Efficient at what and for whom? - Stone Ch. 3

Since the late 1970's and early 1980's making government more efficient has been a primary goal of policymakers and administrators. Efficiency has often been treated as a goal in itself leading to the privatization and marketization of government services to avoid the inefficient bureaucratic process. As Stone points out, however, efficiency is not really a goal, it's a process-based measure that strives to get the most output out of a given input. It says nothing about an ultimate outcome. There always has to be something you want to do efficiently, or more efficiently. Again here, Stone reminds us that efficiency is comparative. The only way we can judge whether or not a process is efficient is in comparison to another process.

Stone takes some time to problematize what we think of as efficiency. She uses the story of a library from Wildavsky and Pressman's Implementation. Wildavsky and Pressman believe they have a handle on what makes a library efficient, but Stone argues that this is too simplistic. It may not just be a count of books that is important but the quality of books. It may not be the variety of books that's important as much as having a sufficient number of the most in demand books. It may in fact not be the books at all that are most important, but the services being provided by the librarians. The problem is that Pressman and Wildavsky do not really explore how they would define the ultimate goal of the library. Is it to educate residents, provide residents with entertainment, help schoolchildren learn, increase literacy, help residents with job search and skills, or all of the above? Pressman and Wildavsky define the goal of a library solely in terms of an output, the number of books they provide to the community. This comes close to using efficiency as a goal in and of itself.

When we talk about efficiency as an ideal in the United States, we are usually defining it in market-based terms. From pp. 66-71 Stone gives us a lesson in critical economics. Although we tend to elevate economics as the best of the social sciences in America, we must remember that economics makes a lot of assumptions about human behavior that are not always true. Stone believes that these assumptions generally fail when it comes to public policy and we should be relying on the model of the polis more often. Things in the polis are not as simple as they are in the market. She repeats a lot of the contrasts between the two models that she discusses in chapter one. Ultimately, she arrives at the conclusion that markets can only be considered the ultimate form of efficiency if you define efficiency objectively. As she showed us with the library example, efficiency is often subjective.

The reason I assigned chapters 2 and 4 or chapters 3 and 5 and not just any two of the four chapters is that Stone discusses trade-offs between these goals at the end of each chapter. In America, we tend to believe that equality and efficiency are trade-offs. In debates about jobs, the economy, social welfare, education, and even healthcare; we hear the argument that increasing equality will make our economy less efficient. Again, we are relying on the straightforward assumptions of neo-classical economic theory here. If we assume that individuals are motivated solely by basic needs and individual well-being then this trade-off makes sense. If we instead believe that basic security, self-esteem, and community well-being are necessary for productivity then there may not be such a straight-forward trade-off.

What do you think? Can you think of an example where efficiency is subjective? Do you think efficiency and equity are trade-offs or does some degree of equity improve efficiency?

Do We Live in the Market or the Polis?

This week we switch gears to Deborah Stone's perspective on policymaking. Deborah Stone is a post-modern and interpretive policy scholar. This can be a difficult perspective for some people to grasp. It assumes that policy is really about story-telling, ideas, and argument. Policy analysts, policymakers, and citizens are not as concerned with trying to create efficient policies, but are instead using metaphors to try and make issues seem like one thing rather than another thing. The choice of these metaphors is strategic and meant to reinforce the worldview of the analyst, citizen, or policymaker.

Let's step back for a minute. What is Stone's book arguing against? She is arguing against the predominant view of policy choice as rational choice. The rational model stems from the market-based model of society. We have talked a little about this previously. In the rational model, the decision-maker goes through logical steps to make her decision. First she identifies the objectives or goals she wants to achieve, then she identifies alternative courses of action and the possible consequences of all the alternatives. She evaluates these possible consequences and selects the best alternatives. This should sound like the decision analysis process that Peters presented in chapter 4 (p. 89). Stone argues that this process is "missing the point" because politics is everything. Even in the rational model, decisions are ultimately political with the steps serving as rationalizations for the preferred choice.

In chapter one, Stone emphasizes the difference between the market model of society and the political model of society, which she calls the polis. Polis is the Greek word for city-state and she will use this term throughout the book to describe the model that she believes is closest to how the policy process really works.

We have talked a little bit about market failure in this class (see the notes on health insurance). Market failure occurs when individuals cannot use the rational decision-making process or when using the rational decision-making process does not lead to optimal societal outcomes. Some forms of market failure are commons problems, imperfect information, and externalities. These situations are seen as rare problems in the market model. In the polis, these are facts of life. This is because community is the major unit of analysis in the polis, not the individual. Everything we do has effects on the community and individuals think about both their self-interest and their community (or more appropriately communities) in their decision-making process. Tying the community interest to the self-interest of community members is the major policy issue in the polis. Information is never perfect in the polis by design. It is strategically manipulated and withheld by everyone. (Think about the last time you applied for a job, asked your professor for an extension, experienced a conflict with a loved one. My guess is that you strategically withheld certain information in these cases, as did the other party. It is socially expected to do so.)

There are two other major differences between the market and the polis. In the market, all resources are scarce and competition is the means of success. In the polis, many resources like social connections and advocacy skills grow with use. Stone calls this the law of passion. Stone published the first edition of her book in 1988, and we have since seen the introduction of these types of "anti-rivalrous" goods into market models. Open source software is the common example in the market because as more people use it, it becomes better and expands. The market also assumes that all individuals have equal power in transactions. In the polis, power is derived from all of the other components. Stone explains this much better than I can on page 32, "I save power for last because it is derived by all the other elements. Power cannot be defined without reference to them. It is a phenomenon of communities. Its purpose is always to subordinate individual self-interest to other interests - sometimes to other individual or group interests, sometimes to the public interest. It operates through influences, cooperation, and loyalty. It is based also on the strategic control of information. And finally, it is a resource that obeys the laws of passion rather than the laws of matter."

In summary:

The characteristics of the market model of society are:

Individuals are rationally self-interested utility maximizers. They make exchanges when trade is mutually beneficial Trading is not a necessity but a net benefit\ Competition for scarce resources They try to minimize costs and maximize benefits Competition leads to better outcomes for society.




The characteristics of the polis model of society are (from Stone p. 32):




Community is the major unit of composition with ideas, wills, goals etc. outside of the individual. There is a public interest beyond individual interests. Most policy problems are commons problems. Influence sometimes verging on coercion, cooperation, and loyalty are the major forms of interaction. Groups and organizations are the building blocks of the community. Information is never perfect. Some resources are scarce and rivalrous, but many are anti-rivalrous and abundant.




Stone believes that the polis model more closely represents the way we make and understand public policy.




It is important to keep these two models of society in mind as we continue with Stone. She uses a lot of examples from social policy - most notably, welfare and affirmative action - because of her background and interests as a scholar, but also because we can see the differences between these two models very clearly in the social policy arena. That does not mean that we cannot apply Stone to other substantive policy areas, and we will do just that as the course progresses.




So far, what do you think? Is this all just "touchy-feely" stuff or is Stone onto something? Do you think we are living in the market, the polis, or do you see evidence of both? Can you think of areas of policymaking where we rely on the polis model rather than the market model? Have you heard any politicians or scholars (aside from Stone) reference ideas from the polis model?