"There Ought to Be a Law!" – Instrument Choice: An Overview of the Issues

2. Policy Instruments: An Inventory (Cont'd)

2. Policy Instruments: An Inventory (Cont'd)

2.2 Complementing the Legal Instrument

Some alternative instruments are obvious – spending, for example. There is a vast literature on non-legal public policy instruments, and there is a modest consensus in this literature that core instrument categories appear to be (in addition to regulation, which was covered above), expenditures, taxes, some form of direct provision of services or goods, either by a government agency or a publicly owned entity, and the use of information or exhortation as a means of delivering policy (see Appendix for a summary).

Static Response: Choosing to do Nothing

Before tackling these categories, however, there is one that is virtually never discussed in the policy literature – doing nothing. The CRTC, as we noted earlier, decided to do nothing about regulating the Internet. The idea that "there ought to be law" assumes that there must be a government response for every problem. But a rational approach to instrument choice should consider the option of deliberately doing nothing. Until recently, this has in fact been the position of most governments on the issue of panhandling. Leave it alone.

"Declining to intervene" may appear as a "non-decision," which indeed it is if it has no rationale beyond either ennui or a simple desire to remain unengaged. But there can be several good rationales for declining to intervene. We will coin a term and categorize these rationales as "static response." Together they comprise a coherent set of considerations that should be part of any systematic process of instrument choice. In reading through the following, apply the rationales to the panhandling example:

Problem related rationales:
there is either no problem after all, or a problem that is not within the government’s priorities or its jurisdiction.
Resource related rationales:
the government does not wish to allocate resources for this problem.
Precedent rationales:
a policy intervention might set a precedent that could place unmanageable demands on government.
Self-corrective system rationales:
while there may be a problem, there is also a coherent system (social, cultural, religious, economic) at work that over time may correct it.

Information

The focus of this instrument is primarily on behaviour and on norms. By changing the information at the disposal of individuals, or their normative views, the behaviour founded on this information and these norms may change as well. It assumes that people have incentives to change their behaviour based on the information. Compared to law, the use of information is based on voluntary response. Insofar as it changes norms and attitudes over time, however, it may be more effective than coercion. Examples include codes, food and health guidelines, logos such as the EcoLogo of Environment Canada.

An information campaign on panhandling might be aimed at panhandlers themselves, at those who give to them, or at the wider public (an example of trying to change norms).

Expenditure

All government activity involves some expenditure, but the usual definition here is of monies in the form of grants, subsidies, transfers or even vouchers that lower the costs of some desired behaviour or outcome. The focus is on behaviour and to some extent on altering market processes to change the calculus of costs and benefits. It might also include property transfers (e.g., land grants) that reduce the cost of something to zero.

Expenditures aimed at panhandling would try to lower the cost of foregoing begging through increased income (welfare payments).

Taxation

As opposed to the simple raising of revenue, the focus of taxation as a policy instrument is to increase or reduce (if taxes are foregone – hence tax expenditure) the cost of certain behaviours. Like expenditures, the focus is on behaviour and on altering market processes to some degree. User fees, cost-recovery, and fines can be included in this category.

Taxes and fees require income to pay them in the first place, and so this instrument is limited in the panhandling case. However, by increasing tax deductions for donations to institutions, government might discourage spontaneous giving to panhandlers.

Service Delivery/Organization of Government

When governments want certain outcomes, they can aim at the processes that allocate resources, and which in turn affect behaviour. If a certain level of health is the desired outcome, governments can aim at the processes that allocate health resources, and either provide that allocation themselves through government services, or intervene in other market and institutional processes in various ways to achieve those outcomes.

The model of direct allocation of resources through government has been criticized in the last decade, and has often yielded to privatization, commercialization, contracting out, or some form of partnerships. Some of this shades off into the next category, below. The key point is that direct service delivery is always one option, but the more complex the resources being allocated, the more challenging the direct service model is.

With respect to panhandling, the option here would be to try to provide services such as shelter and food that would affect behaviour and hence the incidence of panhandling.

Capacity and Institution-Building

Ultimately the role of government is geared to facilitating the development of norms and processes in partnership with other social actors. It takes a more "organic" view of society as consisting not just of interacting individuals, but of collective entities and institutions which create contexts and supplementary norms within which people interact.

This is an admittedly nebulous category, but it appears in most classification schemes. It focuses primarily on norms and processes, and incorporates many of the instrument categories listed above. The rationale is captured in the notion of "distributed governance" or "meta-governance," which has several interpretations. One is that modern social processes are too complicated to be run in a command-and-control, rule-making fashion by government. Information is too widely dispersed, and processes and systems operate too rapidly and are too entangled. Another is that there is too much social diversity to allow tightly coupled norms to govern the entire system. Yet a third is that those closest to a problem or situation are best suited to dealing with it, though they may need help (the notion of subsidiarity).

Whatever rationale seems appropriate, it leads to the transfer of financial, informational, and organizational resources to third parties in order to build their capacity to achieve objectives which are both in their interest and in the policy-maker’s interest.

The development of voluntary codes with the help of government, for example, can be seen as a species of capacity building. So can agreements with First Nations to manage and deliver their own social services. Also included would be the creation/recognition of rights, which can then become the basis of claims that one can make – examples include the Charter, employment equity, and landlord/tenant acts. Ultimately the role of government is geared to facilitating the development of norms and processes in partnership with other social actors. It takes a more "organic" view of society as consisting not just of interacting individuals, but of collective entities and institutions which create contexts and supplementary norms within which people interact.

In the panhandling example, the approach would be to help community social service agencies, non-government organizations, the private sector, and the homeless themselves develop their capacities to deal with the problem. The role for government would not be to "solve" panhandling, but to facilitate and encourage social processes that would address the issue. An example of this approach is the federal Crime Prevention Initiative, which relies on grants and subsidies for local efforts at education and community building.

Instrument choice is not about selecting a single instrument to address a single problem. Problems come in complex matrixes, and policy responses usually consist of a matrix of instruments.

Several points should be kept in mind in thinking about this list of instrument categories (we will return to some of these shortly):

  • Instrument choice is not about selecting a single instrument to address a single problem. Problems come in complex matrixes, and policy responses usually consist of a matrix of instruments.
  • These instruments may be chosen à la carte and not only table d’hàte. There are advantages and disadvantages to each, and they satisfy different criteria, but in some measure they may be substituted for each other (e.g., a tax may be lowered or a grant provided; information and partnership might be substituted for subsidies).
  • Substitution of instruments is easiest when the instrument focus is roughly the same – behaviour, norms, or processes.
  • The "drift" in the rhetoric of instrument choice over the last decade has clearly been away from expenditures, taxation, and direct service delivery, and indeed from regulation.
  • Capacity and institution-building implies some degree of autonomy for third parties, to the point that they may make mistakes – but this in itself may increase capacity insofar as people learn from their mistakes.
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