Comparative Public Policy (Fall 2007)

Some End of Semester Updates

A few articles that I've collected over the past few weeks that might help you round out the material we've covered...

Jonathan Cohn, the author of Sick, has a great piece over at TNR on the debate over Massachusetts/Swiss-styled mandates. It's aimed directly at Barack Obama, but it does a great job covering the general issues as well.

The NYT's Bits Blog has an update on the upcoming spectrum auction. Google has officially entered the bidding, and it looks like they may have a silent partner in Apple.

Although we never explicitly covered tax policy in this class, had we done so I would have almost certainly discussed supply side economics and the ideology of tax cutting. Finding good non-technical readings on this is hard, however, or at least it was until this week's Time Magazine came along. Here's everything you need to know, all in 750 words or less.

I mentioned the Warner-Lieberman climate change bill in class last week. Friends of the Earth has an interesting analysis of the legislation here, as well as a comprehensive round-up of the Energy bill here.

Last but not least, in preparation for the final lecture of the semester, you'll want to take a look at this new Pew survey of Hispanics in America. The debate over immigration policy, it would seem, has led to a dramatic shift among hispanics away from the Republicans and towards the Democrats.

UPDATE: Two more things worth mentioning. The NYT has a long-running series on the environment in China, and this weekend they've added a new piece that focuses on the link between pollution and transportation.

Second, in yet another example of US mayor's moving policy forwards, SF Mayor Gavin Newsom has proposed putting a proposal for a new carbon tax on the 2008 ballot. What's particularly interesting is that the plan as outlined will both be revenue neutral (i.e. no net tax increase) and be a tax cut for businesses and individuals that are able to aggressively "go green."

Environmental Policy Readings

It looks like one of the readings - "As a Matter of Fact, Money Does Grow on Trees" from Outside Magazine - is no longer available in an easy-to-print format. As such, no PDFs for you. You'll have to make do with the web version that is available for free here:

http://outside.away.com/outside/features/200503/money-and-the-environment_1.html

Net Neutralty

A few of you after class asked for links that can provide more info and direction on net neutrality issues. Ask and you shall receive...

Savetheinternet.com is the leading net neutrality activism coalition. Their list of member organizations is quite enormous. In fact, its so big that this link alone should be enough!

Communication Policy Links

For those of you looking for information on current communication policy controversies, here a re a few stories that may be of interest:

First off, as I will explain a bit tomorrow in class, there is a major spectrum auction taking place here in the US in the next few months, and it may have huge consequences for wireless services over the coming decades. Google plans to place a bid in the auction, and given their ever-rising stock price, there's a good chance they may even win. FT has a good background here. Google has their own public policy blog here.

Speaking of the Google blog, there was a great post there a few days back on the way the Internet is changing elections in Europe. This may not directly relate to public policy, but it is worth reading nonetheless. [More from the Washington Post here]

In cable TV news you might actually be able to use, the FCC has just announced a major shift in the policy regulating cable TV in apartment buildings. Short version? No more monopolies. More here from the Washington Post.

Last but not least, Zogby, one of the more independent minded polling firms in the US, just released the results of an Internet attitudes poll today. Most of it is, well...dumb, but the public policy questions are worth a look.

Exam Questions (Updated Thrice)

Some answers to some question I have received throughout the day:

Direct services v. transfers/subsidies:
Direct services are when the government actually provides a service directly to the people. Transfers and subsidies can be in the form of cash, tax credits, or "in-kind," the last of which can be either the direct provision of goods purchased by the government (ex: cheese) or the provision of vouchers that can be exchanged for goods in the private sector (ex: food stamps).

An example from the area of child care: A direct service would be a government owned and operated child care center. A transfer would be a child care tax credit given to individual parents or a voucher that could be redeemed for child care service in the private sector.

The critical distinctions for this class are two-fold:

First, does the government provide the service directly, or does it do it some other way? Is it, in other words, a fully public service, or is it some mix of public and private? To return to the example of cheese...unless the government runs dairy farms that produce the cheese that is being provided to citizens, it isn't direct.

