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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.

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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 ? )

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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?

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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

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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)

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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

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Rival?

Yes No

Yes

Private Goods Ice- cream cones Clothing

Congested toll roads

Natural Monopolies Fire protection Cable TV

Uncongested toll roads

No

Common Resources Fish in the ocean The environment

Congested nontoll roads

Public Goods National defense Knowledge

Uncongested nontoll roads

Excludable?

Market Failures

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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)

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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

S

D

This represents the supply and demand curve for electricity

Is it accurate?p

q

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Negative Externality Example (con’t)

S

D

p

q

SsocialThe true costs of producingelectricity needs to take intoconsideration these costs to society. This is representedby the new supply curve(Ssocial).

The government ensures that this true supply curveis realized by imposing regulations that, in essence,increase the cost ofproduction.

p1

q1

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Positive Externality Example

S

D

This represents the supplyand demand curve for education.

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Positive Externality Example

S

D

D2

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.

p2

q2

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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

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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