#34 Three Steps in Policy Thinking
Three questions to ask yourself while drafting a policy
Frameworks
It is quite easy for anyone to answer any issue with a public policy solution. But through our discussions here in this newsletter we have come to know that not all issues need a policy response (read #2, #13, #15). So when asked to think about or draft a policy which responds to a particular issue, we need a framework to think through. The Three Steps framework helps you exactly with that. (This framework in from Shah and Kelkar’s In Service of the Republic)
So imagine you have an issue at hand. Whatever it might be. These are the three steps you should think through when drafting an appropriate policy response.
Is there a market failure?
If there is no market failure, then there is no role for the state. Different market failures need different approaches.
What kind of an intervention can I design to address this market failure?
The government only has a limited toolkit of interventions. The tools must be carefully chosen. Because, oftentimes proposed solutions do not address the problem. When a government is faced with Market Power, there is no need for government to setup a company of its own. This is what the Kerala government recently did by starting an OTT platform. But when public goods (like security or efficient justice delivery) are underdelivered by the market, the government needs to step in and deliver them.
Is there enough state capacity to implement the proposed intervention?
Many times, despite having a good idea, the suggested intervention may not be implemented well due to state capacity limitations. For example, India’s maternity leave laws, as progressing as they are, have unintended consequences. Not only does it stretch the monitoring capacity of the state, it also impedes economic growth for a developing country like India where only a small percentage of women are in formal jobs. So maybe such ideas could be implemented at a future point, when we have the necessary context and capacity for it.
Thumb Rule: While drafting a policy to address an issues, ask yourself three questions: 1. Is there a market failure? 2. Does the intervention address the market failure? 3. Is there capacity to implement?