Declining options/increasing needs

WHITHER POLICY FOR THE 1990s

Declining Options/Increasing Needs

Ray C. Rist

A merica is ready for change--but not much and not too fast. After eight years of a presidency

characterized by considerable accomplishments and also considerable failures, the country stands ready to preserve the former and address the latter. The outstanding successes of the Reagan admin- istration in reducing unemployment and inflation, for example, represent two areas of economic policy where there is a national consensus to stay the course. But at the same time, and again in the economic policy arena, the failure of the Reagan ad- ministration to curb the dramatic growth of the national debt by not balancing the budget presents an area where changes in existing policy are clearly recognized as needed.

There are two ways in which the change that is underway in the United States can be characterized. One way is to focus on the immediate, the short term, the events that appear each day on the pages of the newspapers or on the evening news. Concerns over the federal budget, AIDS, the American addic- tion to chemicals, or our foreign policy toward the Persian Gulf are but a few examples of the topics that dominate public discourse. Tracking the day- to-day unfolding of these and many other situations facing the country is, without question, important. Each bears a direct impact on the country as well as on the lives of individual citizens. The need of governments at all levels to respond means that these issues must be clearly understood. Short-term policy responses will depend upon the clarity and breadth of these understandings.

But what is happening in the country is also to be understood by its undercurrents, the changes that are less perceptible and less evident on a short-term basis. These changes are over the horizon of a ninety-second-news-byte view of the world.

Tracking these undercurrents is no less important than having a good understanding of the events one sees continually on the surface. It is by going be- neath the momentary realities that a sense of the movement of the country can be gained. It is at this level, for example, that one should look to under-

stand the direction of race relations or the growing inequality among social classes. Only by looking to these longitudinal trends can one gain a sense retrospectively of where the country has been and pro- spectively of where it appears to be headed.

Two such broad trends are identified and dis- cussed here. The first of these two underlying cur- rents addresses the precarious capability of the U n i t e d States to f ind suff ic ient ins t i tu t iona l viability to solve our pressing problems. Stated differently, it is not self-evident that our current in- s t i tu t ions have the skills and o rgan iza t iona l structures appropriate to the problems they face. Successfully meeting the challenges, for example, in health care, financial markets, or urban poverty cannot be assumed, a priori. There is no guarantee that the script has a happy ending.

The second of the undercurrents focuses on why it is that America seems to be sagging. The changes in the country in these past years--greatly increased national debt, a monthly multi-billion-dollar trade deficit, stagnant growth in productivity (a feeble 0.4 percent yearly throughout much of the 1980s), growing gaps in health care coverage for American citizens, and the solidification of a large underclass are but a few examples--give pause to many about the direction the country is headed. Indeed, analyz- ing these undercurrents and their implications for the 1990s becomes of pressing importance if appropriate intermediate and long-term policy strategies are to be crafted.

In trying to answer the alluring question, "Where is America going?" it is necessary to do two things. First, there is a need to assess retrospectively what has brought us to where we are. Thus each of the themes raised here has a historical dimension that is pivotal to our understanding of how we have come to our present condition. Second, and concurrent with this retrospective view, is the effort at prospective analysis, focusing on where the changes appear to be leading. This latter effort is understood as necessarily high risk. Prospective analysis is some- where between good data and prophecy. Still, with-

40 / SOCIETY �9 SEPTEMBER / OCTOBER 1989

out careful consideration of the future implications of present conditions, the policy process is limited to a reactive mode, unable to anticipate and then plan a response, however tentative.

Can the United States still respond effectively to its present problems? Several policy analysts question the political will of the country to muster the energy necessary to take on, for example, the persistent and tough issues of poverty or the budget deficits. Their concern is whether sufficient mobi- lization of public commitment can be generated to instigate change; perhaps the country has become so accustomed to these conditions that they are now taken as part of the status quo and are no longer seen as threats to the well-being of the society.

