stable/10.7312/belm13370.8
IN THE BEGINNING, the world of the Neapolitan poor seemed impenetrable to me. The whole society seemed impenetrable, but the world of the poor was especially private and self-contained. In my walks through the lower-class districts, I was an unobtrusive observer, a receiver of impressions quietly passing through. But I always felt like an unwelcome intruder and made no attempt to settle in alone. I knew that I would have to find someone from within to serve as a diplomatic intermediary, someone who could introduce me and explain me and reassure people, in their own language, that my intentions were…
Similar patterns of behaviour of the poor would result from our shared human traits whether in Naples, Italy, or Auckland, New Zealand/ Aotearoa. Would anyone in Oranga Tamiriki (Ministry for Children) understand what Belmonte noted, felt and understood? He cared to try but I don’t think many in Kiwiland care.
Reading Karen Chhour’s background, she was brought up by a grandmother, then back to other family and ran away a number of times. A fractured background, and no idea of warm close family to hold in mind as a model. More social work with good-hearted understanding people is needed for us to break out of the prison created by last generation’s minds which we carry forward.. Too much money goes to cold autocrats with slimy smiles and well clothed but not acting out Shakespeares words, whether they are pakeha or not –
“All the world’s a stage, and all the men and women merely players. They have their exits and their entrances; And one man in his time plays many parts.”
We have to act in certain ways, but as real people, making our stories and talking, within our own lives. We do have our own agency even while the PTB try to make us pawns.
In social science, agency is the capacity of individuals to have the power and resources to fulfill their potential. For instance, structure consists of those factors of influence (such as social class, religion, gender, ethnicity, ability, customs, etc.) that determine or limit [personal] agents and their decisions.
Agency (sociology) – Wikipedia https://en.wikipedia.org › wiki › Agency_(sociology)
Great analogy GW citing Belmonte’s works.
How far we haven’t come as a society despite the trillions spent on progress in outer space exploration.
I’ve been thinking further since the Belmonte quote went up. This further is interesting – in case readers felt that he found these people unlovable, but –
chapter three The Neapolitan Personal Style
(pp. 27-36)
https://www.jstor.org/stable/10.7312/belm13370.9
WHEN I FLED Naples, I fled like a sleepwalker, brooding, silent, and alone. I fled to Rome and to Florence, but no sooner would I be off the train and checking into a hotel than I would feel a dull, metallic edge cooling in my chest, becoming colder and sharper within me as the days of walking and viewing went by.
Then I had to restrain myself from returning straightaway. Then Naples, which had been my prison, appeared on the horizon of my consciousness as a city of hope…
chapter four Tragedies of Fellowship and Community
(pp. 37-50)
https://www.jstor.org/stable/10.7312/belm13370.10
Can one know anything about a people by the form of their greeting? Certain Indians of Brazil greet their fellows with the declaration, “I am hungry,” thus reinforcing the imperative of commensality. Other peoples may express their reserve with a neutral “Hello” or risk an unwanted intimacy with the query, “How are you?”
The poor of Naples say “Addo va?” (Where are you going?). They say it loud and quickly, if they know you, and they expect a quick answer. It is to say that your destinations and their destinations are a matter of mutual concern; that your life and…
Thanks for the comment and links GreyWarbler.
Just getting very basic, markets require private profit. Hooten gets paid speaking for those who make profit. Of course he will advocate putting anything up for profit. Problem is that the bastards always want to seek risk free rent rather than actually provide profit yielding goods and services to people who are happy to pay.
It’s well known that everyone knows about social investment and anyone can do it. So just do it say the impatient all-knowing.
Clever old saying – should be taught in primary school – to parents :
Everybody, Somebody, Anybody, & Nobody
This is a little story about four people named Everybody, Somebody, Anybody, and Nobody. There was an important job to be done and
Everybody was sure that Somebody would do it.
Anybody could have done it, but Nobody did it.
Somebody got angry about that because it
was Everybody’s job. Everybody thought that
Anybody could do it, but Nobody realized
that Everybody wouldn’t do it.
It ended up that Everybody blamed Somebody when Nobody did what
Anybody could have done.
Charles Osgood author and broadcaster RIP 2024
‘When everybody’s somebody, then nobody’s anybody.’
WS Gilbert The Gondoliers
Hah, so there for the classless society.
I picked this up from a page on Charles Osgood Wood 3rd who was a busy and popular media guy with a sense of humour and often in verse. He has died recently at 91. I doubt whether Matthew Hooton will find that people give a hoot when he goes.
This is a book written by Charles Osgood: Nothing Could Be Finer Than a Crisis That Is Minor in the Morning (Holt, Rinehart & Winston, 1979)
If Hooton was funny he might be bearable.
Yes indeed, instructing govt to do social investment and saying they should have done it 14 years ago is laughable But I didn’t smile once reading his article
He represents the moneyed class, basically our unofficial rulers so he’ll keep on harping on for as long as he sings their – more money for the super rich, less money for everything one, everything else – mantra.
What can we do about this…well for starters, when start developing a cynical view towards whatever their political puppets have to say ditto their mainstream media machine.
So poor people are not already subject to enough boom and bust. So the plan is to financialise and ticket clip the poor and their low paid lookerafterers.
PB – poverty bonds
CPO – collateralised poverty obligations
VIX – violence index
Politicians and Reserve Bank Govnors that can’t hit a KPI of 1% unemployment need to be subject to a massive rise in the EDR electorate disinterest rate triannually.
