policy

Later today, on my other blog, rhizomicon, I’ll be doing a post on the semantic web {web 3.0}, which stems from work I’m doing in the area of semantic web and social media. In my research this morning on information ontologies, I came across Debategraph, a collaborative visualization tool that maps ideas/concepts in the realm of complex policy issues. Here’s a demo video::

The Obama administration used Debategraph for their open government brainstorm last year. You can access the Debategraph here::

A friend of mine once convened meetings on watershed management in the SF Bay Area and this type of technology would have been very useful in the consensus-based planning recommendation model being implemented. While the loud and the cantankerous could attempt to be a thorn in the side at the public meetings, it would be harder to withstand the criticism of most of the other stakeholders. Nevertheless, there is the persistent wiki problem of how status and legitimacy affects deliberation and in this instance, policymaking. What I do like is how content can be uses and repurposed in online collaboration 24/7. I was thinking of semantic web implications in policy, but that’s for another time.

Maybe the State Department should explore this to flesh out transparency policy in light of the recent Wikileaks.

Twitterversion:: Thoughts on Debategraph visual mappings of ideas 4 transparent complex policy deliberation, used by Obama admin last year @ThickCulture @Prof_K

In the US, antitrust law and the Sherman Antitrust Act are focused on fostering competition and the competitive landscape, not protecting competitors. A monopolist is one seller and many buyers and their profit comes from a lack of competition and a manipulation of supply. Regulating monopolies and enforcing antitrust often {ideally} considers the “welfare” of the consumer, particularly in terms of pricing. Generally speaking, antitrust cases involve the following, often within the context of fairness::

• Market definition, in order to determine if a firm has market power
• Market power, i.e., the ability of a firm to charge a very high price, relative to {marginal} cost
• Barriers-to-entry, i.e., the ability of an incumbent firm to limit competition or secure resources or advantages that others cannot

The problem here is the narrow definition of what Apple does. The focus here is on the single market of the hardware, i.e., handsets. In reality, Apple not only sells handsets, but has created a platform that incorporates both hardware and software {apps}, which are interrelated. The more apps, the more attractive the platform. The more attractive the platform, the more incentive there is to develop apps.

In order to address the analysis of platforms in antitrust, multi-sided markets, which are characteristic of platforms with more than one distinct set of clients/consumers, offers useful insights. Apple’s set of interrelated multi-sided markets are::

1. iPhone hardware {smartphone}/iPad hardware {tablet} sold to consumers
2. Apps and digital content sold to consumers on the web/mobile web
3. Platform for smartphone/tablet apps for developers

In terms of hardware, Apple is profiting from its relationship with AT&T, which is subsidizing the price of the iPhone. Teardowns of the iPad show that margins are relatively slim, but the strategy is to increase the number of users to attract developers. In terms of software, Apple controls the app game.

How I see it is that by forcing Flash off of the iPhone platform, it’s giving developers fewer degrees of freedom for technologies that use Flash. Rather than develop one build for an app that uses Flash middleware, developers will have to create several builds using HTML5. Given the dominance of Apple’s App Store, there are strong incentives to develop for that platform crowding out resources to develop for others, such as Android. Apple’s justification is that it needs to preserve the quality of the user experience, but will that be good enough for the DOJ or the FTC under the Obama administration? Technology is full of uncertainty and fortunes can change overnight. Scrutiny of Apple should consider multi-sided markets and address the health of the competitive environment.

