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What Is the Purpose of Public Policy?

The purpose of any policy is not only to effect change but also to educate the public. This educational function is important yet rarely discussed explicitly, perhaps for fear of looking like a propagandist. So be it: I wholeheartedly embrace the notion of policy as a way of educating voters.

How does this work? Consider the moon landing of 1969. It had some concrete benefits, such as preventing the Soviets from militarizing space. But just as important was the message it communicated to the American public: Think big, it said; science can lead to grand and amazing achievements. The educational aspect of the policy greatly increased its value.

Or consider NAFTA, and its successor agreement USMCA. These “free trade” agreements actually increased a lot of regulations, and their free-trade benefits are actually pretty small (though still positive). Still, I am enthusiastic about the policies. If nothing else, they sent voters the message that trade and regional cooperation is a good thing and ought to be encouraged. This educational effect was especially useful in Mexico, as the underlying assumption of the message is that Mexico is a stable democracy on a par with the rest of North America.

Of course, there is also the danger of a backlash effect. If you say that NAFTA will result in high-paying jobs, and it doesn’t, people may end up opposing free trade altogether. That is reason to be careful, but it is not reason to neglect the educational effects of policies.

There are also policies with educational costs rather than benefits. President Joe Biden’s student debt-forgiveness order sends the message that students and the US educational sector are especially deserving of largesse. This is on net a negative message, even apart from the other deleterious effects of the policy, most of all its expense. A far better message would be that the US system of higher education needs serious reform.

Minimum-wage hikes also send the wrong message to voters. Yes, there is literature suggesting that such increases destroy far fewer jobs than previously thought, and may have considerable ancillary benefits, such as preventing suicides. Still, a minimum wage is a kind of price control, and most price controls are bad. Voters may not realize the subtle ways in which minimum-wage hikes are different (and better) from most price controls. Instead, they get the message that the path to higher living standards is through government fiat, rather than better productivity.

If you think that far-fetched, consider the initiative passed by the California Senate this week. The bill would create a government panel to set wages and workplace standards for all fast-food workers in the state, and labor-union backers hope the plan will spread nationally. That may or may not happen, but those are precisely the paths that are opened up by minimum-wage advocacy. Many people hear a bigger and more ambitious message than the one the speaker wishes to send.

So what messages, in the broadest terms, should policies convey? I would like to see increased respect for cosmopolitanism, tolerance, science, just laws, dynamic markets, free speech and the importance of ongoing productivity gains. Obviously any person’s list will depend on his or her values, but for me the educational purposes are more than just a secondary factor. When it comes to prioritizing reforms, the focus should be on those that will “give people the right idea,” so to speak.

Sadly, the American public doesn’t have many ways of receiving economic or policy analysis. Most people do not and never will know the finer points of various policies. But they do absorb the main messages of their political leaders. They also have a general sense of what their country is up to and, for better or worse, a certain loyalty to the status quo. As a broad generalization, I have noticed that French people tend to favor the French system, Australians some version of the Australian system, and so on. These correlations operate as both cause and effect, so choosing a policy very often makes it more popular.

All of which is to say: For better or worse, our political choices often succeed in “educating” us. Just about everything we humans do, one way or another, is a form of communication. So it is with making policy.

More From Bloomberg Opinion:

• A Biden Surprise: Bipartisan Foreign Policy: Jonathan Bernstein

• The Biggest Threat to the US Economy Is Policy Makers: Allison Schrager

• Biden’s Economic Hubris Gives Way to Humility: Karl W. Smith

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. He is coauthor of “Talent: How to Identify Energizers, Creatives, and Winners Around the World.”

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