In general, SD systems favor direct public provision whenever possible; CD and liberal systems do not.

Second, are the benefits universal or are they means-tested? SD systems favor universal benefits, liberal systems avoid universal benefits whenever possible, and CD systems are somewhere in the middle, with programs usually structured around specific criteria.

Other classes might dig deeper into the distinctions between cash payments and in-kind transfers. We haven't done so yet, and to be honest aren't likely to do so by the end of the semester. For us it has been direct service provision vs. everything else.

Category based programs involve benefits that are granted to individuals who, as the name suggests, meet a specific set of criteria. You have to have kids, for example, to claim a child tax credit. Criteria-based benefits can be either universal or means-tested. CD systems love their universal criteria-based programs - if you work, for example, you must participate in the pension program. Liberal systems, on the other hand, like means-testing so much that they often favor means-tested criteria-based programs.

The current debate over S-CHIP reauthorization here in the US is a perfect example of this. Defenders of the program focus on how it helps subsidize health coverage for children who are both poor and uninsured. Opponents complain that the means-testing isn't strict enough, and that as a result, money will be spent on those who are not "in need." And that, they fear, will over time allow the program to morph into a universal criteria-based program, one that is open to all children regardless of their family's income level. Everyone agrees on the criteria; what they are debating is the appropriate level of means-testing. To people living in either SD or CD systems, the debate must look pretty bizarre.

This is not to suggest, however, that liberal systems don't also have universal criteria-based programs. So long as the program is aimed at the "middle class," the US loves to build criteria-based programs that are "open to all." The home mortgage interest deduction and the child tax credit are two examples of this. What you almost never see in the US, however, are truly universal programs that are open to literally everyone, with our lack of a universal health care system the most obvious example.

American Exceptionalism:
Both arguments and history are important here. The cultural argument is based on an unchanging political culture across US history. The structuralist argument is about how institutional fragmentation has blocked efforts to reform social policy throughout US history. The "policy legacy argument" is about how the past affects the future. And the "gender politics argument" is about how both policy legacies and culture came together to shape reform at a key moment in history. So...although you don't need to know all of the historical details, you do need to know enough of them to illustrate how each of the arguments work.

Types of Spending:
I've received several questions about the definition of "public spending." Think of it in terms of public sector spending vs. private sector spending. In terms of the Huber + Stephens argument, the longer the SD party is in control, the less their system is going to rely on private markets / businesses to solve problems, and thus the more "public sector spending" you're going to see.

Social Insurance v. Public Assistance
Apparently I've used a definition slightly different than the book, and although the book is not wrong, it is incomplete.

The key distinction between assistance and insurance is funding. Social Insurance is funded directly by individual contributions, so it is usually only available to those who have paid into the system. You can't collect Social Security or unemployment insurance, for example, if you have never worked and paid into the system. The one major exception is health care benefits, which are a form of social insurance that in many countries is in fact universal.

Public Assistance is taken from general tax revenues, and although these programs are usually tested (either through a means-based system or through other non-income criteria), they can also at times (but rarely) be universal.

The book's definition is simply too narrow.

Final Update:
No new Q+A's to pass along. Instead, a format update. There will be 6 short answers, and you will be asked to choose 4. There will be two essays, and you will be asked to choose 1.

Good luck!

S-CHIP Health Care Reform

For those of you following the ongoing debate over the proposed expansion of the S-CHIP health care program here in the US....

Jonathan Cohn provides an excellent background here.

Ezra Klein has more here.

If you prefer your updates in video form, this should take care of things:

Helath Care With Hillary

Jonathan Cohn, the author of the book Sick that you will be reading later this semester, has an interview with Hillary Clinton just now published over at TNR. There's some excellent material in there, both on the policies she has proposed and on the strategies she plans to use if elected to get them passed.