But for others, the most fundamental and insis- tent question is whether or not, regardless of good will and desire to bring change, the country any longer has the institutional capacity to effect the needed change. Here the concern is with the flexibility, adaptability, and vision that institutions will need to demonstrate in order to address present problems. Basic problems in health care, defense procurement, international financial markets, urban economics, and government itself appear to have grown beyond present capacities to respond efffectively. It is this seeming mismatch between how our institutions are organized and what is needed to address present conditions that generates the alarm.

Raising concerns about institutional capacity quickly eliminates the possibility of focusing on short-term, quick-fix solutions. Creating new institutions or transforming present ones to meet the new demands and realities in American society means a concerted effort over years. Institution building will take time. The interim issue, however, is no less pressing: what to do now. While short- term fixes have reached a high state of political and organizational perfection in the United States, they will not suffice. Linking short and intermediate ob- ectives to the overall strategy for building institu-

tional capacity will be necessary. Particularly intriguing about the strategy for

building institutional capacity is that in the end, institutions need to create their own self-generating means of change. Regardless of the institutional sector, the fundamental concern is with the passivity and acceptance of circumstances as they are. (This is not a new problem for the United States. For many years, the U.S. auto industry cared little or nothing about quality in its products, with disas- trous results for that industry in particular and the industrial health of the country overall. Near bank- ruptcy, like stock market crashes, captures people's attention.) Short-term profit motives, contentment with known organizational structures, and the self- interest of management all hinder flexibility and

continuous adaptation. It is not easy to manage change; it is even less easy to predict exactly where the change will lead. Thus the low-risk posture of simply doing more of what one is alrady doing becomes extremely attractive. The solution that U.S. institutions have frequently settled for is working harder, not smarter.

Institutional Capacity for Problem Solving Briefly, one encouraging but still tentative present

example of building new institutional capacity is the effort going into structuring the U.S. financial markets in the wake of the October 1987 stock market crash. It's recognized that new forms of regulation are needed. The various stock markets are talking to one another on strategy, the Securities and Exchange Commission is involved, large banks and brokerage houses are discussing ways to better preserve needed liquidity, and the outlines of some forms of cross-institutional cooperation are emerging. While it is much too soon to tell if these efforts will be successful, there is no doubt but that the events of October 1987 have generated a clear awareness that the institutional arrangements then in existence were inappropriate to the time and to the needs of a global, twenty-four-hour market system. The loss of nearly $700 billion in the value of American stocks in one month has not been without its consequences.

The current efforts in the Soviet Union to en- hance inst i tut ional flexibility and adaptabi l i ty through an emphasis on perestroika is but another indication that the problem is not simply facing the United States, and indeed, the situation in Great Britain is also similar. Each country faces a set of problems more or less unique to its own circumstances and for which it has to seek its own solutions.

There are now many problems that have grown over time in the United States, often in small incre- ments. The end result of this creeping incremental growth in a problem is that it is often difficult to determine the cumulative impact. Three examples mentioned here are each in a different policy area, but all are national in scope and central to the question of whether America is or is not going to be able to develop sufficient institutional capacity.

First, the United States has experienced the emer- gence of a true underclass that now numbers millions of persons. While there has been since the early 1960s a recognition that poverty was a persistent reality for tens of millions of Americans, there was also the parallel view that persons could be brought out of poverty with relatively straightfor- ward programs and assistance strategies. That set of approaches and assumptions now is understood not to work for millions. They are the new underclass-- a group not caught in any safety net, involved in no

institutional programs, and living on the economic margins.

Second, the past decades have brought forth a R u b e G o l d b e r g tax sys tem tha t is now in- comprehensible to even the most sophisticated tax accountants and lawyers. The country has de- pended upon the conviction of the citizens that the tax laws were fair, understandable, and that what one paid was one's rightful share. The level of trust in the honesty of the citizens has been extremely high. But the system as it has come to be patched together erodes trust. Both the feeling that the laws are increasingly rigged to benefit the wealthy and that the present system is in total chaos leads to tax avoidance, cheating, and frustration. When major accounting firms are no longer willing to certify their work for important clients because of the am- biguities and contradictions in the tax laws, the system is in deep trouble.

