Policy analysis in the wild
Human societies are inherently complex, shaped by layers of moral values, cultural norms, laws, and unwritten rules that have evolved over millennia. Open societies, Gerald Gaus tells us, are even more complex than others, since they allow room for greater freedom and diversity. In many ways the extra complexity makes open societies better places to live. However, as Gaus cautions, complexity also poses challenges for the design of public policies. This essay explores the nature of those challenges and some strategies that policy analysts can employ to navigate them.
The challenges
The central challenge is simple enough to state: The inherent complexity of an open society makes it impossible to fully predict the effects of policy changes. As a result, says Gaus in his final book, The Open Society and its Complexities:
The ambitions of so much political philosophy—guiding society to a fully just, egalitarian, libertarian, socialist, or capitalist destination—are almost surely unachievable in a complex world. In this sense, complexity defeats some of the most enduring aims of political thinking (p. 237).
This unpredictability arises from two features of an open society. One is that such a society consists of many institutions linked by many interdependencies (p. 187). If there were no interdependencies, then a society would be perfectly “modular,” in the sense that it would be possible to modify one institution without concern that doing so would undo yesterday’s modification of some other institution. However, when changes to one institution affect many others, complexity gets out of hand. Predicting the effects of changes in social policy, beyond the very short term, becomes as difficult as predicting the weather.
The other problem is what Gaus calls “reflexivity.” In an open society, we cannot assume that all citizens will simply obey laws or directives that a central governor issues. Instead,
many citizens will perceive the declared social goals as exogenous—as imposed on them by an external authority. In these cases, the reflexivity of citizen responses will be crucial: citizens will decide their best responses to institutional requirements, and these cannot be controlled by governments. It is always important to remember that such reflexivity is not simply a matter of whether they will obey but, if they obey, how they will do so.
As an example, Gaus cites a famous 1975 paper by economist Sam Peltzman. Peltzman analyzed the actual effects of mandatory seat belt laws, which had been implemented in pursuit of the laudable social goal of improving public safety. What he found was that drivers, if they buckled up as directed, which not all of them did, responded to the greater feeling of safety by driving less carefully. As a result, the frequency of collisions with pedestrians and bicyclists increased. The effect on public safety was at best ambiguous, and in some readings of the data, absolutely negative.
Authoritarian rulers make efforts to stamp out reflexivity, yet for an open society, reflexivity is not a bug to be eliminated, but a feature to be cherished. “Agents must have the freedom to reflexively adjust their actions to the decisions of others,” Gaus says. Without the freedom to explore and adjust, he fears that democracy will only lead to group conflict, rigidity, and oppressive enforcement of social conformity. (p. 245).
Ignoring the unpredictability that arises from complexity and reflexivity has led to many policy failures. “Transplants” are one category of such failures.
If the Swedes have muddled through to an acceptable welfare policy, there is no good reason to think that the Americans can take over this policy with similar results. The Swedish policy is embedded in a distinct complex system, with different connections and norms that have evolved along their own unique path (p. 230).
For another example, consider the failure of privatization in Russia in the 1990s. American advisors, having observed that the economies of all prosperous democracies are based on private ownership of the means of production, advised the government of Boris Yeltsin to make privatization of state industries one of its first reforms. Evidently, they gave little thought to the innumberable linkages between private ownership and many other institutions, such as an independent judiciary, enforceable property rights and contracts, and implicit social rules and values. The result, rather than a widely shared prosperity that might have served as a basis for a lasting democracy, was an unbridled kleptocracy that paved the way for a return to authoritarianism under Vladimir Putin.
There is much more on the hazards of complexity, unpredictability, and reflexivity, but this is enough to give the flavor. After a while, the would-be policy analyst begins to wonder how it can all be read as anything other than a counsel of despair. But that is not what Gaus has in mind. Despite his many caveats, Gaus does, as the next section shows, offer some constructive advice.
What can be done?
The adjacent possible. One often repeated piece of advice is to focus on the “adjacent possible,” a phrase Gaus attributes to the biologist and systems theorist Stuart Kauffman. The idea is to give up on utopia and explore what can be done to reduce oppression and injustice in the social neighborhood we actually live in.
For example, economists like me have long argued for carbon taxes as the best of all policies to deal with climate change. Unfortunately, as critics have repeatedly pointed out, a broad carbon tax is just not going to happen in the United States any time soon (though it’s too soon to give up the on the idea). It is a theoretically elegant idea that has failed to win approval when brought to referendum in even the most liberal of states. But if a carbon tax does not lie within the adjacent possible, what does? How about a tax on methane, a potent greenhouse gas that is estimated to account for about a quarter of current global warming? Lo and behold, congressional negotiators managed to slip a very substantial charge on methane emissions into the 2022 Inflation Reduction Act. Although this might turn out to be the single most effective feature of the IRA, hardly anyone noticed.
