ECONOMIC THEORY AND POLICY ANALYSIS: CONCEPTUAL GUIDELINES FOR PUBLIC POLICY-MAKERS

Abstract: Traditionally public policy analysis has been able to employ the conceptual framework offered by the theory of market failure in order to evaluate the efficiency of market outcomes. However, until fairly recently, no corresponding analytical structure existed which could facilitate the examination of the efficiency and equity characteristics of government or non-market outcomes. Quite apart from public choice theory, an embryonic normative theory of government failure has now been developed which can act as a conceptual analogue to the market failure paradigm. At present, three theories of government failure coexist in the literature: Wolf's theory of non-market failure; Le Grand's theory of government failure; and Vining and Weimer's theory of govern- ment production failure. These models form the basis for a more universal theory of government failure. Nevertheless, in its current state of development this seminal literature can still assist in rational public policy design subject to certain caveats. Foremost amongst these is the need for policy analysts to augment the efficiency and equity criteria with some additional broader normative measures, and the necessity for care to be taken in the use of allocative efficiency as a benchmark in non-market circumstances.     

URBAN GOVERNMENT, URBAN POLITICS AND THE FABRICATION OF URBAN ISSUES: THE IMPOSSIBILITY OF URBAN POLICY

An "urban" definition of public policy problems raises great difficulties for the policy maker. If we emphasize implementation as a primary factor in evaluating public policy, we have good grounds for questioning the wisdom of an urban perspective. But urban questions have been and still are major areas of concern in public policy formulation. The ALP federal platform contains a long section on urban policies, reiterating what the Department of Urban and Regional Development (DURD) was striving to achieve under the Whitlam Government. At state level, urban problems have been tackled with varying degrees of success and seriousness, although at this level overall urban perspectives tend to be ignored, for reasons we shall indicate. However urban planning authorities have been tried in most capital cities, and metropolitan plans have been drawn up for all of them. They have concentrated mainly on land use and urban form. By the 1970s a common criticism of such planning was that it left aside many social and economic aspects of urban growth. For example, one (admittedly partisan) government source—the N.S.W. Department of Decentralization and Development—noted "a massive and increasing trend towards socio-economic segregation":
…the remoteness of central city facilities …the cost of commuter transport and the inadequacy of community facilities in low-income outer suburbs are operating to perpetuate economic under-privilege.     

THE LIMITS OF ENERGY POLICY ANALYSIS

Glenn R. De Souza, Energy Policy and Forecasting: Economic, Financial, and Technological Dimensions
Raymond C. Scheppach and Everett M. Ehrlich, (Eds.), Energy-Policy Analysis and Congressional Action
Aaron Wildavsky and Ellen Tenenbaum, The Politics of Mistrust: Estimating American Oil and Gas Resources     

FINANCIAL INCENTIVES TO INDUSTRY AND URBAN ECONOMIC DEVELOPMENT

This paper examines the use of financial incentives to industry to promote urban economic development. It describes the types of incentives offered and sumniarizes the research on the effects of these incentives on firm location. It then examines and contrasts the costs and benefits of incentives to various political jurisaictions—municipality, state and nation. Finally, it aadresses the question of whether incentives, as currently designed, can solve urban unemployment and income problems. It considers the types and intrastate locational preferences of inciustries typically sttracted by incentives and concludes that current incentives may be of limitea effectiveness in promoting urban development. The discussion is particularly relevant in light of continued federal emphasis on introduction of enterprise zones as the major tool of urban economic development policy.     

NEW ISSUES IN THE LOGIC OF POLICY ANALYSIS

Case studies of social interventions need not exchange relevance for rigor, provided analysts keep three methodological issues in mind. First, certain critical tests can and should be performed to help establish causal relations even when empirical data are limited. Second, "causell is an explanatory category representing a moral judgment. Third, case studies should provide some systematic attempt to evaluate the program under scrutiny. The article entitled "Social-Problem Solving in a Revolutionary Setting: Nicaragua's Pesticide Policy Reforms" by Douglas L. Murray (Policy Studies Review, November 1984) is used to illustrate these issues.     

