Westcott, George W.

English

Research Papers in Economics

CRITERIA  FOR  JUDGING  PUBLIC  POLICIES  AS  THEY  AFFECT
ECONOMIC  PROGRESS  AND  INTERDEPENDENCE
Presented  by  George  W.  Westcott
A.  Criteria  Which  Should  be  Observed  in Developing  Sound  Public  Polic-
ies  and  Programs
1.  Policies  and  programs  should  be  developed  by  means  of  recognized
and  accepted  methods  of  economic  and  social  analysis  and  measure
up  to  our  economic  and  social  concepts  of  the  general  welfare.
They  should  be  consistent  with  the  long  run  rather  than  the  short
run.  Then  they  should  be  just,  reasonable,  and  result  in  opti-
mumliving  standards.  Policies  and  programs  should:
a.  Encourage  rather  than  restrict  productivity  (observing  the
limitations  of  freedom  and  the  rights  of  the  individual).
This  includes,  among  other  things:
(1)  Sound  natural  resource  policy.  In  some  cases  this  may
mean  exploitation  (most  likely  in  early  developmental
stages)  but usually  it  means  conservation.
(2)  Conservation  of  human  resources.
(3)  Education  and  research.
(4)  Promotion  of  resource  mobility  for  most  efficient  re-
source  use.
(5)  Promotion  of  production  adjustments  consistent  with  the
principle  of  comparative  advantage.
(6)  Promotion  of  an  efficient  distribution  and  exchange  sys-
tem  consistent  with  sound  international  policy  (as  well
as  domestic  policy).
(a)  Encourage  free  trade  rather  than  trade  barriers  and
restrictionism.
(b)  Promote  price  trends  which  will  be  in  line  with  gen-
eral  equilibriums  normally  resulting  from  the  free
operation  of  economic  forces.
(c)  Promote  an  economically  stable  but  expanding  economy.
(7)  Promotion  of  gains  among  all  groups  which  are  just  and
reasonable.
2.  Our  policies  and  programs  should  optimize  the  rights  and  freedoms
of  the  individual  consistent  with  the  general  welfare.  In  other
words,  they  should  insure  the  rights  and  freedoms  of  the  individual
to  the  extent  that  they  do  not  interfere  with  the  rights  and
freedoms  of  other  individuals.  These  include:
a.  Religious  freedom.
b.  Intellectual  freedom.
c.  Political  freedom.
157d.  Economic  freedom.
3.  Political  implications
a.  Our  policies  and  programs  should  be  developed  through  demo-
cratic  procedures  employed  by  groups  and  government.  The
foregoing  criteria  emphasizes:
(1)  The  importance  of  using  democratic  processes  by  organiz-
ed  groups  and  government  if  we  are  to  achieve  sound
policies  and  programs  which  measure  up  to  these  criteria.
(2)  The  importance  of  developing policies  and  programs  which
will  promulgate  a  democratic  political  system  which  pro-
vides  a  healthy  political  and  social  environment  en-
couraging  individual  initiative.  In  other  words,  poli-
ciesand  programs  should  be  designed  administratively  not
only  to  implement  the  intended  economic  and  social  ob-
jectives  but  to  strengthen  our  democratic  processes
through  their  implementation.  Some  of  the  principles  to
be  observed  are:
(a)  The  right  to  bring  forth  opposing  viewpoints.  This
means  conflict  which  per  se  is  one  of  the  essences  of
democracy.  This  calls  for:
(b)  Tolerance  and  understanding  of  each  other's  view-
points.
(c)  Lack  of  fear--no  fear  of  being  misunderstood,  los-
ing  status,  admitting  errors,  or expressing  differ-
ences  of opinion.
(d)  Need  to  find  areas  of  agreement.
(e)  Compromise  (can  be  done  without  sacrificing  person-
al convictions).
(f)  The  right  of  the majority  to  decide.
(g)  The  right  of  the  minority  to  be  heard  without  sup-
pression.
(h)  The  obligation  of  the  minority  to  comply  with  the
rules  determined  by  the  majority.
(i)  The  secret  ballot.
(j)  Representative  government.
(k)  The  accountability  of  representatives  of  government.
b.  Policies  and  programs  should  be  formulated  through  groups
and  government  made  up  of  an  enlightened  public  who  have
had  an  opportunity  to  form  opinions  through  free  group  dis-
cussion  conducted  in  a  democratic  rather  than  a  dominative
atmosphere.
B.  Guidelines  for  Measuring  Public  Policies
1.  Considerations
a.  Labor  productivity  is  basic  to  higher  living  standards.  The
more  we  produce  per  man-hour,  the  more  goods  and  services
and  leisure  we  have.  This  means  among  other  things,  better
working  conditions,  better  living  conditions  including  food
158and housing, better schooling, and more vacations.
b.  Labor  productivity  is  increased  by:
(1)  Simplification  of  human  tasks.
(2)  Replacing  human  labor  with  machines.
(3)  Power  from  other  sources.
c.  Being  a  primary  industry  producing  the  primary  wants--food
and  fiber--agriculture  must  increase  its productivity  as
the  first  step  in  the  economic  progress  of  a  nation  in
