Transcript How To Think About Public Policy

Public Policy:
Objectives and Principles
Roger Kerr
New Zealand Business Roundtable
“The framework of institutions, laws and
programmes laid down by the arms of
government (parliament, the executive
and the judiciary) that regulate the
economy and wider social interactions.”
Critical issue:
The proper role of government
IRELAND
HONG KONG
SINGAPORE
Objective of public policy
Human flourishing
- not just about economy, monetary values,
efficiency
- encompasses fairness, environmental
quality, freedom
Ideological?
• Should be evidence-based
• Role of economics
• Free trade, school choice, privatisation
• Boundaries of political debate
Common framework
• Markets vs government
• Invisible vs visible hand
• Need governments to set rules of game
Voluntary cooperation
Market exchanges
Politics/collective choice
Voluntary cooperation
Dominant means of getting what we want
• Norm in families, small groups
• Also clubs, associations, charities
• Involves redistribution within families and
through altruism
• Works best in ‘face to face’ settings
But can’t run a large society that way
Market exchanges
Essential for society at large
• Gains from specialisation and trade
• Prices
- transmit information
- coordinate plans
- markets continuously adjust
• Consumers’ interests paramount
But - market failures
Politics
• Voting mechanism is imprecise - candidates,
parties, electoral systems, accountability
• Coercion - not mutual benefits, as with markets & voluntary
cooperation
• Tyrannies of majorities and minorities
Political market failures
Upshot?
Must compare real-world alternatives
• No ideal yardstick
• Political/government failures routine, not
exceptional
In choosing among real world
alternatives
• Focus on incentives
• Bias in favour of economic freedom
Implies limited government
How do we constrain government ?
How do we constrain government ?
Economic constitutions
• Compensation for Regulatory Takings
• Taxpayer/Ratepayer Bills of Rights
Sound processes
Public policy and business management
• A country is not a company
• National central planning doesn’t work
• Different skill requirements
• Problems with DIY economics
Conclusions
Good public policy: institutions that promote
human flourishing
There is a significant role for government,
but
• individuals need protection from government abuse
• governments don’t necessarily act in the public interest
• remedy of government intervention sometimes makes things
worse
The biggest public policy mistake:
to expect too much of government
The challenge:
how to restrain government to
what it does well