1. “Understanding Public Policy: A Primer” Daniel Griswold Cato University Annapolis, MD July 25, 2011 The Cato Institute Washington, D.C.

2. 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

3. Public Policies May: Regulate behavior Extract taxes Distribute benefits Organize bureaucracy Make war Some combination of the above

4. 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

5. 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

6. Problem Formulation

7. Selection of Criteria What do we want to accomplish? Test of a good policy a.Moral argument b.Incentives c.Constitutionality

8. Comparison of Alternatives Munger’s Criteria/Alternatives Matrix (CAM)

9. Political and Organizational Constraints “The Overton Window” Unthinkable Radical Acceptable Sensible Popular Policy

10. 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

11. Education Spending vs. Performance

12. How is Public Policy Made? “Laws are like sausages, it is better not to see them being made.” – attributed to Otto von Bismarck

13. The Players: Voters Interest groups Politicians Administration Civil servants Bureaucrats Capitol hill Academics Researchers Consultants The media Public opinion Think tanks Experts The courts

14. 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

15. Public Choice Theory “Politics without romance” Public officials as self-interested actors Rent seeking Concentrated benefits, diffused costs

16. 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”

17. 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.

18. Public Preferences: Trade Policy with China Voter Group Unilateral Free Trade Trade Agreement Trade War Blues123 Reds231 Whites312 Note: Rank order of preferences for each group

19. The Outcome: Collective Irrationality Unilateral Free Trade > Trade Agreement Trade Agreement > Trade War Trade War > Unilateral Free Trade Endless Loop! No transitive preferences.

20. 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

21. Q&A & Discussion … www.cato.org www.freetrade.org dgriswold@cato.org Facebook Twitter: @DanielGriswold 202-789-5260