order  to  free  manpower  to  produce  the  other  goods  and
services  which  go  to  make  up  higher  living  standards.  In-
creasing  productivity,  therefore,  is  a  matter  of  public
concern.  The  general  welfare  depends  on  it.  Its  fruits
are  passed  on  to all  as  improved  living  standards'.
d.  Technological  progress  creates  "technological"  unemploy-
ment  or  underemployment  in  the  more  primary  industries,
especially  agriculture.
As  technology  advances  hand  labor  becomes  relatively  un-
productive,  characterized  by  relatively  low  incomes.  Tech-
nology  is  advancing  at an  ever-increasing  tempo.  This
sharpens  the  problem.  Labor  must  move  from  industries
where  their  productivity  is  low  to  new  industries  where
it  will  be  higher.
e.  The  fruits  of  increased  productivity  are  theoretically
distributed  to  all society  through  lower  prices.  This  ad-
justment  takes  place  in  perfect  markets  in  the  absence  of
monopoly  tendencies.
Agriculture  tends  to  operate  in  a  more  perfect  market  than
industry;  hence,  the  gains  of  its  increased  productivity
tend  to  be  passed  on  to all  groups  through  lower  prices.
Industry  tends  to  operate  in  a  less  perfect  market;  hence,
the  gains  of  its  increased  productivity  are  sometimes  re-
tained.  This  may  create  terms  of trade  which  are  adverse
to  agriculture.
2.  Criteria and  suggestions  for  improvement
Our  public  policies  and  programs  must:
a.  Encourage  rather  than  restrict  productivity  (observing  the
limitations  of  freedom  and  the  inalienable  rights  of  the
individual).
(1)  Agriculture  - Farmers  must  continuously  seek  new  ways
to  increase  output  per  worker  as  rapidly  as  do  other
industries.  This  calls  for:
(a)  Alert  and  continuous  reorganization  to:
i.  Adjust  to  new  products  as  consumer  demand  changes.
159ii.  Adopt  new  production  and  marketing  methods.
(b)  These  adjustments  may  be  aided  by:
i.  Research  and  educational  programs.
ii.  Incentive  programs  to  encourage  adoption  of
new  farm  practices  and  shifts  to  new  products
to  meet  new  demands.
iii.  Adequate  and  properly  directed  public  and/or
private  credit  programs  for  acquisition  of
capital  equipment  to  replace  labor.
iv.  Cooperatives  to  introduce  efficiencies  into
the  distribution  system  in  order  to  increase
productivity.
v.  Public  programs  to  encourage  movement  of  techno-
logically  underemployed  and  unemployed  rural  la-
bor  into-non-agricultural  occupations.  Increas-
ing  productivity  in  agriculture  creates  the
need  for  constant  shift  of  labor  from  agricul-
ture.  Labor  may  not  have  the  necessary  skills
to  transfer  to  another  job.
(2)  Labor  - Labor  groups  should:
(a)  Promote  labor  productivity  by  cooperating  with  man-
agement  in  adoption  of  labor-saving  techniques.
(b)  Assist  the  technologically  displaced  to  find  new
employment  in  new  industries  and  occupations  rather
than  defend  "make-work"  policies  which  hold  down
the  worker's productivity  (and  his  wages).
(3)  Industry  - Industry  should:
(a)  Continuously  review  its  cost  and  revenue  schedules
to  make  sure  it  is  not  abusing  the  "low-volume-high-
price"  policy  typical  of  production  in  imperfect
markets.
(b)  Promote  increased  productivity  by  cooperating  with
labor  leadership  in  adoption  of  labor  direction
techniques  and  labor-saving  techniques.
C.  Questions  to  Evaluate  a  Public  Policy
1.  Does  the  policy  conflict  with  our  economic  progress?
a.  Does  it  interfere  with  productivity  by  restricting  resource
mobility,  retard  production  adjustments,  interfere.with  our
distribution  and  exchange  system?
2.  Does  the  program  interfere  with  individual  rights  or  freedoms?
3.  Does  the  program  have  harmful  political  implications?
a.  Was  it  developed  through  democratic  procedures?  Does  it
reflect  the  will  of  the  majority?  Does  it  protect  the
rights  of  the  minority?  Can  the  program  be  held  account-
able  to  the  people?
160These  are  some  of  the  questions  that  should  be  asked  regarding  each
policy  considered.  Each  policy  should  be  considered  in  light  of  its
effects  upon  economic  progress,  the  changes  it  might  make  on  the  inter-
relationships  in  our  economy,  and  the  possibilities  of  improving  or
harming  them.
Any  policy  may  be  judged  on  these  criteria.  The  committee  has  not
attempted  to  take  a  specific  proposal  and  evaluate  it  for  presentation.
They  felt  their  time  could best  be  used  in  laying  out  the  foundations
and  framework  which  would  enable  extension  economists  to  evaluate  pro-
grams  as  they  arose.  This  is  what  they  have  attempted  to  do.
161

CRITERIA FOR JUDGING PUBLIC POLICIES AS THEY AFFECT ECONOMIC PROGRESS AND INTERDEPENDENCE

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