Tag Archives: public policy

A Thought Experiment

Sometimes, it’s useful to step outside our usual political debates about programs and policies, about this or that candidate or pundit or official, and think a bit about a more basic question–perhaps the most basic question facing any society: how should we live together?

In my graduate Law and Public Affairs class, we spend a semester considering the American answer to that question. We discuss the effect of Enlightenment philosophy on our understanding of the role of the state, we examine the Constitution and Bill of Rights, and the constraints those documents impose on policy formation, and we take a closer look at current policy debates through that lens. Well and good–the stated purpose of the class is to give public affairs students an appreciation of the myriad ways our legal system shapes our policies.

But every so often, I give an exam with multiple questions from which students can choose (“write an essay on one of the following questions…”), and among the choices, I include one that poses the following scenario:  Earth has been destroyed in WWIII. You and a few thousand other inhabitants, representing a cross-section of nationalities, cultures, races and religions, have escaped to an M-Class planet. (I’m a Star Trek fan. Sue me.) Create a new government.

The question instructs students to identify the values they will privilege, the measures they will take to ensure stability, etc.

The point of the question is to shake students’ tendency to think that the world they inhabit is the only world possible; to get them to question structures and processes they take for granted, and to think about more basic questions. Typically, those who choose to answer my “science fiction” question, rather than the more mundane alternatives (immigration, taxation, environmental issues, etc.) are the better students, although even among them there are plenty who simply fashion their new world government after that of the U.S.,who simply  replicate the world they inhabit, albeit with minor changes. (Most would get rid of the electoral college, for example.) Over the years, however, I have gotten some truly inspired answers–funny, thoughtful, creative approaches to that fundamental question of how humans should construct our social order.

The answer someone gives to that question is a pretty good clue to what they truly value–not to mention to their ability to understand what can and cannot be expected to work in a world composed of real, diverse and quarrelsome humans.

What “new world order” would you create, if you had the chance?

You’ll Never Get Your Hair Cut in this Town Again

Recently, a colleague of mine was asked to research the impact of professional licensing laws and to report her findings to a legislative study committee. Licensing laws have steadily proliferated—in1970, about 10% of the American workforce required a license of some sort in order to earn a living; by 2000, that percentage had doubled to 20%. It is now estimated to be around 29%.

Lest we think of these requirements as evidence of “big brother” or the much-deplored (and largely fanciful) triumph of an insatiable governmental regulatory fervor, most of these rules are the result of lobbying efforts by the occupational groups being regulated. The result is that Indiana—like many states—requires that workers be licensed before they can shampoo or braid your hair, hypnotize you, or decorate your family room.

Licensing laws are justified by concerns for public safety. We license doctors because most patients lack the knowledge to spot charlatans, and the consequences of what academics call “information asymmetry” can be fatal. We license architects and engineers because building collapses are similarly consequential. This justification seems weaker when we get to shampoo girls and interior decorators.

There is statistical evidence that licensing acts as a barrier to entry into a profession, and also as a barrier to labor mobility (since states have different requirements, licenses are considerably less portable than one might imagine). There is also clear evidence that licensing raises consumer prices—depending upon the profession, those increases range from 4-35%.

The study committee was weighing these benefits and burdens, and considering whether other means of protecting consumers in lower-risk situations might be more cost-effective. Certification, for example, might offer a middle ground. Physicians with specialties use this approach—they have numerous board certifications that are administered by professional organizations. Government isn’t involved, and taxpayers don’t pay the administrative costs, but consumers have the benefit of information about that particular doctor’s training and expertise.

Enter political reality.

Facebook postings warned of disease spread by unclean cosmetic instruments. Tweets went out to rally those in the affected occupations. On the day of the hearing, swarms of scissors-wielding hairdressers (and for all I know, livid interior designers and angry hypnotists) descended on the Indiana Statehouse. My colleague, somewhat shell-shocked, reported that those whose scissors were confiscated by security were furious—evidently it hadn’t occurred to them that weapons couldn’t be taken into the Statehouse. She may have to leave town to get her hair cut after this, and she wasn’t even there to advocate de-regulation; she was just reporting what the relevant research showed.