Song:: Feist-‘We Can Work It Out’

Twitterversion:: Development of an #Apple  antitrust analysis framework. How competitive is ecosystem on iPhone platform #ThickCulture http://url.ie/621a @Prof_K

Notes from North of 49ºN

Last Friday, the Torontoist listed its 2009 “Heroes & Villains” and one of the heroes was the mandatory 5¢+ fee for plastic bags {for all retail} that went into effect on June 1st.  A columnist for the Toronto Star, Peter Gorrie, called it a sham, but his arguments are based on a logic that doesn’t account for behavioural change, i.e., a reduction of consumption and use of disposable bags, as people adjust to not using them.  He made several assumptions::

1. Plastic bags aren’t a major environmental hazard, in terms of garbage load and marine hazards
2. Manufacturing plastic bags use fewer resources than paper
3. Plastic bags can be re-used by consumers

He makes the following point, though::

“If the nickel fee makes us more aware the bags do have value and carry a slight environmental price tag, fine. If that prods us to consider using less of everything, even better. At most, though, it’s a potent symbol of how we embrace the trivial instead of doing what’s really required.”

I get where he’s coming from, but I don’t think he’s on the right track.

1. Diverting petroleum resources away from disposable bags that wind up in landfills or in the Great Pacific Garbage Patch by reducing consumption makes both economic and environmental sense.  If the policy in aggregate reduces consumption and conserves finite resources, at the expense of convenience, it’s a win in my book.
2. This assumes that the policy will not curb demand for disposable bags of all kinds.  I’m not aware of Toronto retailers shifting to paper.
3. While plastic bags can be re-used for other purposes, does the existence of a secondary use warrant unconstrained continued usage?  This assumes a demand for plastic bags for all purposes that is unyielding.

More interesting is the quote above, as he wants the public to have more real consciousness about reducing consumption, which is a good thing, but feels the tax embraces the trivial.  This is where social science comes in.

Prospect theory is part of the field of economic psychology, developed by Daniel Kahneman and Amos Tversky, which serves as a rival theory to the rational expected utility model, which is prevalent in economics.  Prospect theory is richer and more robust {sounds like a coffee} than expected utility, as it has greater explanatory power.  A cornerstone of the theory is how people treat gains and losses differently.  The classic example used is which do you prefer::

• a 2% credit card surcharge  -or-
• a 2% cash discount

So, let’s create a hypothetical example.  There’s a camera that a retailer sells at a cash price of $100 and a credit price of $102, i.e., two prices depending on the terms of payment.  Which would consumers prefer::

• A stated price of $102, but with a cash discount price of $100
• A stated price of $100, but with a credit card surcharge of $2, so the credit price is $102

These are equivalent scenarios, but most people don’t like the surcharge and prefer the cash discount.  It’s viewed as a “loss” that people will often go to great lengths to avoid and in prospect theory this is called loss aversion.  On the other hand, as gains increase, they are valued less, which fits economists’ “law” of diminishing marginal utility. These perceptions open the door for framing effects.

Who cares, it’s just 5¢, right?  The 5¢ charge is effectively a tax on using an economic “bad” or environmental externality and the consumer perceived the loss of wealth to be greater than the 5¢.   It’s the money plus a wee bit of a psychological carrying charge to boot.  The consumer once got bags for “free” {actually the cost was imputed in prices}, but now must either furnish their own bags {diminished convenience} or pay 5¢ per bag {out-of-pocket costs}, so now they are subject to losses.  The loss aversion means the 5¢ can serve as a big disincentive for their use, particularly in a recessionary economy.  One supermarket chain, Metro {Dominion} instituted a 5¢ fee across Ontario and Québec, resulting in a 70% reduction in plastic bag use. What this tells me is that the status quo wasn’t entrenched and the policy is helping to alter behaviours.  What I’m hoping is that policies like this help to reduce the 4B plastic bags handed out annually, just in the province of Ontario.

Whoa, hold the phone.  Why not offer cash back for not using plastic bags?  Looking at the prospect theory graph, refunds for not using plastic bags aren’t perceived to be worth it.  In aggregate, getting a few nickels back is perceived to be worth less than the money, so many consumers may not feel compelled to change their behaviour.

In terms of a plastic bag surcharge policy, the carrot loses to the stick.

