Soft equity: Banker Street Irregulars
“Dear little chap!” said Holmes strategically. “What a rosy-cheeked young rascal! Now, Jack, is there anything you would like?”
I’d like two shillin’ better, too!
“I cannot fathom,” I said when the thunderous sounds of footsteps had faded down the hall stairway, and Mrs. Hudson’s flustered wails of expostulation and dismay had calmed with our request for a pot of tea, “why you associate yourself with those scalawags.”
“Really, Watson,” said Sherlock Holmes with surprise. “Perhaps you should peruse my short monograph on the four kinds of money.”
“By employing Wiggins and his friends, I transfer risk to them, an example of the benefits of soft equity. I shall now explain, excerpting from an excellent monograph on the subject in a South African context.”
“The least a fictional character can do is compliment his author.”
Using the tax code to create a deferred-payment incentive allows government a 100% risk transfer — government pays only for performance. And by advertising the mere prospect of such funding, government can attract the private sector:
“It is the unofficial force – the Banker Street irregulars.”As he spoke, there came a swift pattering of naked feet upon the stairs, a clatter of high voices, and in rushed a dozen dirty and ragged little street Arabs. There was some show of discipline among them, despite their tumultuous entry, for they instantly drew up in line and stood facing us with expectant faces. One of their number, taller and older than the others, stood forward with an air of lounging superiority which was very funny in such a disreputable little scarecrow.“Got your message, sir,” said he, “and brought ’em on sharp. Three bob and a tanner for tickets.”“Here you are,” said Holmes, producing some silver. “In future they can report to you, Wiggins, and you to me. I cannot have the house invaded in this way. I want” — and he explained. “Let me know the moment you have news. Is that all clear?”“Yes, guv’nor,” said Wiggins.“The old scale of pay, and a guinea to the boy who finds the boat. Here’s a day in advance. Now off you go!”He handed them a shilling each, and away they buzzed down the stairs, and I saw them a moment later streaming down the street.“They can go everywhere, see everything, overhear everyone,” said Holmes as he rose from the table and lit his pipe. “I expect to hear before evening ….”
As compared with an appropriated program — government puts out grant — soft equity has significant structural benefits:
“Consider, Watson, that since I pay predominantly for performance, I may hire a legion of them. they organize themselves, they pursue such strategies as they think best, they need no direction from me, I am protected because I specify the outcomes I desire. All this greatly simplifies my task, so that I can manage the entire irregulars personally, whereas Inspector Athelney Jones must supervise his entire force, and be responsible for their performance.”
“I really must write that monograph on outcome compliance versus process compliance …” mused Holmes.
“The division seems rather unfair,” I remarked. “You have done all the work in this business. Inspector Athelney Jones gets the credit.”
“Is there anything else to which you wish to direction my attention?” I asked.
“To the curious incident of the defaults in the tax credit program.”
“There have been almost no daefaults in the tax credit program.”
“That,” said Sherlock Holmes, “was the curious incident.”
Direct and indirect
Sponsor versus investor.
As-of-right or allocated.
“As you well know, they often outperform Lestrade’s entire constabulary.”
A more lengthy treatment in the South African context
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Banker Street
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