Beer ads and politics have some things in common
In his sixth essay on the Greek macroeconomy, independent economist Bob Traa ponders the question: What is good policy making?
ANALYSIS The Miller Brewing Company is a beer brewing company headquartered in Milwaukee, Wisconsin, USA. Having noted that a certain quantity of beer drinking can lead to weight gain, among other side effects, in 1987, this company launched a commercial with the slogan “Tastes Great, Less Filling.”
The commercial referred to a new beer that the company had manufactured which it called “Miller Lite.” At first, I thought that this was a misprint from the word “light” as opposed to “heavy” and indicating that something has less weight. This connected cleverly with the notion that weight gain from beer drinking was to be avoided if possible. The marketing team at Miller had invented a new word, and the notion of “lite” instead of “light” has caught on big since then.
Various dictionaries now describe the word “lite” as compared with “light” by saying that lite is an informal variant of light, usually used as an adverb meaning “containing less of an ingredient,” or “being less complex.” I suppose this refers principally to calories. The Merriam Webster Dictionary describes the word as “diminished or lacking in substance or seriousness.”
Marketing for a beer company is all about selling more beer, including accepting some side effects. Being in politics is all about selling a view and getting elected, also often with some side effects. Astoundingly, beer commercials and politics thus have some things in common. Over the years, I have seen very good politicians who take their incredibly difficult job very seriously, bend their thought to the public good (it is not a private interest) and communicate well with the public about what they aim to achieve and honestly explain what the challenges are. But, unfortunately, I have also seen tragic cases of politicians who are firm adherents of the Miller Lite Principle. They treat policy making as an effort to sniff out what you would like to hear, then echo back to you explicit or subliminal messages that they know you would like to hear (sometimes even without necessarily believing any of this themselves), and then ask for your vote, proceeding subsequently to talk about policy in Parliament all day with great erudition without saying anything or committing to anything, as though policy making is all about “Tastes Great, Less Filling.” I also had a dream once (a nightmare) where politicians started to talk so fast that my ears could not keep up. I thought of the masters of this art as the “Miller Lite Politicians.”
This brings us to the important question of what “good policy making” is all about. Can we define this concept? If we can’t, then we should not pretend that there is good or bad policy making. It would all become a crapshoot and we will see what happens further down the line. I hope that the reader will allow me to spend a few words in this “Note for Discussion” thinking out loud what good policy making may be all about. I will stick my neck out and give you some thoughts, but readers may have their own version and surely can improve on my ideas.
First of all, let us narrow the terrain to “economic policy making” because that is where I have some experience. This brings us to the minister of finance and the governor of the central bank in any country as the key players. There are of course other ministers who do a vital job, particularly in justice and law, foreign relations and others, and they, too, surely need to think hard what “good policy making” is all about. But I will restrict myself here to thinking about governing the economy in the field of public service. We can explore a few characteristics that I believe might help to improve public policy making. 1. There need to be some aspirational targets.
If you want to get somewhere, you need to know where you would like to go, otherwise it is very difficult to know whether you have arrived, and you may just be going around in circles without ever getting there. “Clarity of purpose” is another way to describe this. Policy makers who have difficulties explaining in coherent and transparent terms, and even quite intuitive terms, where they would like to take the country or what the key objectives for the government are, may be confused themselves and might not make the most effective leaders.
As an example, we talked in the previous notes about potential real GDP growth, and specifically labor productivity as the crucial concept to lift the standard of well-being in the country. I further took the deliberate step to propose an aspirational target for labor productivity growth, namely to increase it to 1.5 percent a year on average over an extended period of time. And here comes the splendid and so clarifying corollary from such a target if clearly stated by the minister: What are the structural reforms and other policy steps that the government is going to pursue, and over what time period, to achieve this goal? Other excellent aspirational goals, in my view, are: What is the sustainable public sector balance target that the government proposes, and what is its desired path toward this target? Again, the corollary suggests itself: How are you going to do this? What does this imply for the average citizen? What does this mean for the debt, or better still, the public sector net worth?
The bottom line is that the government needs to have some very clear anchors for policy and clearly own them. These anchors need to reflect and be tested against the preferences of the population in the political discourse. Governments should not be shy to exercise leadership, and manage this process. 2. Economic policy needs to be data based.
