In 1831 French sociologist and political theorist Alexis de Tocqueville traveled throughout the United States to study its prisons and returned home with a wealth of broader insights he memorialized in his classic work Democracy in America, one of the most influential books of the 19th century. With its trenchant observations on equality and individualism, Tocqueville's work remains a valuable explanation of America to Europeans and even to ourselves.
Philip Alston, the United Nations' special rapporteur on extreme poverty and human rights, has now taken his own trek through Alabama, California, Puerto Rico, Washington, D.C. and West Virginia to explore whether the persistence of extreme poverty in America undermines the enjoyment of human rights by its citizens. Professor Alston, an international law scholar and human rights practitioner, saw, as many of us know first-hand, that the idealistic notion of American exceptionalism, its founding commitment to human rights and its immense wealth are shockingly at odds with the public squalor found in plain sight throughout the United States.
America has the highest incarceration rate in the world, nearly five times the OECD average. Its infant mortality rates in 2013 were the highest in the developed world. Americans can expect to live shorter and sicker lives than people living in any other rich democracy. The United States ranks 35th out of 37 OECD countries in terms of poverty and inequality. And the Stanford Center on Poverty and Inequality ranks the United States last among the 10 best-off countries—18th among the top 21—in labor markets, poverty, safety net, wealth inequality and economic mobility.
There are no easy answers to these daunting problems. Yet, Professor Alston's explanation of the crisis we face, easy to express but extraordinarily challenging to address, rings true. These are a few of his compelling observations:
Still other disturbing developments warrant mention here. The new tax law will only exacerbate the wealth and income inequality dividing the richest Americans from the poorest. And dramatic cuts in public assistance—some already implemented, others in the works—will shred the fragile safety net on which too many Americans rely.
In President Donald J. Trump's January 30 report on the state of our nation in turmoil, he aspirationally declared that, "This is our new American moment. There has never been a better time to start living the American dream." When will we, as a people, begin to demonstrate the courage, the resolve and the political will it takes to restore the basic human rights our neighbors deserve as much as we do?
Marc Lane is an attorney, financial adviser and the author of Profitable Socially Responsible Investing? An Institutional Investor's Guide, published by Euromoney Institutional Investor PLC, and Representing Corporate Officers, Directors, Managers and Trustees, published by Aspen Publishers.
The world's first social impact bond, or SIB, was introduced in 2010 to fund innovative social programs that realistically might reduce recidivism by ex-offenders in Peterborough, England, and, with it, the public costs of housing and feeding repeat offenders. Prudently building on the strengths of that initiative, Illinois Gov. Pat Quinn is rolling out SIBs to help solve some of the state's most vexing social problems.
A SIB isn't a traditional bond where investors are guaranteed a fixed return but a contract among a government agency that agrees to pay for improved social outcomes, a private financing intermediary and private investors. SIBs shift the risk of experimenting with promising but untested intervention strategies from government to private capital markets, with public funds expended only after targeted social benefits have been achieved.
Peterborough's problem was daunting: Sixty percent of prisoners serving short-term sentences historically had gone on to re-offend within a year after their release. But policymakers were confident that a solution was within their reach. They attracted private investment to pay experienced social service agencies to provide intensive, multidisciplinary support to short-term prisoners, preparing them to re-enter society and succeed outside the penal system.
The government decided which goals would be supported, but exactly how those goals would be achieved was left to the private sector. It was the investors, through a bond-issuing organization, who ultimately endorsed the allocation of investment proceeds — how much would be invested in job training, drug rehabilitation and other interventions.
If the Peterborough plan eventually shrinks recidivism rates by 7.5 percent or more, the government will repay the investors' capital and share the taxpayers' savings with them, delivering up to a 13 percent return. If the target isn't hit, the investment will have failed and the government will owe the investors nothing.
Illinois' SIB effort was spearheaded by the state's Task Force on Social Innovation, Entrepreneurship and Enterprise — the governor's think tank on social issues, which I am privileged to chair — with support from Harvard University's John F. Kennedy School of Government, the Rockefeller Foundation and the Aurora-based Dunham Fund. A request for information issued by the Office of Management and Budget on May 13 yielded responses from service providers eager not only to reduce recidivism here but also to create jobs, revitalize communities, improve public health outcomes, curb youth violence, cut high school dropout rates and alleviate poverty.
Now the governor has issued a request for proposals intended to spur better outcomes for Illinois' most at-risk youth — by increasing placement stability and reducing re-arrests for youth in the state's Department of Children and Family Services, and by improving educational achievement and living-wage employment opportunities justice-involved youth most likely to re-offend upon returning to their communities.
Kudos to Mr. Quinn for bringing SIBs to Illinois. May they soon start delivering on their promise.- See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf
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