Incarceration Rates

A quick followup on the chart showing incarceration rates across the OECD. Just this past week, U.S. Senators Webb and Schumer, along with U.S. Representative Maloney, held a joint hearing on the issue. Here's some data from a fact sheet they released just prior to the hearing:

KEY POINTS

§ The United States has the highest reported incarceration rate in the world. While the United States currently incarcerates 750 inmates per 100,000 persons, the world average rate is 166 per 100,000 persons. Russia, the country with the second highest incarceration rate, imprisons 624 per 100,000 persons. Compared to its democratic, advanced market economy counterparts, the United States has more people in prison by several orders of magnitude. Although crime rates have decreased since 1990, the rate of imprisonment has continued to increase.

§ Growth in the prison population is due to changing policy, not increased crime. Many criminal justice experts have found that the increase in the incarceration rate is the product of changes in penal policy and practice, not changes in crime rates. Changes in sentencing, both in terms of time served and the range of offenses meriting incarceration, underlie the growth in the prison population.

§ Changes in drug policy have had the single greatest impact on criminal justice policy. The Anti-Drug Abuse Act of 1986 created mandatory minimum sentences for possession of specific amounts of cocaine. The Act instituted a 100-to-1 differential in the treatment of powder and crack cocaine, treating possession of 5 grams of crack cocaine the same as possession of 500 grams of powder cocaine. Crack cocaine is typically consumed by the poor, while powder cocaine, a significantly more expensive drug, is consumed by wealthier users. Mandatory minimum sentences for low-level crack-cocaine users are comparable (and harsher in certain cases) to sentences for major drug dealers.

§ The composition of prison admissions has also shifted toward less serious offenses, characterized by parole violations and drug offenses. In 2005, four out of five drug arrests were for possession and one out of five were for sales. The crime history for three-quarters of drug offenders in state prisons involved non-violent or drug offenses.

§ The prison system has a disproportionate impact on minority communities. African Americans, who make-up 12.4 percent of the population, represent more than half of all prison inmates, compared to one-third twenty years ago. Although African Americans constitute 14 percent of regular drug users, they are 37 percent of those arrested for drug offenses, and 56 percent of persons in state prisons for drug crimes. African Americans serve nearly as much time in federal prisons for drug offenses as whites do for violent crimes.

§ The U.S. prison system has enormous economic costs associated with prison construction and operation, productivity losses, and wage effects. In 2006, states spent an estimated $2 billion on prison construction, three times the amount they were spending fifteen years earlier. The combined expenditures of local governments, state governments, and the federal government for law enforcement and corrections total over $200 billion annually. In addition to these costs, the incarceration rate has significant costs associated with the productivity of both prisoners and ex-offenders. The economic output of prisoners is mostly lost to society while they are imprisoned. Negative productivity effects continue after release. This wage penalty grows with time, as previous imprisonment can reduce the wage growth of young men by some 30 percent.

§ Prisons are housing many of the nation’s mentally ill. Prisons are absorbing the cost of housing the nation’s mentally ill. The number of mentally ill in prison is nearly five times the number in inpatient mental hospitals. Large numbers of mentally ill inmates, as well as inmates with HIV, tuberculosis, and hepatitis also raise serious questions regarding the costs and distribution of health care resources.

§ The United States faces enormous problems of offender reentry and recidivism. The number of ex-offenders reentering their communities has increased fourfold in the past two decades. On average, however, two out of every three released prisoners will be rearrested and one in two will return to prison within three years of release.

UAW + GM Deal (UPDATED)

As I mentioned in class today, the deal between the United Auto Workers (AUW) and General Motors (GM) has enormous implications for the issues we are studying this semester. Here are a few articles that provide a good background on the story:

First off, the front page story, agreement overview, and background details from the New York Times. They aren't perfect, but they do provide a great overview of the issues involved.

The Detroit papers are always a good place to turn for auto industry news. The Detroit Free Press provides some analysis here, and the Detroit News has an extensive package of news and analysis here.

LAst but not least, in case this is something you are considering including in your paper, Automotive News will provide complete details from an industry perspective here.

