White Paper: Questions to Guide Regulatory Policy Development

Regulatory Reform for the 21st Century City

Quinton Mayne Grey

By Quinton Mayne • April 27, 2015

INTRODUCTION

The goal of this short white paper is to offer some reflections on what a process of “informed comparison” of policy options that involves stakeholder input might look like. Specifically, I propose a set of questions that local officials could ask themselves in order to help determine the best approach to adopt when trying to accomplish a particular policy objective. These questions fall into three broad categories.

  1. The first set of questions aims to surface information about the target or object of public action, whether it’s a particular good or service, or the provider or user of this good or service.

  2. The next set of questions aims to help local officials better understand the internal and external assets and resources they can draw on in order to achieve their desired policy objective.

  3. The final set of questions aims to help local officials reflect on the form that public action should take given their answers to the first two sets of questions.

KNOW YOUR REGULATORY TARGET

As part of the process of informed comparison of policy options, local officials should aim to better understand the nature of the good or service being considered as the potential target of public action. They should also seek to gain as full an understanding as possible of the providers as well as the users of the good or service. Some important questions worth asking include:

  1. Does the provision of the good or service under consideration fall within the jurisdiction of more than one department, unit, or agency? Answering this question involves thinking holistically about the good or service being provided and mapping fully who inside city hall is already involved or could become involved in regulating different aspects of the provision of the good or service under consideration. This in turn will help reveal areas of regulatory duplication as well as the regulatory demands or burdens being placed on the provider of the good or service. By identifying who inside city hall is or could become involved in regulating a particular good or service, it will also become easier to ascertain the internal availability of different types of resources and assets that can be more efficiently deployed to achieve the desired policy outcome.
  2. How different is the good or service under consideration from those already being regulated? At first blush, a particular good or service may appear novel and different and therefore in need of fresh regulation. City officials should however aim to identify whether the good or service could reasonably be dealt with under existing regulation.
  3. How organized and mobilized are the providers and users of the good or service under consideration? City officials should endeavor to better understand whether providers and users of the good and service under consideration have established more or less formal links that facilitate joint action. Providers may have created some form of organizational structure, such as a membership association or even a loose network that allows them to share information and pursue common interests. Though perhaps less likely than among providers, users of the good or service under consideration may also have access to the means of joint action, including online spaces of communication. Identifying the organizational and mobilizational strength of both providers and users is important for local officials for at least two reasons. On the one hand, it helps officials better understand whether providers and/or users have the capacity to oppose and resist public action. On the other hand, it can help officials assess the feasibility of efficiently engaging and partnering with providers and/or users to achieve their desired policy outcome.

WHAT ASSETS AND RESOURCES CAN BE DEPLOYED?

As part of a process of informed comparison of policy options, local officials need to undertake a broad assessment of the assets and resources that are deployable in the pursuit of their desired policy outcome. Carrying out such a broad assessment requires gauging capacity from a systemic point of view. This means taking into account the assets and resources that are available inside city hall as well as those available within the community for whom the desired policy outcome is relevant or important. In other words, in addition to asking what the capacity of local officials is to effect change, it is important to gauge what assets and resources providers and users of the good or service under consideration have at their disposal, and which ultimately could be directly or indirectly leveraged in order to achieve the desired policy outcome.

Local officials can draw on a variety of analytic frameworks to gain a fuller understanding of the types and levels of assets and resources available inside and beyond city hall. Here, I propose the so-called “NATO” framework developed by Christopher Hood, Gladstone Professor of Government Emeritus and Emeritus Fellow of All Souls College Oxford, as an important starting point.[1] NATO stands for nodality, authority, treasure, and organization, each of which represents one of four foundational resources that can be deployed, if available, in order to achieve a particular desired policy outcome.