Twitterversion:: @Torontoist 2009 “hero,” the 5¢ plastic bag fee, is a policy that follows sound social science theory, based on Nobel laureate’s work. @Prof_K

Song:: The Submarines-“Modern Inventions”

Notes from North of 49ºN.

Macleans magazine, like any other, likes to create lists.  I was going through old issues before I pitched them and I spied an article about Canada’s Most Dangerous Cities.  {Here’s the 2009 version}. Caledon, Ontario for two years straight was deemed the safest place in Canada, a town of 58,000 about 40 kilometers/25 miles from Toronto.  I’ve seen Caledon from the air, heading into Toronto’s Pearson Airport, a town on the edge of the greater Toronto area {GTA}, where the 410 freeway peters out on the rural outskirts.   I recall the town where I worked the past few years, Thousand Oaks, CA, was deemed one of the safest places by the FBI, which wasn’t too surprising.  It was fairly affluent, suburban, and homogeneous at 85% white in the 2000 Census.  The 2008 Macleans article went into the reasons why Caledon had such low crime, while crime seemed to be on the rise in neighbouring Brampton.

How safe is Caledon.  According to the Macleans article::

“Of the 100 biggest cities or regions in Canada, Caledon is the safest. In 2006, the most recent year for which there’s annual data, it ranked the lowest —107 per cent below the national average — for a score combining six crimes (murder, sexual assault, breaking and entering, vehicle theft, aggravated assault, and robbery)”.

So, what makes it so “safe”?

• Strict police
• Visible police {6,000 hours of foot patrol with 100,000 interactions and only 12 public complaints}
• “Restorative justice” {which brings suspect and victim together with a mediator instead of a court judge} has been used extensively since 2006 to resolve non-violent incidents, from neighbour disputes to vandalism.
• Relative wealth:: median income of about $32,900, compared with $24,800 across Ontario.
• The population is overwhelmingly white and English-speaking {almost half of all residents are third-generation Canadians or more}.

Are problems on the horizon?  The local youth complain of nothing to do and a lack of public transportation makes them feel “stuck” unless they have a driver’s license.  Petty crimes and vandalism are a going concern in Caledon.  The big concern is growth.  Problems with crime in Canada are correlated with areas of growth, where the local infrastructure and support mechanism are outgrown.  Crime has followed the pattern of Canadian growth in the West.  Population in Caledon is expected to increase by 48% by 2021 and “racial fights” are starting to erupt in local schools, where students from nearby Brampton {a town with over 60% first-generation Canadians} are being bussed to.  Also, while robberies in Caledon are rare, Brampton is seeing a spike, so local law enforcement {Caledon’s Ontario Provincial Police} is trying to be proactive with robbery prevention seminars.

What’s the policy implication here?  What’s the relationship between diversity and crime?  Toronto celebrates its diversity {the seal of Toronto has the motto, “diversity our strength”} and enjoys on of the lowest crime rates in North America, so the socioeconomics of cities likely plays a role, along with other factors like geography and demography, not to mention the cultural differences between Canada and the US.

I think what Caledon has now is a sense of “community,” based on a way of life that tends to be more homogeneous and with a slower pace.  Does impending growth threaten this, particularly with the scalability of the public infrastructure.  Specifically, if growth outpaces the capacity of the public infrastructure, could there be a danger of those with the means starting an exodus -or- will those in the community work to strengthen the infrastructure?

A few weeks ago, I was in Sleepy Hollow, NY in Westchester County, less than a hour north of Manhattan.  While on the surface, the Village of Sleepy Hollow seems like a homogeneous suburb on the Hudson, it actually is diverse culturally and socioeconomically.  The “downtown” core is a vibrant shopping area and let’s face it, it’s Sleepy Hollow and has caché as a Washington Irving/Halloween-themed tourist destination, but one gets a sense of community and meaning.  I’m actually interested in visiting Caledon to see if it has what I observed in Sleepy Hollow.  I never got a sense that Thousand Oaks had any sense of community and meaning, but I freely admit I never looked very hard to find it.