UPDATE: One thing worth mentioning from the NYT article. This section, which appears near the end of the front page piece, isn't just wrong, it's nonsensically wrong:

Beyond the bookkeeping effect of VEBAs, the health care funds could create a kind of incentive for Detroit companies and the union to modify their behavior.

....U.A.W. members, assured of health care benefits that were the envy of the labor movement, had little incentive to take better care of their health, since their generous coverage would pay for most any ailment.

By contrast, Toyota, which pays premiums only for workers, not their families, has fitness centers at its factories and requires newly hired workers to exercise two hours a day during their training period.

Kevin Drum, the blogger for Washington Monthly, explains in brief what is wrong with this here. I will most definintely discuss this when we get to health care later in the semester. Here's Kevin's version:

Toyota funds employee healthcare through a mandatory payroll tax that stays the same regardless of whether its employees are healthy. The funding system itself provides no incentives one way or the other to stay healthy. Furthermore, Japanese payroll taxes heavily subsidize the healthcare system for nonworkers, which means that, in essence, Toyota is paying for healthcare for everyone, not just its workers.

Japan has universal healthcare. Everyone is covered no matter what, so Japanese workers and their families have every bit as much incentive to overuse the healthcare system as American autoworkers. There's nothing about this entire passage that makes any sense. What's it doing in the story?

This idea of incentives is central to the argument made by opponents of universal health care. In its most basic form, the argument claims that if individuals are provided with free coverage, they will use health services far more often than if they had to pay at least some, or perhaps even all, of the costs of coverage themselves. Further, it claims that in such "free" systems, individuals will be far less likely to take care of themselves, as they are aware that if and when they get sick the costs of treatment will be covered by someone else.

A few seconds of thought should show the folly of this argument.

First, it assumes that people do not have a preference between being sick or healthy, or more specifically, that the only thing that determines this preference is the cost of care. I don't know about you, but I'd prefer to be healthy every day of my life regardless of who pays the costs when I get sick. Financial considerations are not my primary motivator here, not even close. But if you believe the NYT, GM workers aren't like this. Financial costs, apparently, are what drives their consideration about sickness and health. All that matters to them, apparently, is who bears the financial burden.

Second, it assumes that people have a preference for going to the doctor over not going to one. Again, I don't know about you, but I don't enjoy my visits to the doctor, even when I am sick. I, like most people I known, put off such visits. The problem, of course, is that such visits are at times necessary, and that by delaying such visits, we often make our medical problems much worse, but in terms of heath outcomes and costs.

And third, it assumes that individuals should shop around for the best price when choosing a doctor. Again, I don't know about you, but this is not how I work. Nor, frankly, should it be. I'm not an expert on medicine, and I never will be. As a result, I don't have to the knowledge necessary to make an informed choice about which doctor to see. I rely on my primary care physician to do that for me. Now it is true, I have no doubt whatsoever that in a perfect world - a world where every citizen knew as much about medicine as their doctors - we could in fact create a system that lowered costs by relying on citizens to shop for doctors based on both skill and price. But let's be honest; we don't live in that world and we never will.

Still not convinced? Try this: Explain to me how someone on a stretcher in an ambulance is supposed to shop around for the best combination of price and care in the middle of their emergency. Should they have to shop for the best value in ambulance care, or should it just be confined to their choice of hospital? Defend your choices. If you cannot - and if you are not willing to subject yourself and your family members of the system you are defending - than you need to be very, very careful about making arguments for a system that envisions patients as consumers in a big, open, free market.

One last thought before I go. The US has by far and away the most decentralized, market based system of any of the advanced industrialized nations in the world. Despite this, we spend roughly double the amount everyone else spends on a per capita basis. And our health outcomes are in most cases no better than middle of the pack. The ""more incentives, please" argument suggests that we can fix this imbalance by tilting further away from the systems created by other nations.

More on this later in the semester...

Paper Assignment

I've uploaded details about the paper as a PDF under Course Documents over on our CourseInfo site. I'll bring hard copies of the assignment with me to distribute and discuss briefly before Thursday's lecture.