21July 2008 - SPA508 Policy Analysis & Design-

1. 21July 2008 - SPA508 Policy Analysis & Design- Review Syllabus (Final Copy) Markets & Government Efficiency - Market Failure What constitutes a “good society” - Social Welfare Functions Meanings & impact of the public interest The role of politics in advancing public policies What have you learned about Malaysian policy analysts

2. On Stone Chapter I • Write down • No more than three points • That you found particularly important or • That you found particularly insightful or • That you would like discussed • Any parts of the chapter you would like explained

3. From last week: Measurements • Need to check definitions • A complete example at http://www.bls.gov/bls/empsitquickguide.htm • Malaysia’s Statistical Bulletin gives definitions • To examine changes over time verify that definition, including salient sample characteristics,* have not changed *Year1 sampled 18-29 year olds Year2 sampled 21 – 30 year olds

4. Drawing lessons from the news: Outsourcing Foreign Workers • Current outsourcing policy (Malaysia) • Immigration Dept issues licenses to foreign worker suppliers • Employers hiring fewer than 50 foreign workers must use a licensed company • Most other companies also used licensed companies b/c licensed companies can make things move faster

5. Outsourcing: Problems • Current policy breeds corruption: bribing of immigration officials • Workers are exploited • May not have a job when they arrive • May lose job & be turned in if they complain • Outsourcing companies recruiting policies inconsistent with variations in seasonal work • Inconsistent policies for companies to do their own hiring

6. Outsource - Evidence • What quantitative evidence would you look for to document the extent and nature of the outsourcing problem? • What measure(s) would you track to see if a change in policy was successful?

7. Markets • Markets: Institutions that create wealth & income through production of goods & services • What would be the arguments AGAINST having the gov’t intervene to reduce the price of petrol? That is, “letting the market decide.”

8. Public Policy • A government action or intervention • Criteria for recommending government action • Market failure – efficiency based • Concept of a good society – social welfare function • Human dignity (equity of opportunity) • Fair distribution of resources (equity of outcomes} • Political Feasibility • Consider: Which, if any, criteria suggest that public policy should do something about the price of petrol?

9. Traditional Market Failures • Market cannot provide some goods efficiently because • More than one person can get benefits at the same time • The producer one cannot exercise control over its use • The benefits are not effected by the level of use • For example: National defense, air quality control • Market cannot allocate costs/benefits of externalities • Negative externalities: Pesticides used on a farm pollute water down stream • Positive externalities: Person immunized protect unvaccinated people • Monopolies • Lack incentives to operate efficiently or have competitive prices • Lack of perfect information – consumer may not have sufficient knowledge to estimate true price What is important If market failure occurs collective action (public policy) will be more efficient than the market

10. The Free Rider Problem • When access to a benefit cannot be controlled some people may receive the benefit without paying. These people are called free riders, e.g., • Group projects • Fire and police protection • A problem – should commuters pay for city services?

11. A Social Welfare Value: Requirements for Human Dignity • Equity of opportunity to participate in markets • Freedom from extreme poverty [prevents one from participating in markets] • Minimal ability to participate effectively in markets • Remedial education • Job training • Universal suffrage – needed to have a voice in public policy decisions

12. A Social Welfare Value: Equality of Outcomes Assumes Income affects value placed on outcomes An extra 1000RM means very little to a rich person and a lot to a poor person Redistribution policies risk decreasing the total available resources High taxes may lead people with high incomes to move Caps on medical fees may lead physicians to relocate

13. A Social Welfare Value:Preserving Institutional Values • Adhering to a constitutional framework • Respecting common view of what is fair • Maintaining & strengthening social institutions • These values may be particularly troublesome, b/c cultural and ethnic differences

14. Back to petrol • Which, if any, criteria justify a public policy to do something about the price of petrol • Market failure • Human dignity/equity of opportunity • Equality of outcomes • Institutional values • How about some other policy issues • Illegal immigrants Language of instruction • Congestion on Penang Bridge

15. Fitting Stone’s work in • Stone uses “public interest” to identify agenda for public policy • Commons problem demonstrates gaps betw individual interest & public interest • Influence, cooperation can close the gap • Groups are key in exercising influence, facilitating cooperation, developing loyalty • Recognizes the quality of information in the polis

16. Public Interest I • Agreed on policy areas: • Process to provide order & fairness; a mechanism for dispute resolution • System to provide security • Police • Defense • System to decide membership • Transient policy areas: policies or programs favored by a majority

17. Public Interest II • Individual attitudes about what is good for their community • All 3 meanings suggest what policies will be considered appropriate for gov’t, action, i.e., • Requirements for order & safety • Areas of wide consensus • Individuals’ perceptions of what is good for the community

18. Commons and Collective Action Problems • The problem of the commons – free goods may be degraded b/c of overuse • Conflict betw self interest & public interest • Private benefits have social costs • Industrial pollution • Locating a factory, casino, recreation centre • Social benefits have private costs • Schools and health care require taxes • Healthy people pay for unhealthy people • People without children pay for schools

19. Bringing private interest in line with public interest • Influence (shape our opinions/wants): Sources include friends/family, media, others? • Cooperation • Collusion, price-fixing, insider trading • Coalition, alliance • Loyalty

20. The Role of Information • Perfect information: accurate, complete, available to everyone • Information in the polis • What people believe to be true is important. Depends on who presents the information and how it is presented • Never know all the possible actions or effects or what others will do • Inaccessible or deliberately hidden

21. Effects • Policies are adopted b/c they are expected to have a positive effect on • The general criteria, such as, efficiency or equality • A more specific criteria (outcome) that we hope to achieve • (Think back to the outsourcing question as to how you would measure the impact of a policy change)

22. FYI: Example of terms used to describe outcomes • Policy: To focus on basic academic skills • Immediate: Improve basic skills • Side Effects: Reduce time spent on non-basic skills • Unintended: Higher drop out rate • 2nd order: Good basic skills leads to X • 3rd order: X leads to ? • Long-term: More productive labor pool

23. Policy Analysts and Consumers • What type of training did you informants have • How does an analyst decide what policy problems (or issues) to work on? • What steps does s/he take to study a problem • What tools does s/he commonly use? • What tools or skills does s/he consider most valuable? • What advice would s/he give a student interest in a career as a public administration • How do consumers of analysis decide • How to go about researching a problem? • What resources do they find most valuable? • What types of presentations do they find most useful? • What types of presentations do they consider of little or no value? • What advice would s/he give a student interest in a career as a public administration

24. What’s ahead • 28 July • Please download & bring Human Resources to class (8 pages) • May quickly review Weiss chapter on-line • 4 August - Assignment 3 due (details available 28/7) • Select a problem. Identify and discuss • Criteria justifying a public policy • Suggest measure(s) to track its impact

25. Homework • Make sure that you complete all parts of an assignment – it is the fastest way to lose points • Consider using headings for each section • If clarity was 9 or 10 – no concern with English; 8 – reading paper is sometimes challenge but usually understandable • Consider using shorter sentence • May want to use Word’s spelling & grammar check • I may give e-mailed assignments more useful feedback. So e-mail is ok

26. Guides on the Wiki • BC [British Columbia] Evaluation Guide • 10 Steps to Resource Based Management [World Bank] • Urban Institute (used in class) • Cost-Effective Analysis • Analyzing Outcome Information