I am not a betting woman, but I’d give odds against any change in the status quo. As any political scientist can confirm, it is easier to stop change than to effect it.

There are a couple of lessons here, for those interested in reality, rather than the ideologies of Right or Left.

The Right needs to admit that government regulations are just as likely to be a product of the economic self-interest of the regulated industry as the expression of authoritarian impulses. At the state level, much of the drumbeat for licensure reflects the (understandable) belief that one’s occupation should be elevated to the status of a profession; much more comes from a less noble desire to restrict entry and increase profits.

The lesson for the Left is that regulations do, in fact, increase costs, and that they are not always the best way to achieve public goods. The perceived benefits in public safety must be weighed against those costs.

The lesson for my colleague is to avoid angry hairdressers brandishing scissors.

 

 

 

 

 

 

 

 

 

 

Questions

I get tired of beating the same dead horse, but the Star’s story this morning about the Litebox episode–a piece of real reporting that is becoming increasingly rare–raises additional questions.

The story makes vividly clear how slapdash the City’s vetting process has been, and how politically motivated the decision to announce “job creation.” But the story makes a bigger point, albeit implicitly, about the entire policy of “buying” jobs for one’s area by offering financial incentives to companies that will promise to move or expand.

The obvious arguments against such efforts are familiar: it puts government in the position of helping some businesses but not others that may be their competitors, which troubles those of us who believe in real markets; and it is a zero-sum game overall, since the company that moves its company from Ohio to Indiana is not creating more jobs–it is simply moving jobs from one place to another.

But the Litebox fiasco pointed up a problem I hadn’t previously considered. Even if competent people are running these programs–clearly not the case here–they are unlikely to know enough about the technologies and economic realities of very different industries to make truly informed decisions. This may not have been the case when local officials were competing to attract an automobile factory, but the same technological and cultural changes that increasingly challenge tech businesspeople and that make investment decisions risky even for savvy and knowledgable investors make it virtually impossible for government officials to accurately gauge the viability of tech business deals.

When you add in the inevitable politics involved–the huge pressures to score political points, to look like you are delivering on your campaign promises–it’s no wonder that the jobs don’t materialize. As the Star pointed out, even companies with sound performance records and none of the red flags that accompanied the Litebox proposal have more often than not failed to deliver on their promises.

It’s time to rethink these incentives. Even in competent administrations, as currently structured, they are bad public policy.

Have I Got a Revenue Enhancement for You!

I’ve been pondering the arguments about how to reduce the national debt, and I have a proposal. Dump the drug war.

The fiscal consequences of our current policies are staggering. While other estimates have been as high as 88 billion, an economics professor at Harvard reported in 2005 that replacing marijuana prohibition with a system of taxation and regulation similar to that used for alcohol would produce combined savings and tax revenues between $10 and $14 billion per year.  Even that’s not chump change. (Estimates from a variety of sources are that marijuana prohibition costs U.S. taxpayers nearly $42 billion dollars a year in criminal justice costs and lost tax revenues alone. This is just from marijuana prohibition—not efforts to control harder drugs.) As of August 19th of this year, state and federal governments together had spent $25, 969,752,344 on an effort that has–as the AP recently reported–has failed to meet any of its goals. The federal government alone spends approximately 500 dollars a second on drug prohibition.

Then there are the opportunity costs. Indiana used to have a robust hemp industry. Hemp is an enormously versatile and useful product that cannot be smoked or used as a recreational drug, but our indiscriminate policies outlaw its growth. They also prohibit use of marijuana to alleviate the side effects of chemotherapy. And the drug war diverts desperately needed dollars from serious crime-control efforts and other government programs.Estimates are that the money spent annually on the drug war would pay for a million additional teachers.