Finally, there is the growing recognition that the welfare state as it was conceived during the New Deal has proved a failure on its own terms. It is not because the impulse was wrong, but because the system as it has evolved no longer takes care of the poor. The poor have suffered from budget cuts and the elimination of programs in far greater proportion than have those in middle- and upper-income brackets. Indeed, the end result of the present system is that the poor are denied services and care while affluent Americans are not required to pay their own way. Of all the entitlement programs in the federal budget (entitlement being government commitments to assist financially certain target groups in the population, e.g., Social Security for those past a certain age, student loans, veterans compensations and military retirement, etc.) it is now estimated that only one dollar in five goes to the poor. The other four go to middle-income and affluent Americans. These nonmeans-tested, government handouts to those who do not need them draw valuable and scarce dollars away from education, nutri t ion, and employment - t ra in ing programs. So long as so m a n y bel ieve they are "entitled" to government support, even when they do not need it, those who do have real needs will never receive the necessary support. The welfare system has evolved to where the "haves" are in line ahead of the "have nots:"

In reflecting on the means by which the United States can develop the necessary institutional capacity across various sectors t o respond to these long-term trends and undercurrents, many of those who track the policy issues facing the country con- clude that the public sector has got to take the lead, period. As the country moves into the post-counterreform era of the 1990s, the bot tom line is simply that the public sector has got to get involved in a sustained way. This conclusion arises from witness-

WHITHER POLICY FOR THE 1990s / 41

ing the results of efforts during the past decade to restrain the activities of government and seek private-sector solutions to the nation's problems. De- regulation, massive tax cuts, protecting wealth, the privatization of government services and functions, and reductions of 14 percent in federal support since 1979 for education are but some of the events that have occurred and whose consequences have been observed; the social costs paid for during the Reagan counterreform period have been out of proportion to the benefits.

Other observers take the view that government ought to be involved in the efforts to develop new institutional capacity because it is singularly well placed to be a change agent. For these analysts, the status quo will give way only to concerted efforts to build and sustain change. Their view is that no single entity in the private sector can generate the necessary momentum or be a sufficient catalyst, given the magnitude of what has to be done. Further, the government has available to it such a wide variety of policy mechanisms and inst ruments-- tax prefer- ences, regulation, grants, laws, loans, loan guaran- tees, etc .-- that it alone can effect the right mix and match to push for change.

This near unanimity of opinion that the government has a vital role to play in addressing the problems that the country is facing suggests a distinct difference between the 1980s an the 1990s. While it is, of course, too soon to see if this proposed rein- vigorated role for government will emerge, one characteristic of those calling for this effort suggests that it will happen. Specifically, the call for greater government involvement cuts across traditional ideological perspectives. It is not only the liberals who are arguing for government involvement and leadership; the call is coming as well from those on the conservative end of the spectrum. Consensus on this issue is provocative in its implications. It suggests that there could be broad-based support for a more targeted and proactive government. If this is so, there is then the potential for realignment on any number of politically charged issues such as defense procurement and Social Security.

But amidst this clamor for government leadership, there is a fundamental question that first must be addressed. The issue is the institutional capacity of government itself. While the calls for change ring out, the unexamined assumption is that the current institutional arrangements in government will allow for a response. Why, though, if other sectors of the society have not been self-re- newing and adaptable to the changing circumstances of our day, might one suppose that it has taken place in government?

The reality is that it has not. If one looks to the legislative branch as an institutional setting from which leadership could address these emergent


problems, one finds a terribly fractured organiza- tion where there are more than 250 committees and subcommittees, where the budget process has all but broken down, and where any coherent legislative agenda is entirely missing. In the executive branch, the circumstances are different, but the conditions are no better. Assistant secretaries play musical chairs among departments (average tenure in some departments for assistant secretaries is about eighteen months), there is frequently little or no coordination of policy efforts among key players, and the capacity to implement policies and programs effectively ranges from only some to almost none. The present conditions in government are themselves h indrances to renewal. How (and whether) the U.S. government changes during the 1990s and what institutional capacity it develops to respond to the issues facing the country will affect the quality of life for us all.

