Christopher Ragan is an economist and the inaugural director of McGill University's Max Bell School of Public Policy, which launches this week in Montreal.
Newspapers are continually highlighting debates over public policy. Continuing concerns about Canada's trading relationship with the United States, how and whether carbon emissions will be priced across the country, and the taxation of privately controlled corporations are only three of many current examples. The stories invariably represent the competing views of the advocates and opponents of these policies.
Despite the often passionate arguments from those on either side of any issue, we need to recognize that there is rarely a "right" thing to do when it comes to public policy. There is plenty of room for debate. But that doesn't mean that anything goes. How should we think about "good policy"?
To begin, make the crucial distinction between a policy goal and policy details. We will always be able to debate the appropriate goals of public policy, and for good reason. How large a role should governments play in the economic life of the nation? To what extent should the state provide for individuals in their retirement rather than leaving them to their own saving decisions? Which developing countries, if any, merit Canadian economic assistance? Should our country's military be designed for peacekeeping or for war-making? These and many other questions can and should be debated actively, and there will never be an absolute "right" answer because the debates are laden with various kinds of value judgments.
Acting through the political process, governments try to resolve these competing judgments and choose their policy goals. This is a tough process. But even with the policy goal chosen, there is still more work to be done because there are always alternative ways to achieve that goal.
This brings us to policy details, where the discussion can be more objective. Consider four key elements of "good policy."
First, a good policy achieves its stated objective. Why use any specific policy if it doesn't do the intended job? One good example is the agreement between the federal government and the Bank of Canada to target the annual rate of inflation at 2 per cent. For the past two decades, the average inflation rate has been almost exactly 2 per cent, and with little variation. Whether or not you favour the policy goal, it is impossible to argue that the policy itself has failed.
Second, a good policy has few undesirable side effects. Unintended consequences are a serious problem with many types of policies, and in some cases they can outweigh the policy's direct benefits. One example is the system of supply management that applies to Canada's dairy and poultry industries. Initially designed to stabilize farmers' incomes, these policies can only be sustained with massive tariffs on imported products. For years, these tariffs have driven up prices for consumers and hobbled the food-processing industry, which is now unable to compete in global markets. Is the enhanced stability in farm income worth these significant costs?
Third, a good policy achieves its objective at the lowest possible cost. We live in a world of scarce resources and cannot afford to be wasteful in how we achieve our goals; lower-cost policies leave more resources available for other priorities. An example is using carbon pricing rather than more intrusive government regulations to drive a reduction in greenhouse-gas emissions. We can debate the realities of climate change and the need to reduce emissions, but once governments decide to do so, the strong case for carbon pricing is that it is far less costly to the economy than regulatory alternatives.
Finally, and perhaps most challenging, good policy needs to be communicated to the general public, whose support is needed for its implementation. Most policies involve all sorts of complexities – scientific, economic, political and social – and making these policies easily understandable is difficult. But policymakers need to put real effort into this part of the process. The federal government's plan to change the taxation of privately controlled corporations has been a real failure on this front. The basic economic and political rationale for adjusting the tax rules is sound, but the sloppy and incoherent way it has been communicated may yet prove to be its death knell.
Good public policy is a foundation of peace and prosperity. But it doesn't just happen; it takes real effort by dedicated people who recognize the public interest. Canada needs more of them.