THE RELEVANCE OF COMMUNITY INVOLVEMENT TO SOCIAL WELFARE AND PUBLIC ADMINISTRATION

Abstract: Citizen involvement is regarded as a desirable component of public policy making, particularly policy in the social welfare field. This paper examines different conceptions of social welfare and different conceptions of citizen participation. Participation is a term with many shades of meaning, and policy makers should distinguish between sociotherapy, market research and citizen power, all of which come under the rubric "citizen participation". Different conceptions of participation are appropriate in different policy circumstances and these circumstances are examined with reference to two recent Australian participatory programs in the welfare field. The paper concludes with an examination of the applicability of participation, leadership and expertise to public administration, and argues that these three values exist in a dialectical relationship and that social justice and the effectiveness of programs will be limited if too much reliance is placed on any one of these values.     

THE ROLE OF STATE ECONOMIC DEVELOPMENT PROGRAMS IN NATIONAL INDUSTRY POLICY

A decade of economic stagnation has produced a plethora of calls for government action to stimulate economic growth in employment. Arguing that activists federal industry policy is likely not to emerge in the United States, Rasmussen and Ledebur examine the potential role of states in a "federalist industry policy." States presently administer effective programs of financial assistance to business enterprises. These efforts are "rationally parochial" in that their purpose is served equally well by cresting a new job or pirating from other jurisdictions. This paper considers how state programs can be reoriented to serve national growth and development objectives as well as those of specific jurisdictions. It concludes that a subnational industry policy offers a unique opportunity to reallocate existing state resources to achieve a much higher social return.     

POLICY EVALUATION. DEMOCRATIC THEORY. AND THE DIVISION OF SCHOLARLY LABOR

The implicit priorities of political science have been inhospitable to policy evaluation as a scholarly endeavor. Political science, at least as practiced in the West, draws from a philosophic tradition that views political life, and especially democratic political life, as a public objective, not principally as instrumental for other social ends. Comparative policy analysis deviated from that tradition by treating political conditions as independent variables. Policy evaluation, which assesses the social consequences of governmental actions, deviated even further, adopting an explicitly and totally instrumental approach. The argument ofthis essay is that the tactics of policy evaluation should be adopted for assessing the impact of policy patterns on democratic institutions and citizenship. This recommendation flows from a diagnosis of the division of labor in policy evaluation and an identification of the optimum entry points for political science.     

METHODS OF THE SECOND TYPE: COPING WITH THE WILDERNESS OF CONVENTIONAL POLICY ANALYSIS

Policy analysts, like allegorical homesteaders, face the seemingly unmanageable task of coping with the wilderness of ill-structured problems, while concurrently attending to well-structured problems, which can be addressed with conventional methods of policy analysis. What has appeared thus far as an unmanageable task may become manageable once analysts acknowledge the principle of methodological congruence: The appropriateness of a particular type of method is a function of its congruence with the type of problem under investigation.
To be sure, conventional methods of the first type are appropriate and useful for solving first-order problems, which are relatively well-structured. Contexts of practice, however, are pervaded by second-order problems which, variously described as squishy, messy, or ill-structured, are the class of all first-order problems. Just as methods of the first type are congruent with the simple analytic demands of first-order problems, so are methods of the second type congruent with the complex analytic demands of second-order problems. When policy analysts fail to observe this principle of methodological congruence they are likely to solve the wrong problem.
Methods of the second type are not limited to general heuristics, but include specific and readily comprehensible procedures for estimating the boundaries and structure of ill-structured problems. Since these estimation procedures appear to satisfy requirements of inductive estimates in general, policy analysts can assess their own performance in providing approximate answers to the right question, thus coping with the enemies who lurk in the wilderness of conventional policy analysis.