By Soumya Chaturvedi
A statement that reflects the aspirations and goals of an institution and lays down the prospective guidelines or strategy to achieve the said aim can be termed as a ‘policy’. It is considered as determining constraints and imposing limitations on the activities of an institution by being a product of political influence. In this regard ‘public policy’ is a decision taken by the state to address a social problem along with laying down the precise strategy for implementing the decision. Public policy-making is not a one-time event, but a continuous process that involves dialogue, bargain, negotiation and acclimatizing diverse interests. Describing public policy-making as a mere technocratic exercise in the form of executive implementation as per (pre)defined rules of the game will be an underestimation, rather a misrepresentation. It is a complex process that in the process of constant interaction, gets influenced by socio-political, economic and other factors. The aforesaid factors bring about a contextual difference in policy-making process in developed and developing countries. Developing countries constantly witness instability in socio-political factors and environment which affect the public policy of the country. Thus, it becomes imperative to theorize the policy-making in developed countries to accommodate the influence of such factors. In this essay, the author will discuss the theoretical framework for policy-making by first giving an account of few policy-making models in Part I. In Part II, the role of narratives on the economy in general, on policy-making and amending, in particular, will be discussed. The essay concludes with an argument that a policy, especially in a developing country must be constructed in a theoretical structure while accommodating inter-disciplinary knowledge produced by several socio-political factors.
Theorizing Public Policy-making
In the realm of policy-making, there are certain well-known models. It is imperative to garner a basic understanding of these models in order to draw comprehensive criterion in a theoretical structure that a policy must seek to fulfill. One such model is ‘Rationalism’. According to this model, the process of policy-making involves making reasoned choices after contemplating the desirability of all the options available to resolve a public issue. The analyst is expected to rank the goals, identify all possible policy alternatives, predict the consequences, compare such consequences and then choose the best alternative. This model requires a thorough cost and benefit analysis before arriving at a conclusion and making a ‘rational’ decision. It thus considers the alternative policy choices on rational parameters. It is expected that the Rational Model for policy-making will yield solutions that are Pareto-optimal.
In the Systems Model, David Easton identifies intra-societal environment and extra-societal environment, where the former comprises of the ecological system, biological system, personality system, social system and latter of the international political system, international ecological system and international social system. According to this Estonian Systems or Black Box Model, these two environments provide inputs in the form of support and demand to the political system. Demands are the claims and supports comprise of laws, rules, and customs. These inputs are then converted into outputs by the institutions and policy-making personnel in the form of public policy. Interestingly, the Systems Model accommodates the feedback mechanism. It incorporates the idea that public policy implemented as an output has the capability to alter the environment and have a significant effect on the demand. Thus, new demands and supports may be created or few maybe withdrawn, creating a conducive environment for future policy decisions. This model ensures that diverse concerns and demands affecting the same policy are addressed, providing a comprehensive understanding of the policy, its implementation and its effect.
Incremental Approach is an outcome-driven model of policy-making. Lindblom, in his thesis, describes policy-making as a process which continuously builds from the given situation. He proposes that since there is ‘bounded rationality’, ‘successive limited comparison’ of the alternatives should be conducted. Based on the post-implementation analysis, incremental changes must be made to the said policy in order to ensure that the desired outcomes are met. This model ensures that a strategy that will work and deliver is identified, instead of the best strategy to achieve the desired goal. It also involves mutual negotiations and adjustments between the policy-maker and target audience of the said policy, thereby increasing the acceptability of the policy and the strategy deployed to implement it. Thus, policy-making under this model evolves through reciprocal and complex relations between technocrats, public functionaries, interest groups, other institutions, and participants.
A thorough analysis of the above mentioned models coupled with a basic understanding of practical constraints in the implementation of policy identifies four criterions that a policy must fulfill. The four attributes of such a policy knowledge framework are Comprehensive Outcomes; Culmination Outcomes; Pareto–Optimal Criterion; and Use of Nudge. These four attributes will be explained using a common example of implementation of a policy that would ensure a single unified indirect tax for India, i.e. Goods and Services Tax [‘GST’]. Comprehensive Outcome is a process–driven attribute of policy–making. This criterion expects a policy to consider the process that will be necessary for implementing a policy. It takes into account the agency consideration, its composition, functioning, powers, and responsibility. It must also fulfill the feasibility criteria. For example, for the purposes of implementing GST, the policy must ensure a GST Council is established. The policy must identify the specific role of the Council, its powers, and responsibilities. The policy must also identify the resources required to constitute the Council. If the GST Council is unable to function due to a shortage of resources, the entire policy will fall flat. Culmination Outcomes is an outcome–driven criterion of policy–making. According to this criterion, a policy must ensure that it is strategized in a manner where the desired and intended outcomes are being met. The purpose of implementing GST was to ensure that payment of tax is made easier and tax loopholes are corrected. There must be an increase in revenue collected. If GST falls short on these two intended and desired outcomes, it will vitiate its reason for formulation.
The third criterion is Pareto–Optimal Criteria. Pareto–Optimality is a state where the allocation of resources is strategized in a way that preference of one individual or group is not made better off and the cost of making a preference of another individual or group worse off. In policy–making, higher preference satisfaction of, say ‘A’ cannot outweigh the interest of ‘B’ through a policy. GST policy is intended to make the businessmen better off by more institutionalized mechanism in claiming tax rebates. This, however, cannot be done at the cost of placing consumers in an adverse situation. Use of Nudge is the fourth criterion. According to this criterion, a state must deploy some form of ‘Libertarian Paternalism’ in order to make the policy implementation smooth. Libertarian Paternalism is an idea that affects the behaviour of public and private institutions by nudging them to act in a certain way, while also respecting their freedom of choice. Instead of imposing a policy, the state must align incentives in a way that people accept the policy and act accordingly while exercising their free will. Implementation of GST must offer businessmen immediate tax advantages while reducing the cost of some products for the consumers. Such incentives will nudge the target groups in accepting the policy and thus, ensuring smooth transitioning from multiple indirect tax regime to GST regime.