Twitterversion:: Dissecting Canada’s “safest” cities. Role of diversity? Scalability public infrastrture? Community/meaning? http://url.ie/2xmk #ThickCulture @Prof_K

Song:: Lavender Hill – The Kinks

Notes from North of 49ºN

It’s not often I agree with Tom Friedman, but last fall when I was preoccupied with the US general election, teaching, and associate directing a center, he was advocating not just a bailout, but a green buildup.  He quoted Van Jones, author of The Green Collar Economy::

“It’s time to stop borrowing and start building. America’s No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let’s put people back to work — retrofitting and repowering America. … You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.”

Friedman was in favour of attaching green strings to bailouts, an idea I think warranted further study, at the very least.  Fast forward 9 months and focus on the province of Ontario, where at the federal level, the Conservatives {Stephen Harper}, and at the provincial level, the Liberals {Dalton McGuinty}, jumped on the US bailout bandwagon to a tune of $9.5B or $10.9B Canadian.  This is in addition to the Obama administration’s $49.8B.  The combined US and Canadian bailouts are worth 130 times the present value of GM.  Here’s what both Harper and McGuinty had to say about this::

“We had to save it all or have zero forever,”

–Stephen Harper, Prime Minister of Canada

“The alternative would have been a devastating blow to Ontario families and communities.”

–Dalton McGuinty, Ontario Premiere

The troubles in the industry are not new news and CBC has a chronology of layoffs.  I’ve alluded to this bailout before and the scant jobs it will save, but here are the specifics in terms of the Canadian GM assembly line::

“At present GM Canada has 12,000 hourly and salaried employees, but that number is expected to shrink to about 5,500 over the next couple of years. About 1,100 of the new total is expected to be salaried jobs, which are unrelated to assembly operations. That means Ottawa and the Ontario government are together spending an unprecedented $2.1 million for each assembly job at GM Canada they hope to save.”–Time, 1 June 2009

It’s likely that GM suppliers will also be affected, a $7.2B industry employing 45,000 workers, but it is unlikely that all these jobs are at risk.  While Canada accounts for about 19.4% of North American production, Canadian cost advantages have been eroded by a stronger Canadian dollar, a weakened US union in the UAW, and strong and strategic bargaining by the Canadian Auto Workers union.

While the situation looks gloomy for manufacturing in Ontario, quite a few are banking on green jobs.  So much so that St. Clair College has a 2-year green jobs programme and the province has a commitment to clean energy.  Currently, the province gets 25% of its electricity from coal, but wants to shut down all of its coal plants by 2014.  The province is hoping to convert some of the plants to carbon-neutral biomass, although the yields will be lower.  The slack will need to be picked up by alternatives, with greener options being wind and solar.  Ontario’s Climate Change Action Plan calls for greenhouse gas emission reduction to 6% under 1990 levels and the new Green Energy Act is meant to protect the environment, regulate, and spur investment in green technologies.

Policy & Innovation:: The California Example

The PPIC has a report on the effects of California’s Zero-Emissions Vehicle {ZEV} mandate, particularly in the 1990s and early 2000s.  During this time, the California government, through the Air Resources Board {CARB} initially set in 1990 requirements that by 1998 that 2% and by 2003 that 10% vehicles sold in California would be ZEV.  Suffice it to say, concessions were made over time, but the original mandate set the wheels in motion for innovation.  The effects of the program were::

• The policy spurred patents in near-term technologies
• CARB arguably responded to technological changes when revising the program
• Technological spillovers resulted in a greater number of indirect  innovations
• Increased market development for emerging technologies
• Broadened design parameters
• Lower emissions in California

The program, albeit complex and not without politics and controversy, shows how policy can help to shape market-based activity in ways that would not occur otherwise.

