“Understanding Public Policy:

A Primer”

Daniel Griswold

Cato UniversityAnnapolis, MDJuly 25, 2011

The Cato Institute Washington, D.C.

What is Public Policy?

• Complex and dynamic process – not what you learned in high school civics class

• What government does to and for society

• Collective action through the government

Public Policies May:

• Regulate behavior

• Extract taxes

• Distribute benefits

• Organize bureaucracy

• Make war

• Some combination of the above

Why Care about Public Policy?

“Just because you do not take an interest in politics doesn't mean politics won't take an interest in you.” – Pericles

“The natural progress of things is for liberty to yield, and government to gain ground." – Thomas Jefferson

“I am interested in politics so that one day I will not have to be interested in politics.” – Ayn Rand

Analyzing Public Policy: a Framework

Michael Munger, Duke University, Analyzing Policy: Choices, Conflicts, and Practices (2000)1. Problem formulation

2. Selection of criteria

3. Comparison of alternatives

4. Political and organizational constraints

5. Implementation and evaluation

Problem Formulation

Selection of Criteria• What do we want to accomplish?

• Test of a good policy

a.Moral argument

b.Incentives

c.Constitutionality

Comparison of Alternatives

Munger’s Criteria/Alternatives Matrix (CAM)

Political and Organizational Constraints

“The Overton Window”• Unthinkable

• Radical• Acceptable

• Sensible• Popular• Policy

Implementation and Evaluation• Did the program accomplish its goals?

• Good intentions not enough.

• Market outcomes, political acceptance, expert analysis

• Charles Murray’s Losing Ground; immigration enforcement; government K-12 school spending

Education Spending vs. Performance

How is Public Policy Made?

“Laws are like sausages, it is better not to see them being made.”

– attributed to Otto von Bismarck

The Players:

Voters

Interest groups

Politicians

Administration

Civil servants

Bureaucrats

Capitol hill

Academics

Researchers Consultants

The mediaPublic

opinion

Think tanks

Experts

The courts

Models of Policy Analysis• Institutionalism• Process model• Rationalist model: policy as maximum

social gain• Incrementalism: policy as variations on the

past• Group theory: policy as a group equilibrium• Elite theory: policy as elite preference• Public choice theory

Public Choice Theory

• “Politics without romance”

• Public officials as self-interested actors

• Rent seeking• Concentrated

benefits, diffused costs

Arrow’s Impossibility Theorem

• A rational individual who prefers Pepsi over Coke, and Coke over Dr. Pepper, will prefer Pepsi over Dr. Pepper.

• Arrow showed there is no “fair” voting method for constructing social preferences from arbitrary individual preferences.

• Society may not be a “rational chooser”

A ‘Fair’ Voting System

1. Each voter can have any set of rational preferences. This requirement is called “universal admissibility.”

2. If every voter prefers choice A to choice B, then the group prefers A to B. This is sometimes called the “unanimity” condition.

3. If every voter prefers A to B, then any change in preferences that does not affect this relationship must not affect the group preference for A over B.

4. There are no dictators.

Public Preferences: Trade Policy with China

Voter

Group

Unilateral Free Trade

Trade Agreement

Trade

War

Blues 1 2 3

Reds 2 3 1

Whites 3 1 2

Note: Rank order of preferences for each group

The Outcome: Collective Irrationality

Unilateral Free Trade > Trade Agreement

Trade Agreement > Trade War

Trade War > Unilateral Free Trade

Endless Loop! No transitive preferences.

What You Can Do• Vote, or not• Fund think tanks • Write letters to your congressmen• Blogging/social media• Take a career in ideas• Write op-eds and letters to the editor• Encourage other people to become

engaged

Q&A & Discussion …

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