  1. Nodality is the “property of being in the middle of an information or social network.” In other words, actors with high levels of nodality occupy a privileged position within informal and formal networks that enables them both to transmit credible information and collect or receive it. As such, nodality is a resource that public-sector actors as well as providers and users of particular goods and services can possess. If obtaining a desired policy outcome requires the collection and/or dissemination of high-quality, credible information, then it is important to identify individuals and groups (inside and outside city hall) with greater nodality as the basis of determining their suitability as lead actors or partners in the planning and even the implementation of policy.
  2. Authority refers to the “possession of legal or official power […] to demand, forbid, guarantee, adjudicate.” At first sight, it might seem obvious that public officials possess authority while providers and users of particular goods and services lack it. It is important, however, to push past this simply dichotomy and carry out a full assessment aimed at identifying pockets or islands of authority within city hall as well as out in the community of providers and users. Authority may be a resource readily available to providers, for example, in the form of a voluntary association that has the power to compel or prohibit particular behavior of its members. Whereas the currency of nodality is credibility, the currency of authority is legitimacy. Therefore, in addition to identifying instances of formal authority or authority that exist “on paper,” it is essential to understand whether authority when exercised (for example, through the imposition of fines or compelling particular actions) would be viewed by relevant actors as appropriate and legitimate, even natural, as opposed to excessive or overreaching.
  3. Treasure describes “the possession of a stock of moneys or fungible chattels.” Gauging treasure involves accounting for the availability of slack financial resources that can be used for a variety of purposes to achieve the desired policy outcome. This includes, for example, the payment of salaries, the purchase of equipment and technology, and the use of financial incentives to bring about change in the behavior of providers and/or users of the good or service under consideration. Given the demands being placed on city governments to achieve desired policy outcomes with fewer financial resources, it is important that local officials come to as full an understanding as possible of the financial assets available to providers and users. Whereas public-sector actors may occupy privileged positions in terms of gathering and disseminating credible information and being able to take legitimate authoritative action, private providers and users may in some instances possess comparative financial advantages. If this is the case, achieving the desired policy outcome may involve drawing on the slack resources of providers and users through, for example, the payment of fees and fines.
  4. Organization indicates “the possession of a stock of people […], land, buildings, materials and equipment somehow arranged.” As part of a process of informed comparison of policy options, local governments must be able to gauge the individual and collective knowledge and skills of public-sector personnel as well as the physical assets (including equipment and technology) that these individuals and groups have at their disposal. An assessment of “organization” should involve inquiring into the distribution and concentration of relevant expertise both horizontally across units and departments as well as vertically between management and front-line staff. If expertise and skill are unevenly distributed, as they often are, it is important to consider whether this distribution is helpful for the realization of the desired policy outcome and whether any collaborative organizational arrangements exist that would allow for the pooling and transfer of knowledge across traditional silos within city hall. A similar investigation must be made of the current and ideal allocation of equipment and technology given the nature of the desired policy outcome. If particular physical assets are deemed necessary for the realization of the desired policy outcome, an “organizational” evaluation should also involve among other things collecting information on the geographic distribution of physical assets across the city. As with nodality, treasure, and authority, it is crucial that any assessment of organizational assets look beyond city hall in an effort to understand the organizational assets of providers and users. The relevant unit of analysis when gauging the resources available for the realization of a desired policy outcome cannot just be the public sector; it must also take in the wider community of affected interests – including providers who may be the potential object of regulation as well as users who could benefit from regulatory intervention.

WHAT FORM SHOULD PUBLIC ACTION TAKE?

Not all regulatory tools are created equal. Some are the equivalent of a sledgehammer, while others are more like chisels that allow for more targeted action. Sometimes, of course, a sledgehammer is needed; other times, however, a chisel is required. Moreover, and crucially, when a chisel is actually called for, effective regulators (like good sculptors) must have the skill and capacity to use it. In other words, in addition to being able to distinguish between different regulatory instruments, it is important to fully understand whether the necessary resources and assets are available and can be deployed to use a particular regulatory instrument to achieve a particular policy outcome. The previous set of questions, grounded in the NATO framework, aimed at helping city officials to surface information on what assets and resources they and their potential partners could deploy. Knowing what one is capable of is a key part of better understanding the best instrument to choose to achieve a desired policy outcome. Next, city officials must also be able to differentiate between regulatory instruments in such a way that allows them to match tool with capacity.

To help officials in this task, I propose that they ask four questions about the regulatory instruments they are thinking about deploying in order to achieve their desired policy outcome. These four questions come directly from what Dr. Lester Salamon, Professor at the Johns Hopkins University,  identifies as four key characteristics of any policy instrument.[2]