Is America in Decline? Nearly a century ago, Woodrow Wilson wrote:

America is now sauntering through her resources and through the mazes of her politics with easy nonchalance; but presently there will come a time when she will be surprised to find herself grown o ld- -a country crowded, strained, perplexed--when she will be obliged . . . to pull herself together, adopt a new re- gimen of life, husband her resources, concen- trate her strength, steady her methods, sober her views, restrict her vagaries, [and] trust her best, not her average, members. That will be the time of change.

The time is now. How the United States responds will determine not whether, but how deeply, this country continues to slide into a period of decline, both at home and abroad.

The notion that America is in serious trouble breaks out into two separate but interdependent arenas--foreign and domestic. America cannot address its problems overseas without also addressing its problems here at home. For example, one cannot do something about foreign competition without also doing something about American productivity; one cannot argue for greater "'burden sharing'" among our allies without also doing something about our multi-bil l ion-dollar trade deficits; it makes no sense to reduce the number of foreign graduate students allowed to enter our science programs if we fail to train our own students so that they could compete without protectionist quotas. Consequently, the analysis of decline, while focusing on different spheres of American influence and involvement, really is of a single thread. Treating our problems overseas as separate and distinct from

those we are experiencing here at home is, in the end, a false dichotomy.

In addressing the issue of external or foreign decline, it is important to begin by stressing that the decline of the United States relative to its allies (and even to its adversaries) was inevitable. With respect to our allies, this decline has even been necessary. The global dominance of the United States in the years after World War II was achieved largely through economic and technological superiority. Potential competitors at that time--Britain, Japan, Germany, France, and the Soviet Union--a l l had felt the ravages of war in ways that the United States had missed. But as we have helped to rebuilt the economies and economic infrastructures of friends and even former enemies (Germany and Japan), it was to be anticipated that they would increasingly become partners and not simply dependents. Our relative decline to their growth over these past years has been, in considerable part, our own doing. Stated differently, the outcomes of NATO, the Mar- shall Plan, and the World Bank have met and even exceeded our expectations. But what has happened during the 1980s was that their growth and use of innovation surpassed ours. The complacency of American industry resulted in less productivity, less quality, and less attention to the economic foundations of the society. Today, the gross national prod- uct of the European Economic Community exceeds our own.

Concurrent with these shifts in the economic relations among nations was the effort by the United States to sustain its military hegemony. In the forty- plus years since World War II, the United States has poured increasing amounts of its resources--mate- rial, intellectual, and f inanc ia l - - in to trying to maintain the military superiority that was unques- tionably ours in the years immediately after the war. Yet we failed to accept the shifting nature of global powe r relations and the fact that other countries would themselves develop military capabilities. The United States thus has been frantically trying to sustain its military positions simultaneously all over the globe. This overextension has profoundly upset the balance that is needed in a mature economy between foreign and domestic demands. Attending to our industrial infrastructure, educating the work force, supporting research and development, and following up on basic research breakthroughs were all ignored in the pursuit of an ever-more-elusive military hegemony. The drain on the resources of this society have been enormous. A billion-dollar-a- day Pentagon budget does have its impacts.

What has happened domestically was not inevitable. The United States had declined internally as the result of our own failures. Relative to our allies, we have not invested in rebuilding our heavy industrial infrastructure, we have not encouraged savings

as a source of capital for investment, we have pursued short-term paper profits, and we have chosen not to make the human capital investments we now need for the ever-expanding technological competition we face. The 1980s thus witnessed, in spite of much political rhetoric that fogged the reality, a dramatic shift in economic conditions between the United States and its allies--especially Japan and Germany. For example, the United States began the decade with yearly productivity gains of approx- imately 3 percent. By the end, our productivity gains were less than 1 percent. For the past decade, our economic base has been shrinking relative to

Short-term profit motives, contentment with known

organizational structures, and the self- interest of management all hinder

flexibility and continuous adaptation.

the growing economic bases of our main competitors. This yearly productivity gains have been in the range of 3, 4, or even 5 percent.