Hindering the hindrances. Another fruitful direction for policy lies in what Gaus, borrowing a term from earlier British thinkers, calls “hindering the hindrances.” By that he means removing “impediments to people taking up options and effectively adjusting their behavior” (p. 196).
Many of those impediments result from the poor design of prior policies or from the perverse interaction of multiple prior policies, each of which was well-intentioned in itself. The U.S. welfare system provides a case in point. Each thread in its tangle of overlapping programs (SNAP, TANF, EITC, and many more) was intended to help poor families achieve a better life. Yet these programs jointly create a poverty trap that undermines work incentives for the near-poor and blocks their efforts to achieve true self-sufficiency. More cash assistance, fewer in-kind programs, and better coordination of separate policies could mitigate the problem even without radical system change.
Rules of the game. Poor policies are not the only thing that can hinder social organization. Often, even very complex social arrangements emerge spontaneously under the guidance of the “invisible hand” of self-interest. For example, in small towns of the past, no one had to order the butcher, the baker, and the greengrocer all to set up shop on the same street. It was in their self-interest and the interest of shoppers for them to do so. Later, without directives from a central planner, supermarkets emerged as a further improvement of the systems for moving food from farm to table.
Sometimes, however, self-organization is blocked not by bad policy, but by strategic dilemmas in which common interests conflict with private interests. In such cases, a change in the rules of the game may be needed to help a community break out of a suboptimal situation. A case in point, much in the news as this is written, concerns the construction of pipelines and electric transmission lines.
In this case, the common interest is an energy supply that is reliable, clean, and cheap. The conflicting private interest is that of individual communities or landowners who don’t want a pipeline or power line across their own property. If people could vote behind a veil of ignorance, they would likely support the common interest against the small a priori possibility that they would be the ones whose cornfield was excavated for a pipeline, but such votes take place only in the realm of political philosophy.
In a case like this, there is an obvious role for government, but what kind of a role? The undemocratic option would empower an energy czar to approve siting for each item of infrastructure. An alternative that is more consistent with the ethos of an open society would be to limit the government’s role to that of setting rules by which decisions would be made, with opportunities for democratic input. The United States currently has such a set of rules, but they are replete with so many veto points and opportunities for delay that the construction of energy infrastructure has become cripplingly expensive and time-consuming.
In the past, veto points and delays have often suited those who see themselves as friends of the environment. They have made it possible to stop or delay fossil fuel projects such as the Keystone pipeline. However, fossil fuel pipelines are not the whole story. It is becoming increasingly clear that the transition to a clean-energy future will require the construction of thousands of miles of new electric transmission lines, something that will be at best slow and expensive, and at worst impossible, under the prevailing rules. Reaching agreement on a new system for the permitting of green infrastructure will be a daunting test of the ability of the American version of an open society to cope with the challenge of climate change. Suggesting new rules and critiquing the proposals of others will provide a rich vein of work for policy analysts.
The policy analyst as public entrepreneur
In exploring the adjacent possible, hindering the hindrances, and devising rules of the game, policy analysts do not seek to impose solutions to policy problems from the top down. Rather, says Gaus, borrowing a term from Paul Dragos Aligica, they serve as public entrepreneurs. The function of the public entrepreneur is to spur recognition of problems, propose solutions, and provide opportunities for discussion and exchange of information.
The role played by public entrepreneurs is much like the role that Henry Hazlitt saw for economists when he wrote, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.” Hazlitt’s characterization of the work of economists is similar to Hayek’s suggestion that they should serve as gardeners, rather than engineers (Gaus, p. 241). Whether gardener or artist, the policy analyst has neither full knowledge of the interactions of key variables nor the full ability to manipulate them.
Despite all temptations to treat the social world as linear and determinate, the policy analyst needs to face up to a deep problem:
[T]hough our policy thinking usually focuses on many-to-one relations, complex systems abound in many-to-one-to-many relations: one policy is an input into another, which ultimately may be an input into the first. Such feedbacks easily make the prediction of the effects of a policy incalculable. Add to this that our target variables are themselves usually systems of related variables, and we can begin to see why so much sectoral goal pursuit is a hit-and-miss affair (p. 138).
In the face of this reality, Gaus counsels a strategy of focusing policy changes on a few variables and evaluating outcomes each time they are changed. If the outcome is an improvement, the policy can be applied more forcefully or more widely; if the outcome is disappointing, it is time to try something else. Gaus calls this “climbing gradients,” an expression that calls to mind an explorer trying to find a way through a mountain pass in a dense fog. Such a strategy can be dressed up as “learning-based governance,” although he admits that “muddling through” may be a more realistic description (pp. 238-39). By working on a small scale, constantly monitoring feedbacks, and avoiding utopian schemes, the policy analyst can hope to do more good than harm. Toward the end of his book, Gaus sums up his position in these terms:
The two great errors of thinking about reform in complex societies is that it typically can be effectively top-down dictated, or that it is essentially impossible for the governor to do anything (p. 240)
 | A guest post by
|