The U.S. Policy Process

1. The U.S. Policy Process • A lot like making sausage • Have to understand the process if you want to influence policy Chapter 3 of Knutson, Penn, and Flinchbaugh 05

2. Economists Role in Policy • Concerns > Issues > Policies • Policy Position • A conclusion about • Influenced by: Issue/Problem FactsValuesMyths Decision

3. Facts, Myths, Values, and Goals • Facts – known with certainty and objectively verified • Myths – unscientific accounts perpetuated by legend • Values – concepts of good, right, and desirable • Goals – desired end results or objectives

4. Agrarian Myths • Economic prosperity depends on agricultural prosperity • Land is • Farm programs are • Farmers are environmentalists • Myths are • Do not have to be true to affect policy.

5. Jefferson Agrarianism Values • Agriculture is the basic occupation of mankind • Rural life is morally superior to urban life • A nation of small, independent farmers is the proper basis for a democratic society • Are these true? • If these do not hold, then economics must be used to defend price and income support programs

6. Policy Goals • Goals – desired end results for policy • The purpose to which a policy is directed • Economic goals

7. Economists Role in Policy • Current Events • Brazil has brought charges against US cotton policy in WTO (World Trade Organization) • Dan Sumner at UC Davis and Bruce Babcock at Iowa State Univ. • Testified at WTO hearing for Brazil • Now US Cotton Council has threatened to have Congress cut their research funding • What is academic freedom? • Should a professor take sides?

8. Economic Theory of Public Choice • Private Choices • Key principles: • All resources are scarce or limited • Assumes rational behavior • Prices signal consumption and production decisions • Public Choices • Key principles: • 1 & 2 above but votes are the market signals of public choice instead of price • Trade-offs (i.e. log rolling, horse trading) on an issue by issue basis

9. Positive vs. Normative Economics • Positive economics explains consequences • Normative economics involves value judgments about what should be • Is this true?

10. The Pareto Criteria • Pareto optimality • Very rare • In policy we tend to use the compensation principle as the basis for policy decisions • Welfare economic theory used to measure gains and loses

11. Welfare Economics • Consumer surplus • Producer surplus • Often in policy there is a deadweight loss $ s a P 1 b c D Q/yr q 1

12. Approaches to Analysis • Scientific approach • Like chemistry lab • Analytical approach • These tend to depend on person’s point of view • Evangelistic approach • Educational approach

13. Four Process Questions • What is ? • Facts, observation • What can be? • What are politics? • Can it be done? • What will be? • Predictions • What should be? • Value judgments, normative

14. Political Spectrum Liberal Conservative (more government) (less government)

15. Influence Triangle

16. Politics of the Minority • Find allies issue by issue. Not philosophy by philosophy • Build coalitions, compromise, find common ground • Be positive, reasonable, work within system • Base case on facts, not myths or emotions • Adopt non-partisan strategy

17. Policy Process • Legislative branch – 435 and 100 those are the numbers • Role of Congress: write and pass legislation • Executive Branch – President and agencies can propose legislation • Judicial Branch – settles disputes • Interest Groups -- producers, consumers, agribusiness, foreign govts.