Public Policy Analysis
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Outline What is public policy? Why study it? Contexts of public policy Reasons for government intervention Role of policy analysis Criteria for analysis
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What is public policy? The course of government action (or inaction) taken in response to public problems. It is associated with formally approved policy goals and means, as well as the regulations and practices of agencies that implement programs. 3
Policy = Kebijakan Public Policy = Kebijakan Publik Proses pembuatan keputusan yang memperhatikan aspek politik, budaya dan hukum. Studi tentang bagaimana kebijakan diadopsi Public Economic Policy = Kebijakan Ekonomi Publik proses pembuatan keputusan yang memperhatikan aspek politik, budaya dan hukum di bidang ekonomi Perhatian tentang Kebijakan publik : Politikus, tertarik pada interaksi antara sistem politik dan kepentingan kelompok tertentu dalam proses kebijakan Ekonom, fokus pada dampak kebijakan terhadap masyarakat (efisien ? ) 4
Introduction Contrasting views of government
“The role of government is to create an environment in which the entrepreneur is willing to take risk and be able to get a return on the risk taken.” – George W. Bush
“… the right public policies can foster an environment that makes strong growth and job creation easier.” – From Kerry and Edwards “Our Plan For America”
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THE FOUR QUESTIONS OF PUBLIC POLICY
When should the government intervene in
the economy? How might the government intervene? What is the effect of those interventions on economic outcomes? Why do governments choose to intervene in the way that they do? 6
Interaksi dlm Public Policy Public policy merupakan hasil interaksi 4 I : Idea Institution Interest Individual
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Macam-macam Bentuk Interaksi Bargaining
System Command System Competition System Comflict System Cooperation System 8
Basic Concepts
Government – Institutions and political processes through which public policy choices are made
Politics – The exercise of power in society; processes through which policies are formulated; also related to the electoral process
Policy Analysis – Examination of components of public policy, policy process, or both
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Contexts of Public Policy
Social context – Societal changes (e.g., population changes)
Economic context – State of the economy (e.g., surplus vs. deficit)
Political context – Political/ideological issues (who is in power?)
Governing context – Structure of government (e.g., separation of powers)
Cultural context – Values, beliefs (e.g., red state vs. blue state) 10
Why does government intervene? Political reasons Moral, or ethical, reasons Economics and market failures
– Equity – when the market fails to be efficient – four categories » the existence of monopolies or oligopolies » externalities » information failures » inability to provide public or collective goods 11
Market Failures Rival?
Yes Private Goods
Yes Excludable?
No
Ice- cream cones Clothing Congested toll roads
No Natural Monopolies Fire protection Cable TV Uncongested toll roads
Common Resources Public Goods Fish in the ocean The environment Congested nontoll roads
National defense Knowledge Uncongested nontoll roads 12
Market Failures (cont’d) Externalities: the decisions and actions of those involved in the market exchange that affect others - negative externality: third party not compensated for harm/loss (e.g., pollution) - positive externality: third party does not have to pay for a gain (e.g., education) 13
Market Failures: Externalities and Public Goods
Society's microeconomic objectives – equity – social efficiency » marginal social benefits and costs » production where MSB = MSC
Externalities
External costs of production – MSC > MC
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Negative Externality Example This represents the supply and demand curve for electricity Is it accurate?
S
p
D
q
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Negative Externality Example (con’t) The true costs of producing electricity needs to take into consideration these costs to society. This is represented by the new supply curve (Ssocial). p1 The government ensures that this true supply curve is realized by imposing regulations that, in essence, increase the cost of production.
Ssocial S
p
D
q1
q
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Positive Externality Example This represents the supply and demand curve for education.
S
D
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Positive Externality Example All of society benefits from a better educated population. While parents may ignore this, the government should not. So, the government subsidizes education. This subsidy, in effect, increases parents income so that they will demand more education.
S p2
D2
D
q2 18
Market Failures (cont’d) Information Failures Information sharing becomes a problem Not a problem for certain items one buys a lot (e.g., food) – able to make adjustments What about large items (cars) or Items that are difficult to understand without assistance (e.g., prescription drugs)
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Why Study Public Policy?
Improve citizens’ ability to participate and make choices – Increase knowledge of substance and process
Improve citizens’ ability to influence policy decisions – More informed arguments and analyses 20
Role of Policy Analysis Policy analysis: a systematic, organized way to evaluate public policy alternatives or the programs themselves – used in a variety of ways » assessing problems » developing alternatives » evaluating implemented programs
– can be used to influence policy
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Ways of Analyzing Policies Effectiveness Efficiency or economic feasibility Equity and freedom Political feasibility May be others as well, such as extent of public participation or flexibility of a policy Each criteria may not carry equal weight in each decision
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Meningkatkan Rokok putih (prod LN) Rancangan Undang-Undang (RUU) tentang Pengendalian Dampak Tembakau, Dampak ke input (petani,TK) Dampak ke output (produksi), perush rokok kecil,
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Ditambah lagi nasib perusahaan rokok kecil yang semakin terjepit. Pasalnya, serentetan peraturan bukan membuat iklim perusahaan itu bagus melainkan terjadi sebuah shock. Termasuk dalam hal pemberlakuan harga jual eceran (HJE) yang menekan pengembangan pabrik rokok.
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Mungkin yg paling bisa dilakukan adalah: - Menaikkan cukai rokok sehingga harga rokok menjadi mahal - Membatasi tempat-tempat orang bisa merokok (denda yg besar buat yg melanggar) - Memperbanyak poster-poster anti rokok berikut bahayanya (disekolah, tempat umum dsb) - Keberanian MUI untuk menyatakan merokok itu haram. Jadikan barang eksklusif 26