The aspirational targets need to be measured and monitored in a consistent way. The definition of measurement cannot be changed in order to meet the target (you will be surprised how often I have seen this, with the public being unaware). The targets cannot be so complicated that only a model can spit them out; instead they should be relatively simple to understand and monitor. Sometimes a better technology comes along, or an innovation of some type, that truly warrants a modification or an update of a target. Also, everybody makes mistakes, even the very best sometimes slip. This is not a problem. Not discussing this and not making some corrections is actually the true problem. In short, while targets should not be adjusted willy-nilly, there are (infrequent) occasions that the minister as leader of the economic team needs to make some adjustment, and this should then be very clearly discussed and explained to the public. Also, given how important they are, don’t set too many aspirational targets, because then the system may become overidentified and is not internally consistent. It is much more difficult to hit very many targets at once, than pick your careful priorities and focus on those. This does not mean that other objectives are not important; it means that objectives need to be dealt with in careful sequence to keep things tractable and retain clarity with the public. 3. Explain what you are doing.
Communication is everything. Good communication cannot be faked. If the public does not trust its leaders or is afraid of the government apparatus, or the political system more generally, because they are afraid of retribution if they confess to having different ideas, then you have a big problem. Also, suppress as much as possible the notion that what governments do is “confidential.” No, governments are not substantially in the confidential business, they are in the public business (exceptions include issues of security and to avoid interfering with markets). Government is not a private entity and should not work for a private entity – the government’s task is to foster the public good and nothing else. Deep and open discussions about what the “public good” actually is and how you can recognize it, would be an excellent use of time. Ask yourself: Do we trust the government? Are we confident that the government will be our best representative in managing these difficult times? Is the government credible? If you have doubts about any of this, communication is amiss somewhere (and maybe for good but unfortunate reasons; who is hiding what?). 4. Ask the public.
I have seen occasions where the public would call a ministry with questions on a certain issue, and the ministry did not answer the phone. This is not confidence enhancing; it destroys trust. The political system exists to serve the public, the public does not exist to serve the politicians. Also, in this category: Publish data in simple, easy to understand tables. I once saw a government publish some fiscal numbers that were a bit sensitive. Within two weeks there was a response from affected groups that this table must be incorrect as it contained inaccurate data – the problem was underestimated, and the public reaction convinced the government that this was a valuable observation. In short, there are so many people among the public who know about certain topics, that contact with them is highly valuable as a test whether the government has the right information. Ask the public and welcome its input. It is hard work, but it pays off in the long run. 5. Be careful with expectations – stay modest.
Overpromising is a classic in politics. It has a very serious problem. And that is that the cost of errors is not symmetric. What do I mean by that? I have seen governments who promised that they could solve problems quickly, the economy would grow fast, and jobs would return in no time. Also, since, somehow, they convinced themselves of their own rhetoric, it was deemed right to start a new borrowing binge to support or even to push this miraculous recovery. Worse still, some of the public believed it also and started their own generous financial schemes. This strategy of pushing expectations (to get elected) often ends in tears, some years later. These tears are almost never the politicians’. Imagine now the opposite situation; a politician counsels caution and carefully guides the economy back to health with sensible transparent objectives that are aspirational but still realistic, and communicates well with the public why it is worth trying these policies, even though there are no guarantees. In the first instance, politics overpromised and a crisis followed. In the second case, caution prevailed and there may be some room for surprises on the upside. If you have an upside surprise, you can celebrate and feel more confident. Thus, the cost to society of these two errors is not symmetric – hubris generates catastrophes; modesty generates trust. Which one do you prefer? 6. Aim for the long run and good balance.
Good policies are balanced and sustainable, far beyond the government’s term, which requires careful institution building. Poor policies succumb to conflict. Good balance and a long-run view show that the broad interest of the public is at stake. Short-termism and policies for special interests are private policy, not public policy, and they require private money, not public money.
So, in my view, we have six qualities that contribute to good public policy making: Set a few clear aspirational measurable targets; use data to monitor progress and don’t fudge the data; explain what the plan is; invite the public to participate; stay modest; think of the long run and keep things in balance. I have great admiration for politicians who take this seriously and try to adhere to principles. Their job is very difficult, after all: The responsibilities are enormous, the pressures are nerve-wracking, reality is complex and confusing, so one has to have good anchors not to drift away into oblivion. Always keep the form in mind of what is “the right thing to do” and learn from mistakes – that is how countries advance and create well-balanced and humane societies.
Some readers may have different experiences. * Bob Traa is an independent economist. This is the sixth in a series of articles by him for Kathimerini titled “Notes for Discussion – Essays on the Greek Macroeconomy.”