Motivation and Public Policy

Motivation and Public Policy

1. Public Services and the Market

   • Arguments for marketising education and health
     • efficiency
     • value neutrality
     • self-reliance
   • arguments against marketising
     • the indigent cannot be allowed to die
     • equality of opportunity requires universal education

2. Richard Titmuss

   • a private market in blood is allocatively inefficient and produces contaminated blood
   • a private system is more expensive
   • the market redistributes in the wrong direction
   • marketising what can be done voluntarily degrades society: altruistic motives are driven out by self-interested ones
   • marketisation and the degradation of society
     • motivations of givers: pure altruism, reciprocity, recognition of past or future benefits recieved.
     • voluntary activity as a kind of freedom
   • economist says that if the voluntary way of giving blood is inefficient compared to the American system of paying for blood. But Titmuss wanted to show that the British system is more efficient and overall better
     • why is it better?
       • if you pay for blood, you get bad blood
       • private system is more expensive
       • market redistributed bloody in wrong direction. poor people give all of the blood because they need the money and the blood ends up in those who can afford it
       • making something in to a market that could be done voluntarily is degrading to society. there is something noble about doing something for another person

3. Le Grand

   • points of agreements with Titmuss
     • the contamination argument
     • the corruption argument
   • points of disagreement with Titmuss
     • the UK system turned out to be less allocatively efficient than it appeared in 1970
     • Titmuss' picture of public services involve omnipotent professionals and passive citizens
   • terminology
     • Knight
       • a public sector professional who is motivated by altruism
     • Knave
       • a public sector professional motivated by self-interest
     • Pawn
       • a citizen who is the passive recipient of public services
     • Queen
       • a citizen who has significant say in the nature of the public services she recieves
   • in designing public services the designer must work out whether the public sector professionals/workers are knights or knaves.
   • people are altruistic where the cost to them is not too great
   • where they need to be paid, they are happy to accept low payment as recogition
     • examples of foster carers
   • Higher pay drives out altruism
   • Exit Vs Voice
     • in order to achieve voice, citizens must rely on politicians
     • voice mechanisms tended to be dominated by the well-to-do and articulate
     • exit means giving citizens choice between providers
     • this too can lead to preferential access for the better off
     • Le Grand considers exit more effective
   • three models of service delivery
     • command and control
     • the "trust" or "network" model
     • the quasi-market = le Grands preferred model
       • it combines market with non-market features: universal equal provision on the other hand, choice of providers on the other
       • citizens are queens
       • providers are assumed to have a mix of knavish and knightly motivations - but do the former drive out the latter?

4. overview

   • a quasi-market is when a public-service retains what it is to be a public service but is re-engineered so it has some virtues of the market
   • people are selfish and rational maximisers of their own utility
   • quasi-markets are a compromise between the two competing elements
     • more efficient - provide choice and liberty
     • cannot be left entirely to the market. equality of opportunity requires universal education.
   • defenders of the welfare state argue people are not entirely selfish, but you can make public services run effectively by appealing to people's better nature. so we need to create the circumstances to allow us to act altruistically.