With these understandings of the present situation, the question can be asked: is America, like many other great nations before it, on a downward slope into becoming a second-tier nation, as has already happened in this century to Britain and France? This slide is neither inevitable nor irreversi- ble, but present trends may continue at an acceler- a t i ng pace i f t he U n i t e d S ta tes does n o t fundamentally change its present policy priorities. The country must make concerted efforts to regain its balance, its sense of proportion between domestic and foreign demands, and to reallocate its re- sou rces in ways t h a t r ebu i l t its e c o n o m i c foundations.

It is at this juncture that the earlier question on institutional capacity and the present question on American decline come together. Melding them generates the bottom line: does America have the institutional capacity to respond to the decline of the past decade, in both its domestic and its foreign components? Policy analysts are hopeful that the United States can learn from its mistakes, chart a plan of action, and then muster the institutional capacity to follow through. But if the country falls short in developing and implementing reforms in the industrial and foreign-policy areas, if little new ground is turned, then many analysts believe present trends will continue. Self-correcting responses do not come automatically. Without the necessary effort, America will defeat itself.

Working for the past decade in a counterreform

WHITHER POLICY FOR THE 1990s / 43

environment has had its impacts upon those who labor in the vineyard of policy studies. It has also had its impacts upon the analytic developments of the field itself. Policy analysts are trained to con- sider and analyze options, assess their relative impacts, and link various options to costs and benefits. Conducting their craft in this way, during a period of tight budgets, clear ideological constraints on what alternatives would be considered, and a strong bias against government action, has taken its toll. The optimism of the late 1960s and the 1970s has given way to a more pragmatic and less proactive stance.

In attempting to sketch broadly the current status of policy studies in the United States, there are several key points. First, the field appears to have become much more retrospective in its analysis. Looking backward to learn about what has happened to programs and policies seems to have over- taken efforts at framing future agendas and options. There is, overall, less attention to emerging issues and their implications.

Second, in this shift to retrospective analysis, there has also been a strong emphasis upon doing more "managerial" studies. Broader theoretical concerns as well as efforts to track long-term implications of policies have given way to shorter- term, management -o r i en ted work. If counterreform policies tend to push for the reduction and withdrawal of government activity, then the kinds of information needs that managers working in this environment will have will not be those that are proactive or expansionist in nature. "Managing down" focuses on budgetary data, personnel ceil- ings, the tightness of eligibility criteria, transferring and eliminating program functions, etc. The task for policy analysis has been to help in this process, a responsibility that was inevitable but not welcomed.

Implications for Policy Studies Third, doing more and more of this work over the

past ten years has remolded the craft. Linking policy analysis to budgeting, for example, has clearly emerged as one of the dominant themes of the field during the past decade. So also, for example, has the concern with policy implementation. By the end of the 1980s, the issues being addressed in the journals are infrequently those of whether policies are appropriate and likely to achieve stated goals. Rather, article after article focuses on how to implement effectively what one has. The concern with the processes, while not unimportant, tends not to lead to assessments of impacts or consequences. A stronger emphasis on neutrality has emerged. Ana- lysts write less about results (good and bad), make fewer judgements about policy outcomes, and focus more on descriptive accounts of things as they are or as they were.


Finally, there appears to be a growing awareness of the limitations of policy analysis. One limitation is that some decisions have to be made that cannot be captured in quantitative terms. The current AIDS situation in the United States is instructive. There are moral and ethical dimensions to this problem that have to be addressed and for which policy analysis has very little to say. Providing con- doms versus stressing sexual abstinence among teenagers is a case in point. The judgement on which way to go is basically a moral one. It has to be made on a level that is beyond the technical analysis of pros and cons.

The second limitation that has increasingly come to characterize policy analysis is the persistent de- constructionist nature of the American political system. Regardless of how thoughtful or how complete a particular piece of work might be, its distortion and abuse in the policy arena is inevitable, especially if it is on one of the politically sensitive topics of the day. The ways in which journalists, politicians, and the public-relations masters of "spin" take on an issue and remold it to suit their own needs leaves the policy analyst either decrying the changes or going with the flow, hoping that some splinter of the original analysis remains. But in neither instance has the analysis been able to stand its own ground. It has been picked up, swirled about, and spun off as something quite different. Such

changes clearly delimit the impacts to be attributed to the original work.