Law Enforcement Against Prohibition is an organization formed by law enforcement professionals–current and former police officers, sheriffs, prosecutors and judges. These are people who have seen the drug war up close and ugly, and their message is simple: it has been a costly disaster. Just as with America’s prior experiment with alcohol prohibition, the result has been policies that have created a set of perverse incentives that have made drug dealing so profitable that they outweigh the prospects of being caught. Last year the FBI reported that there is a drug arrest every 19 seconds in the US, and 82% of those were for simple possession. That isn’t surprising, since government estimates are that 47% of Americans over the age of 12 admit to using illegal drugs–mostly marijuana, which is no more harmful than those legal drugs, tobacco and alcohol.

There is a copious academic literature documenting the failure of American drug prohibition–and wide consensus on the magnitude of its social and human costs. There is also wide recognition that politicians of both parties are loathe to act on the basis of evidence when that evidence contradicts their ideology or (heaven forbid) threatens their electability by causing them to be seen as insufficiently concerned about law and order. On the other hand,  the country’s current fiscal crisis may finally provide a rationale for doing what most students of the issue have long advocated: discard a policy that has never worked. Decriminalize, tax and regulate marijuana, and focus on treatment and prevention for those with genuine addictions. (Ironically, federal law does not distinguish between use and abuse: it simply declares that any use of a substance that has been declared illegal is a crime, no matter how sporadic or casual the use. This “zero tolerance policy” has cost us a fortune–on average, it costs $25,251 to incarcerate a federal prisoner for one year.) Surely, even the most rabidly anti-tax Republicans would not object to taxing another “sin.”

Over the past 30+ years, we have ignored the numerous books, scholarly studies and organizations advocating the repeal of drug prohibition. Perhaps the current focus on national financial issues can help us achieve both savings and sanity.

Going the Wrong Way

When I was practicing law, it wasn’t uncommon for clients to express apprehension about going to court. Among their concerns was the relationship between the judge and the lawyer representing the adverse party—were they poker buddies? Had the lawyer contributed to this judge’s campaign? Did he or she practice with a law firm that had hosted a fundraiser for the judge?

 

Let me hasten to say that in my seventeen years of active practice, I never personally encountered a judge whose rulings appeared to be influenced by political contributions. (The one exception was a widely reported corruption trial of a judge in an adjoining county, who was convicted of trading favorable decisions for campaign cash.) In other parts of the country, however, elected judges have increasingly been found guilty of “selling” justice for campaign contributions and other electoral assistance. This has become a matter of considerable concern to the profession; Justices Kennedy and Breyer have recently expressed concern that judicial campaigns may be undermining judicial integrity and independence. A wide variety of “good government” organizations are working to take judicial selection out of the electoral process.

 

What’s wrong with electing judges?  The answer to that question involves the nature of a judge’s job.

 

The ideal jurist should have solid legal skills, a “judicial temperament,” and unquestioned integrity. Most importantly, he or she must be guided by the rule of law—not the desires of the electorate. People who argue for judicial elections in order to get judges who will be “responsive to the voters” do not understand the role of the judiciary in American law. (If judges  answered to the “will of the people,” America would still have segregated schools, bans on interracial marriages and poll taxes.)

 

In our system, the legislature is the branch of government accountable to the electorate; the judiciary is accountable to the constitution and the law. And because law is a specialized field, deciding who is qualified to be a judge requires specialized knowledge on the part of those who are doing the choosing. At the very least, it requires that judicial candidates be screened for the necessary skills by their peers in the legal community.

 

Just as every M.D. isn’t qualified to perform heart surgery, every lawyer isn’t qualified to be a judge. As a lawyer friend recently put it, “Politics will never be absent from judicial selections, but at least with merit selection you can hopefully avoid having a charming nincompoop chosen by an ill-informed electorate.” Judges ought not be selected on the basis of nifty bumper-stickers and catchy jingles.

 

In Indiana, judges are elected in every county but two: St. Joseph and Lake counties. Now the legislature is proposing to change judicial selection in St. Joseph County from appointed to elected. No one seems to know what triggered this change, which has quietly sailed through the session despite opposition from the State Bar Association, the local Chamber and the Indiana Lawyer, among others.

 

Your Indiana legislature–proudly moving Indiana backward.