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Varieties of public policy

POLI 352A. Varieties of public policy. What does government do?. Extracts resources Expends resources Regulates Directly owns means of production. The logic of government intervention. Government intervention can help solve market failures relating to: Fairness Insurance

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Varieties of public policy

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  1. POLI 352A Varieties of public policy

  2. What does government do? • Extracts resources • Expends resources • Regulates • Directly owns means of production

  3. The logic of government intervention Government intervention can help solve market failures relating to: • Fairness • Insurance • Macroeconomic management • Public goods • Non-excludable • Non-rival consumption • Not all publicly provided goods are public goods

  4. A public good

  5. The logic of non-intervention • International competitiveness • Budgetary sustainability • Individual incentives (moral hazard) • Individual choice

  6. Comparative puzzles What are some differences in policies across countries that interest / puzzle you?

  7. A common dilemma • How do we balance equality against economic efficiency? • How do we protect individuals and households against economic risk while preserving incentives to work (and save and invest)? • What is the proper role of the state in the economy and society?

  8. Varieties of welfare state A welfare state is a collection of cash-benefit programs and government services that protect individuals against poverty and economic risk. Roughly, it comes in three varieties: • Liberal • Corporatist • Social democratic

  9. Liberal welfare state • Means-tested benefits • Low benefit levels • Stigma • Strong work incentives • Examples: U.S., Canada, Britain, New Zealand, Australia • Think safety-net welfare state

  10. Corporatist welfare state • Social insurance against risk • Entitlement based on contribution • Earnings-related benefits preserve status • Generous benefits for middle classes • Covers those who work • Weak services  low female employment

  11. Corporatist welfare state • Examples: Germany, Austria, Italy, France • Think insurance welfare state

  12. Social democratic welfare state • Emphasis on equality and universality • Also, large role for social insurance, but • More generous than conservative W.S., especially for low-earners • Generous government services • Child care, nursing care, training • Boosts female work participation

  13. Social democratic welfare state • Think citizen’s welfare state • Examples: Sweden, Denmark, Norway

  14. Looking ahead:The motivating puzzle Why such different policy answers to a common social dilemma?

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