In 1984 these people promised us a transparent society, and a high skill, high wage economy. They seem to be about as close as my flying car.
And every election since and you fell for it each time.
I recall cases of targeted welfare payment cards working well in South America. In one case I vaguely recall that the country’s government issued cards to slum dwellers. The cards would be used to buy essential items. Unusually and successfully, they were hooked into an education incentive scheme that lifted a lot of children out of poverty through education.
No longer can education lift children and adults out of poverty Neil. Remember that is 20th century thinking and we are in post 20th century ie 21st and looking round us can see that last century’s actions and ideas as administered and accepted by most of us, have resulted in failure to facilitate people’s lives and wellbeing and skills in handling adversity, diversity, and future thinking. Being well off does not make people better and more cohesive and thoughtful citizens, neither kindly or practical; just wanting more and setting off as individuals to get it, even family might be discarded.
Education has not taught us how to control and monitor our thoughts and ideas, to prioritise, assess background pressures, and political memes and self-interest. It teaches us particular subjects, when we should concentrate firstly on understanding our own locality’s driving force and culture, and in general the human potential through learning wide philosophy as basic, then particular subjects can be concentrated on. In addition. the internet, if it provides untainted information, is available for extra facts, background and viewpoints needed.
We need to move on to learn how to make decisions and plan things, how to think things through For instance primary children at school would as an exercise; think of alternative plans for the playground, different sports and activities that could be taught. They would then analyse these and how they would explain these decisions as part of an educational course, that would be learned and experienced.
This off the internet sketches the processes we all have to make in decision-making for good results. Groups that I have worked in do not always have a set routine to facilitate adequate discussion and decision-making.What are the five 5 decision-making processes?
The decision-making process includes the following steps: define, identify, assess, consider, implement, and evaluate. Today we’re going to think together a little bit about the decision-making process.1 Pēp 2024
5 Steps in Decision Making Process – Mometrix Test Preparation
https://www.mometrix.com › academy › decision-makin.
(‘The phrase, “a camel is a horse designed by committee” is often used to describe design by committee.’ .. https://en.wikipedia.org/wiki/Design_by_committee.
Life has ever more decisions to be made these days of all sorts, and there is a lot of slyness which can take us down. But we all need to recognise this capacity for slyness in ourselves, and then in others, and learn to halt ourselves from behaving badly, and others rorting us. ‘The proper study of mankind is man’ Alexander Pope (see below).
Now there is AI that is envisaged to make us all redundant as human beings so we don’t feel personal worth, and have none for becoming employed and being part of the money economy, and if rejected and dependent then can be treated as a piece of crap.
A writer from the past is Hans Christian Andersen with his story about a bemused, fuddled, naked King wrapped in compliments from sly, manipulative people about his illusory magical robes. His advisors were embarassed to reveal the ‘naked truth’ and the naive clear-eyed child had less to lose by speaking up. To lift our ideas and keep ahead of AI will use the sly human abilities that built the system and seek to outwit us. Perhaps only our wit will save us! but even then AI may develop wit as well. Where will it end? We must have aware 21st century education, develop our understanding of humour, do exercises in finding the behaviours we accept which seem ridiculous and decide if they are actually helpful, and how to laugh at ourselves without feeling a failure. And learn music and song-writing would be helpful.
We have to start thinking hard. As Lord Rutherford said “‘We haven’t the money, so we’ve got to think’.” An inspiring leader – can we get another like him now to invigorate our minds?
https://www.rutherford.org.nz/biography.htm
Note – his education started in a country school in isolated Foxhill, Nelson.
Ernest Rutherford was born on 30 August 1871 in Brightwater, a town near Nelson, New Zealand. He was the fourth of twelve children of James Rutherford, an immigrant farmer and mechanic from Perth, Scotland, and his wife Martha Thompson, a schoolteacher from Hornchurch, England…
When Rutherford was five he moved to Foxhill, New Zealand, and attended Foxhill School. At age 11 in 1883, the Rutherford family moved to Havelock, a town in the Marlborough Sounds. The move was made to be closer to the flax mill Rutherford’s father developed. Ernest studied at Havelock School (another country school and his success would tend to indicate that his schoolteacher mother had supported his studies usefully.)
In 1887, on his second attempt, he won a scholarship to study at Nelson College.[17] On his first examination attempt,…
“The world mourns the death of a great scientist, but we have lost our friend, our counsellor, our staff and our leader.”
James Chadwick 1937.
“Rutherford was ever the happy warrior – happy in his work, happy in its outcome, and happy in its human contacts.”
Sir James Jeans, 2nd Jan 1938.
https://www.rutherford.org.nz/msquotes.htm
So building further on your ideas Neil, I feel that we have to go beyond your prescriptions for the future and quickly before we are overwhelmed by the various traumas demolishing our natio; climate, poor politics, poor financial systems and languid, compromised government.
I think we who want better need to gather as an extended family, and achieve like-minded communities not necessarily living within one suburb. It could however be like Tui Community. https://www.tuitrust.org.nz/. We could name them hamlets that are extended families that support each other, and clump together to form villages. The aim would be to do as much as possible within the present political system but expand autonomy and limit taxation which takes at present a bigger proportion of low incomes than those of the wealthy.
But don’t expect anything cost-efficient and good for citizens to come from the PTB. The idea would be to get help where possible from the authorities but remember that if you rely on them, they have sold their souls to business practices and money, and if they can, will sell you. So grants not loans from these cardboard creatures.