Ontario:: Good Money After Bad

While not surprising, Canada and Ontario should have considered asserting themselves more, rather than caving to bailout pressure.  Why not move forward to develop policies that help transition away from declining industries and in-line with over provincial objectives?, e.g., environmental and energy.  How I see it is that the US and Canada are bailing out a company the capital markets have little faith in and now face the daunting task of rebuilding with a new CEO, “Big Ed,” who has a reputation for being an empire-builder.  I question having an empire-builder in charge of a company needing to be leaner, a company needing to reinvent itself overnight.  Let’s hope he indeed  “learns something about cars,” and doesn’t make mistakes like this one, the old CEO Rick Wagoner copped to:: “axing the EV1 electric-car program and not putting the right resources into hybrids. It didn’t affect profitability, but it did affect image.”

While there have been debates on whether or not the US needs an auto industry {NY Times} and criticisms abound, such as this one on how GM betrayed our trust, Canada is nevertheless a 12% equity shareholder.  This creation of a capitalist-state joint venture opens up a huge can of worms, as which interests will prevail and how to balance autonomous management and control versus paternalism?  I think the answers are in economic sociology, a topic for a future post.

Song:: “Canada” – Low

Video::

Twitterversion:: #Canada #bailout of #GMfail =more #fail ? Can #Ontario still dvel #greeneconomy & innov.w/enviro&energy policy objctves? http://url.ie/1wdt  @Prof_K

On the eve of the president’s second news conference, he might want to take a look at John Kingdon’s classic Agendas, Alterantives and Public Policy.  Along with setting the record for most mixed-metaphors in a book (garbage cans, primeval soup, policy streams, policy windows), the study provides a key insight for understanding policy change.  In a nutshell, Kingdon argues that if you can merge policy problems, the decision-making agenda, and policy solutions brought forth by policy entrepreneurs, a policy window opens up (I know, the high school English teacher in you is cringing), that allows you to realize a policy agenda.

Kingdon’s streams imply an order to the policy process…only a handful of problems and solutions can garner the attention of policy makers at any given point in time and only a certain set of solutions are acceptable to decision makers and the public. By contrast, the Obama administration’s new budget seems to be part of a “shock and awe” approach to the policy process…flood the public agenda with a number of simultaneous problems and solutions (health care, education, climate change, etc.) in the hope that the deluge will overwhelm members and result in mass policy change.

It’s an interesting and maybe unprecedented public policy strategy. If it works, it may signal a new approach to policy change, albeit one at which the framers would cringe. Personally, I’m skeptical that we’ll get a budget that looks anything like it currently does. The Senate is already putting the brakes on the process.

What do you think of a “shock and awe” approach to policy change?

I’m putting together a public policy course for the first time since graduate school.  It reminds me what I love about what I do.  Public policy is about how we solve common problems.  The palete from which to choose readings is unlimited.  That’s been part of my problem…there’s so much interesting material to talk about out there it’s impposible to narrow it down.

One area that sorely lacking in public policy scholarship is the effect of the presentation of information on decision-makers.  Im having my students read a few articles about Edward Tufte.  Bonanos, C. (2007) The Minister of Information. New York Magazine. and  Smith, F. (2007) Intelligent Designs. STANFORD Magazine. Tufte is a self declared arch-enemy of power point and is famous for pointing out NASA’s scientists’ inability to convey important information to higher-ups before the Challenger disaster.

He’s also famous for popularizing this map by Charles Joseph Minard that shows the losses incurred by Napoleon’s army in the Russian campaign of 1812. The diagram show how Napoleon’s army thinned (beige band) as temperatures in Russia dropped (black band).

It makes me wonder how different our disciplines would be if most of us put thought into the form of our data presentations. We’re trained to focus solely on function but, mostly because of cost concerns, our conferences provide us little opportunity to use technologies that could bring our data to life. Would having LCD displays at academic conferences make them more policy relevant? Would they encourage more journalists to attend?