The end result of these changes in the craft of policy studies over the past decade is that the work is now generally characterized as being retrospective, quanti tat ively rather mundane , l imited in scope, focusing on processes, and driven by the information needs of program and project managers. The reality of conducting this kind of work is quite different from the rhetoric of the textbooks on the subject. The descriptions in these b o o k s - - o f the analyst framing options for decision makers, bring- ing to bear a var ie ty o f soph i s t i ca t ed meth- odological tools for their work, and contributing to the larger understandings of the problems we face-- simply no longer ring true.

The policy studies community has also lowered its sights and expectations. With trimmed sails, students, professors, and practitioners alike are all wondering if they can ride out the wind that has blown them so far from their original course. But whether the original course should any longer be pursued is a question that begs for an answer. Stress- ing the rhetoric of doing work one way while, in reality, doing it quite differently is straining the credibility of the field.

Ironically, the changes in the methods and perspectives of the policy studies field that have taken root these past ten years are now themselves about

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to be called into question. As the country emerges from this counterreform period, there will be considerable demand for careful assessments of the current conditions in the society and of what the options are for addressing our problems. Prospec- tive analysis will again be in demand. Some in the field may argue that their keeping a candle in the window these many years has now been vindicated. Their vigil is now over; the textbooks were right. Policy studies can now go back to what it was in the 1970s, throwing off the constraints and contortions of the past ten years. Others will view these changes with less delight, given that they have retooled to work in the counterreform climate of the 1980s. They have found a niche in this new climate and they will not be happy to lose it.

Whether the policy studies field can again adjust its course and move toward making new contribu- tions during the 1990s in an open question. Time will tell. But so too will the willingness of those in the community to take a fresh look at what has been learned in the 1980s that can be brought along into

WHITHER POLICY FOR THE 1990s l 45

the discourse of the 1990s. Fiscal constraints will be a given. State and local governments are now per- manent players on the field. Policy accountability is now a requirement. Ignoring these lessons and turn- ing instead to the fond remembrances of the 1970s is a prescription for failure. Just as the country faces a set of changed realities, so too does the policy studies community. How it responds in the coming years will determine its relevance (or irrelevance) to the challenges at hand. []

Ray C. Rist is deputy director of the General Govern- ment Division, United States General Accounting Office. Before that, he served at the National Institute of Educa- tion. He has held teaching appointments at the Univer- sities of Illinois and Oregon and at Cornell University, and is now adjunct professor at George Washington Uni- versity. He has authored fifteen books, including Finding Work: Cross National Perspectives; Program Evaluation and the Management of Government; and he has edited the last four volumes of Policy Studies Review Annual.

Address Unknown: Homelessness in Contemporary America

James D. Wright

T he past decade has witnessed the growth of a disturbing and largely unexpected new prob-

lem in American cities: the rise of what has been called the "new homeless" Homeless derelicts, broken-down alcoholics, and skid row bums have ex- isted in most times and places throughout our history. But the seemingly sudden appearance of homeless young men, women, children, and whole families on the streets and in the shelters was, in retrospect, a clear signal that something had gone very seriously wrong.

The sudden intensity and new visibility of the homelessness problem took most observers by sur- prise. Ten or fifteen years ago, a walk along the twenty-odd blocks from Madison Square Gardens to Greenwich Village would have been largely un- eventful, a pleasant outing in an interesting part of New York City. The same walk today brings one

across an assortment of derelict and indigent peo- p l e - o l d women rummaging in the trash for bottles and cans, young kids swilling cheap wine from paper bags, seedy men ranting meaninglessly at all who venture near. Who are these people? Where did they come from? What, if anything, can or should be done to help?

Many s te reotypes abou t the homeless have sprung up in the last decade. One of the most popular is that they are all crazy people who have been let loose from mental hospitals. A variation is that they are all broken-down old drunks. One writer has de- scribed them as the "drunk, the addicted, and the just plain shiftless"; the implication is that most of the homeless could do better for themselves if they really wanted to. Still another view is that they are welfare leeches, living off the dole. A particularly popular view that sprang up during the Reagan

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