Role of Narratives in Policy-Making
The narrative is said to be an event or a story which has the capability and potential to stimulate emotions or concerns of others while advancing self–interest. It may possess direct or indirect human interest in order to be stimulating. The narratives have an inherent tendency of spreading or ‘going viral’, which sometimes mutate and can cause unpredictable changes in the political society. In the realm of social sciences, narratives as a concept of study have gained currency. The area of narrative study includes, but not limited to narrative psychology, the narrative of religious studies, storytelling sociology, and narrative criminology. The common thread that runs in the study of narrative is that individuals are unable to present their specific demands, philosophies or objectives when asked directly. However, when asked to narrate a story or present a narrative, they are better able to describe their situation, opinions, and demands. It was only around the twentieth century when scholars agreed that narratives are just not of entertainment value. They have the potential to reveal about the thought process in humans and are central to the understanding of human motivation. Often individuals are seen to resort to narratives in ambiguous situations or where they do not know how to respond. Thus, narratives have a subtle manner of producing ‘social norms’ that govern, although partially, the activities of individuals residing in a society.
Predicting the success or failure of any policy is very difficult, specifically due to the involvement of narratives and their influence on human activities. It thus becomes imperative to include the social and mental processes in the policy space to ensure the success of a policy in resolving the social issue. In the context of policy–making, narratives can play a significant role in diagnosing the effectiveness of the policy and provide feedback that can induce changes in the policy, making it much more efficient. Further, since the perfect background information on the situation does not exist, narratives can provide assistance against the issue of information asymmetry. Ordinarily, narratives from four different perspectives can aid the process of policy–making. These are Humanistic Perspective; Contextual Perspective; Behavioural Perspective; and Agency Perspective.
Humanistic Perspective accounts for narratives of the individual from the targeted groups or stakeholders that are affected or concerned with the implantation cycle of a policy. It involves every subgroup of the targeted audience of the policy, their experiences, expectations, and concerns. For instance, the GST policy example. The said policy automated the entire process of claiming tax rebates. This might be convenient for big corporate houses and firms. However, micro, small and medium sized enterprises and firms may not be technically empowered. They might not possess the technical skills required to operate the GST network. This places them in a disadvantageous position where the GST policy has become a cumbersome process. It may require to alter the policy–making process and creating space for a new strategy to facilitate the micro, small and medium sized enterprises. Contextual Perspective requires the policy to pass the endogeneity test in the context of the particular region or country, accounting for different socio–cultural features. It essentially assesses the policy to the root causation of the social problem. If the policy addresses the real cause of the social problem, then it can be categorized as a comprehensively articulated policy. Tax collection in India generally displays a figure that is lower than expected. If the intention of GST policy is to increase the tax revenue, it is important to ascertain if the target the policy should have been indirect tax or direct tax collection. There may be a case where the prime focus of the policy should have been a collection of direct taxes. Thus, GST policy must successfully pass the endogeneity test in the backdrop of socio–cultural features of India, in order to be a sound policy.
Behavioural perspective takes into account the feedback received from Comprehensive Outcomes and Culmination Outcomes [from the aforesaid policy knowledge framework] in the form of a narrative from the implementation cycle of the policy. If the GST policy assures that post-implementation the prices of essential goods will fall, then passing of such benefit to the consumer group becomes important. A feedback stating that the desired outcome of reduction is not being met as businessmen increased their profit margin instead of passing it down to the consumer demanded to alter the policy text. The Council must amend the policy to include a strategy for creating deterrence against such actions of the business community. Agency Perspective involves the opinion and concerns of the executives and agencies involved in implementing the policy. The feedback provided by them narrates the practical course and impediments involved in the implementation of the policy. A policy cannot always be strategized to address the unforeseeable. Taking the Agency Perspective into account will prepare the policy for such new and different scenarios. It also builds a sense of confidence in the agency that their concerns are being acknowledged and reciprocated with a plausible solution. Thus, this ensures a positive commitment toward implementing the policy and realizing the aim of solving the social problem.
In order for a policy to realize the intended outcomes and achieve the desired goals, the process of policy-making has to go beyond its technocratic mandate. The case of developing countries is comparatively more peculiar due to its unstable socio-political environment. In this context, the policy as a governance tool to address this instability in the said socio-political environment must fulfill certain criteria constructed in a theoretical structure to solve the social problem. The policy knowledge framework mentioned above provides the desired theoretical structure by identifying four criteria that a public policy must fulfill, namely, Comprehensive Outcomes; Culmination Outcomes; Pareto–Optimal Criterion; and Use of Nudge. Further, narratives have proven to project the rapid changes in the society. Therefore, the policy knowledge much accommodates the narratives from Humanistic Perspective; Contextual Perspective; Behavioural Perspective; and Agency Perspective. These eight criteria will comprehensively provide a holistic theoretical structure to the policy-making process, making it not merely a technocratic exercise with bureaucratic implementation, but an interactive inter-disciplinary body of knowledge aimed at addressing social problems and aiding indigenous approach to development.
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Soumya Chaturvedi is a first year Masters’ student at Jindal School of International Affairs.
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