In the popular phrase this choice between competing outcomes entails robbing
Peter to pay Paul. Economists refer to is as opportunity cost.
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Every
decision to deploy resources creates a cost in the other opportunities that are
foregone to make the choice. In measuring opportunity costs economists are
generally concerned with financial costs. Government policy makers, however,
are concerned with the full array of costs and benefits whether financial or of
some other kind.
Utilisation of Level 2
The study of policy making in this book utilises Level 2. This has the major
advantage of providing a relatively simple model that highlights the main
concepts involved in policy making. Ideally we should also study Level 3
which incorporates Level 2 but has the wider concern of dealing with the entire
picture. Unfortunately this would require a detail of treatment that is beyond
the scope of this book.
Nature of Policy
Rationally conceived, the purpose of law is to change the world because each
law or interpretation of a law causes an effect or outcome (and these effects
have been identified in Step 1). Hence, the best law or interpretation is the law
or interpretation that causes (that is, is predicted to cause) the best effect
compared to the effect that any other law or meaning might cause.
This shows how there are two major components of reasoning with policy.
One of these is causation. A law or an interpretation of a law is no better and
no worse than the effects that it causes.
Evaluation is the other major components of reasoning with policy since it is
necessary to determine which law or meaning is best. Obviously which
meaning is “best” is
potentially contentious because there are conflicts over
values. In practice, of course, what is best is determined by the particular
values which are utilised in the process of forming law by the legislature or
court in question.
Causation
The reasoning for making and interpreting law rests on the fact that each
version of a law causes an effect if enacted,
and each meaning of an
ambiguous provision causes an effect if chosen by the court as the legally
correct meaning of the provision.
This is illustrated in Figures 5.1 and 5.2
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The true cost of something is what you give up to get it. This is measured
as the opportunity cost of a course of action. This consists of all the costs of the
course of action along with the benefits foregone for an alternative course of
action.
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