Contrasting Views on the Rationale for Policy - Coursework Example

RATIONALE FOR POLICY The Argument The basic argument of the Public Policy Initiative (PPI) is that there is an imperative need for multi-disciplinarypolicy analysis of human development and socio-economic issues. There have been many arguments for against the current policy settings such as whether to adapt a market system or to have the interventionist approach. The need for such analysis is greater than ever during these times of: Unanticipated fiscal deficits faced by the Government and the resulting budget cuts in publicly-funded social programs and education. High and unwanted levels of immigration, like the case for Texas where the aliens have a greater role in the economic sector, these are both, documented and undocumented, and so there is a controversy over denying state-funded basic services to un-documented aliens. Another important factor is the rapid population growth which contributes more to the economic problem of scarcity and towards the selection of a public policy that has to fairly deal with all the related aspects. Another reason for a strong public policy is the declining public support for the arts and cultural activities however there is a rising importance of the audio-visual sector culture. The case is that the gaming tribes should contribute more towards the state funds. Rapid advances in technology and genomics science, also poses a threat to personal privacy thus such infringements should also be looked upon. The next major aspect to be considered while designing a policy is the context of job development in the ever increasing global society. This containment should not only fulfill the white collar attitude instead it should look forth on a relatively larger scale thus improving upon efficiency and equity. The Competitive Environment The main critic on this approach is that in a perfectly competitive environment there can be a case that a firm might enable itself to drive away all other competitors thereby becoming a natural monopoly is an exception owing to the absence of the required many sellers that would set the so-called invisible hand of competition in motion1. To our concern and knowledge Adam Smiths laissez faire theory relies on this hidden hand to attain efficiency in markets. Why it is important is just because in an ideally competitive economy every firm tries to maximize social profits i.e. the concept of deriving maximum utility out of each resource or profit maximization, this could be called as the net benefits consumers and producers receive from participation in markets. Why to support Weimer and Vining is because there are a number of factors that make the Free Market approach much more effective than (government) regulated markets. They are; Production-motivation/Capital-attraction this means that there are just adequate monetary remunerations that make these economic agents to fulfill the customer demand at a desired price and this is well termed as the production-motivation. Through this approach, the supplier tends to keep on producing the desired product and eventually he tries to expand the scale for further remuneration thereby adding more to his incentives for profit maximization that is achieved by “economies of scale”. Efficiency2 ensures that goods & services are provided at the lowest possible cost. Again, the concept is that the supplier tries to minimize cost and maximize sustainable profit. Demand Control & Consumer Rationing is essential to avoid waste of resources, this means that the market system can effectively limit consumption by individuals and only those who can afford enjoy the fruits. But this well leads to a failure as well because the market system fails to provide with some necessities that are termed as public goods as these do not provide with any fruitful remuneration to the producer so they are avoided within the market constraint. The rationing mechanism however allows the level of prices to achieve what economists call as the only real economic function of prices that have the ability to influence the decisions made by the economic agents. Is efficiency the only social value? This is what was argued by the Weimar approach and consumers’ values are different from just efficiency. Values are based on choices. However it can be said that in a market system there is a perfect redistribution system but still the problem is that the wide tends get wider as the rich become richer and the adverse happens to the poor. Thus in this case the social value is declining and the choice utility is only appropriate for a few in this case. Consumer choice modeling The polis approach is based upon more on the equity principle rather than the selective approach of consumer behavior. Weimar and Vining are trying to persuade into the consumer behavior approach as what can just be satisfied and for further enlightening I would like to add in a case for the choice utility3 of consumer such that producers go for what the customer just wants. This is known as choice modeling. Using choice modeling and by questioning a statistically convincing number of customers and dealing with different subsets of this number with delicately varied choices, it is feasible to quantify customers’ willingness to pay for various attributes. By classifying attributes valued by customers and their readiness to pay for them, the benefits side of the equation is complete. On the other side of this equation, of course, are costs. These are attributable to public utilities, which are subject to regulations that include direct control of their rates of charge for services and a limitation on its allowed rate of return. Public Policies The point is that Public policies are those government interventions that aim to surrogate the hidden hand of competition. It is evident that a true price mechanism would widen the gap among the individuals and thus the pure competition terminology would soon lead to a disaster as it is difficult to sustain the economic efficiency and equity at the same time therefore the main objective of the regulating system is to imitate the economic results that would transpire automatically under a purely competitive setting. The provision of goods and services and the regulation of markets by the government and its agencies are examples of such government interventions4. Societal values other than economic efficiency are equally considered in policy formulation. These include goals such as equality in distribution and other macroeconomic objectives such as industrialization and rural development. Conclusion These cannot be reconciled as one aims for equity and efficiency and the other is based on valuation. The point is that we are overlooking one major aspect regarding the policy settings and a fact is that the regulating system tries to ascertain the provision of inflation that hurts the economic stability to a devastating level5. Both approaches are paralleled towards economic growth but Inflationary effects upon the Economic growth are considered as difficult challenges. As the tools present to deal with inflation need, other trade offs which an economy does not want. Such as to reduce the price level the economy must try to reduce costs and in doing so it may lose quality production. Some products are meant to be expensive and reducing their prices will cause the suppliers to lose out. The other thing that hinders our understanding for a policy is the effect of a taxing system that is maintained by the regulating authority. This is completely opposed to the inflation handling scheme as the tax system oppressed by the local authority tends to deviate away the productive and allocative efficiency as it tends to reduce both, the consumer and producer, surplus which means it becomes a dead weight loss to the society so again we are left to the question of “is equity maintained?” Bibliography 1. Banfield, Edward C. (1959) Ends and Means in Planning. International Social Science Journal, 11 (3). 2. Bardach, Eugene. (2004) A Practical Guide for Policy Analysis: The Eightfold Path to More Effective Problem Solving. New York: Chatham House Publishers. 3. Colebatch, H.K. (2005) Policy Analysis, Policy Practice and Political Science. Australian Journal of Public Administration, 64 (3), pg. 14. 4. Friedmann John (1987), Planning as Policy Analysis. In the Public Domain, pp. 136-156. 5. Howard, Cosmo. (2005) The Policy Cycle: A Model of Post-Machiavellian Policy Making? Australian Journal of Public Administration, 64 (3), pg. 3. 6. James C. Bonbright et al, (1987) Principles of Public Utility Rates, Second edition (Arlington, Virginia: Public Utilities Reports, Inc.), 383. 7. Munger, Michael C. (2000) Five Questions: An Integrated Research Agenda for Public Choice. Public Choice, 103 (1-2), pp. 1-12. 8. Rein, Martin. (1976) Social Science for Social Policy. Ch. 7 in Social Science and Public Policy. London: Penguin Books. 9. Stone (2001), Chapters 2 (Equity) and 3 (Efficiency) 10. Walker, Warren E. (2000) Policy Analysis: A Systematic Approach to Supporting Policymaking in the Public Sector. Journal of Multicriteria Decision Analysis, 9 (1-3), pg. 11. 11. Weimer and Vining, (2005) Ch. 2. What Is Policy Analysis? And Ch. *3. Toward Professional Ethics. 12. Weimer and Vining. (2005) Chapters 4 (Efficiency and the Idealized Competitive Model) and 5 (Rationales for Public Policy: Market Failures). 13. Weimer, David L, (2005) Institutionalizing Neutrally Competent Policy Analysis. Policy Studies Journal, 33 (2), pg. 131. 14. Weimer, David L. (1998) Policy Analysis and Evidence: A Craft Perspective. Policy Studies Journal, 22 (March). Read More