Implications

Economics that is based on exogenous preferences inevitably ignores rhetoric, which focuses on persuasion. However, this omission may limit the value of some economic analysis, especially in relation to behaviour in deliberating on indirect or collective policy issues.

146 _{This point could be qualified. Changes might occur in the early days after introduction and before the} legislation is entrenched if clear flaws are identified quickly or if there is a change of government.

A theoretical ―ideal‖ economic approach to policy making might appear as follows. Begin with an assumption of free, perfect information (a parallel to the zero transaction cost assumption) and then all possible policy alternatives can be considered. Each would have all the costs and benefits identified and measured, and the optimal policy selected using an appropriate decision rule. A policy assessment structure based on this approach has been developed for general use by the Ministry of Economic Development (Regulatory Impact Analysis Unit, 2007a).147

In other disciplines, a range of concepts are emphasised that could be grouped under the umbrella term of ―macro-rhetoric‖. In particular, framing, the choice of language and promotion of key terms, and agenda setting and denial are considered by some outside economics to be central components of political and social activity. Hardin‘s ―street- level epistemology‖, along with Mackay‘s popular delusions, also suggests that at times viewpoints and ideas can become widely accepted without being strongly justified. Processes whereby groups may be motivated to become active are described by Cobb and Ross, Bryce, Schattschneider and others. These influences are important in the processes of both political law making and the implementation of laws, and so are relevant to the topic of this thesis.

An approach such as that in the Ministry of Economic Development structure is unlikely to mesh well with a political environment based on rhetoric and traction. In such an environment, parties select their preferred policies, after which they operate in a political arena to put their policies into practice. Detailed scrutiny at this late stage would generally be unwelcome, especially where it involves consideration of numerous alternative options (including those of opposition parties).

Consequently, even without consideration of costs of analysis with its associated requirements of information and expertise, an economic approach may not be politically feasible. Economists should therefore be aware of the constraints on policy determination arising from the political process. To quote Simon:

147 _{In addition, a 66 point checklist, primarily of legal technical criteria, is provided in guidelines from the} Legislation Advisory Committee (2007).

―The dream of thinking everything out before we act, of making certain we have all the facts and know all the consequences, is…the dream of someone with no appreciation of the seamless web of causation, the limits of human thinking, or the scarcity of human attention.‖ (Simon, 1971, p. 47)

Downs (1957) focused on politics, addressing the issue of choice of policies by parties. However, from either an economics or a political science perspective, there are limitations on the relevance of Downs‘ propositions arising from his assumptions of rationality and absence of false information. As has been shown, there are bodies of literature which can be tapped to suggest an alternative approach and to yield alternative propositions.

This chapter indicates some of the possibilities when Downs‘ approach is taken together with some of the points in this policy-related literature. The propositions that are presented in Section 5.3 collectively paint an interesting picture of an environment in which people are persuaded to subscribe to particular viewpoints and policy decisions are made. While any theoretical viewpoint is merely describing an analogous structure to the real world, it may be emphasising some aspects which are important.

The picture is one of a limited number of issues commanding attention at any one time, with groups and parties competing to control or influence the agenda. Where an issue has enough attention to gain traction, parties will take a position on that issue. They are less likely to try to promote a new issue, and the media will generally focus on issues which have already achieved traction. Where institutions have been established in relation to an issue, those institutions have an incentive to promote and broaden the issue. Public opinion tends to follow issues that are seen to have wider support or are supported by the current government. It is guided not so much by reasoned debate as by authority, celebrity endorsement and framing, and plausible but flawed arguments may be used when they are persuasive and politically desirable. The political focus tends to be more on agenda setting and denial, competing for public attention and political support on issues, rather than on deliberation on policy options. Governments will not wish to have attention drawn to issues that are not on the agenda, including laws that have been passed, and so monitoring on these matters will not be encouraged.

These alternative propositions build on concepts and findings from a range of literature beyond the normal bounds of economics. Collectively, they suggest that the political process may fail in its function of making laws and monitoring and revising laws. Outcomes may be based more on the result of competing political forces than on a conceptual ―ideal‖ of reasoned evaluation of alternatives.

The implications for policy are important. There are clear possibilities of failure in the policy making process, and errors may not be identified for many years. Consequently it may be productive for analysis to consider two responses. First, recognition of potential limitations in the political process can be the first step towards addressing those limitations. Second, as limitations of the process are also limitations in policy formulation and implementation, resulting constraints on the potential effectiveness of policies should be recognised.

The next chapter considers, as a case study, the parliamentary debate extending over a period of years that resulted in the Property Relationships Act 1976 as passed in 2001.