  1. How “coercive” is the regulation? Coerciveness refers to “the extent to which a tool restricts individual or group behavior as opposed to merely encouraging or discouraging it.” The least coercive approach to regulating a good or service, or the provider and/or user of that good or service, is through voluntary compliance. This requires only that individuals or groups that are the target of regulation voluntarily comply or work with public officials to achieve the desired policy outcome. The most coercive form of regulation formally restricts one or more feature of a given good or service or forbids providers and/or users from taking particular actions. Between these two poles exist moderately coercive forms of regulation that involve the use of carrots and/or sticks aimed at incentivizing particular types of behavior. This might involve the dissemination of information: for example, privately to an individual provider or user or more publicly to the broader community of providers and users regarding good or bad behavior. This might also involve the payment of subsidies or rewards to encourage certain forms of behavior and the issue of fines to discourage other forms of behavior. What is important for city officials to bear in mind is that more coercive regulation often requires a greater supply of assets and resources. For example, if a regulation aims to achieve a particular outcome by outlawing certain behavior among providers or restricting the form or content of a particular goods or services, in reality this necessarily requires public officials to undertake enforcement proceedings. This means that officials (and/or their partners) must not only possess various kinds of resources that allow them to gather, analyze, and disseminate credible information, but they must also enjoy enough legitimacy so that coercive action does not undermine their authority.
  2. How “direct” is the regulation? For Salamon, “directness” measures “the extent to which the entity authorizing, financing, or inaugurating a public activity is involved in carrying it out.” To understand the so-called directness of a regulation, officials in the most basic sense of the term are tasked with inquiring into whether the regulation in question requires the exclusive use of public-sector assets or some combination public and private assets. For instance, city hall might provide the necessary resources to fund a regulatory program but rely on the expertise and technology of a private actor to deliver or implement the actual regulation. In some cases, the private actor may be a third party independent of both city hall and the providers who will be the target of the regulation in question. In other cases, the private actor may be the providers themselves or a membership association representing them. Partnership and delegation, which are key features of “indirect” regulation, can assume many other forms and do not necessarily require boundaries between the public and private sectors to be bridged. Sometimes the boundaries in question exist within city hall. Officials must therefore ask themselves whether the regulatory instruments under consideration can be financed and delivered by the same unit or department or whether they require resources (such as financial and organizational assets) to be pooled from different departments and agencies. In the end, it is important to note that a fundamental goal of carrying out any assessment of the directness of a particular regulation is to gain a better understanding of the resources required to manage indirectness itself. In short, before choosing a regulation that requires the leveraging of private resources to achieve a desired policy outcome, city officials must gauge whether they are in a deeper sense capable of effectively managing the public-private relationship that such a regulation would produce.
  3. How “automatic” is the regulation? Salamon’s rather awkward-sounding term of automaticity simply refers to “the extent to which a tool utilizes an existing administrative structure to produce its effect.” To understand how automatic a regulatory instrument is, city officials must ask themselves whether public-sector structures and organizational forms already in place can be used as they stand or could become useful with some degree of alteration. Similarly, city officials should ask themselves the same question of the institutionalized administrative capacities of private actors, including the providers of the good or service under consideration.
  4. How “visible” is the regulation? Answering this question requires city officials to understand how easy it is to measure and identify the assets and resources deployed in pursuit of a desired policy outcome. At a basic level, this means gauging whether already used or promised assets show up in internal budgeting processes. There are, of course, other less formal ways beyond a line item in a budget to record or register the use of particular resources and assets. However, assessing the visibility of a given regulation involves figuring out who exactly is able or likely to perceive when assets and resources are being expended. For example, the more a regulation draws on the assets and resources of multiple actors inside and outside city hall, the greater the number of individuals and groups that are likely to register the regulation in action. It is important to note though that seeing a regulation in action as a result of identifying the use or depletion of particular resources (perhaps even the use or depletion of one’s own resources) is not necessarily a bad thing. This is almost certainly the case when actors, who register the use of particular resources as a cost, are at the same time benefiting from the regulation that requires these resources to be deployed; especially if the benefits outweigh the costs. At the end of the day, by asking “to whom is this regulation visible?” city officials are generating important information that will allow them to better understand for whom a regulation is or could become in some sense politically salient. These could be departmental managers, elected politicians, the providers of the good or service being regulated, or the users of that good or service.

CONCLUSION

Comparing policy options in a way that involves stakeholder input isn’t necessarily an easy process. That being said, it is a crucially important one when undertaking regulatory reform. It involves local officials identifying and working across silos that exist within city hall as well as reaching out to engage businesses and residents. In the preceding pages, I’ve outlined some key questions that officials can ask themselves in order to generate different types of information that will help them work across internal silos and engage external actors. The aim of these questions is threefold: (1) to help officials better understand the nature of the good or service under consideration for regulatory reform; (2) to help officials determine the supply of resources and assets inside and outside city hall that officials can mobilize and deploy in order to achieve a desired regulatory outcome; and (3) to compare regulatory reform options that in turn allow officials to identify the best response given the nature of the good or service to be regulated and the resources available to carry out that regulation.

FOOTNOTES

[1] Christopher Hood, 1983. The Tools of Government. Chatham, NJ: Chatham House Publishers. See also Christopher Hood and Helen Margetts, 2007. The Tools of Government in the Digital Age. Houndmills: Palgrave Macmillan.

[2] Lester Salamon, 2002. “The New Governance and the Tools of Public Action: An Introduction.” In The Tools of Government: A Guide to New Governance, edited by Lester Salamon. Oxford; New York: Oxford University Press.

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