Claude Joseph

In the fall of 2008, the United States faced the worst economic downturn since the Great Depression of 1929. The crisis was so deep that it soon turned global, with approximately 20 million people in China losing their jobs and tens of millions falling into poverty (Stiglitz, 2010). As it had been for previous economic crises such as the Internet crisis, and the savings and loan crisis,[1] economists and policymakers have been using different frameworks to explain the root of this recent economic meltdown.

On one hand, proponents of free and unfettered markets (e.g., Sowell, 2010; Woods, 2009) argue that the 2008 financial debacle was caused by too much regulation that undermined the natural law of supply and demand of the financial market. To Sowell (2010), the crisis has its roots in many policies and regulations that the federal government has enacted. He observes, “among the impelling factors were growing pressures from government regulatory agencies for mortgage lenders to reduce their lending requirements, so that people with lower incomes and lower credit ratings could become home buyers” (p. 139). Thus, the Community Reinvestment Act, which encourages banks to lend to underserved communities, is what led the world economy into this nightmarish crisis (Sowell, 2010). By the same token, Woods (2009) argues, “we’ve been looking in the wrong place. The current crisis was caused not by the free market but by the government’s intervention in the market” (p. 2).  Fannie Mae and Freddie Mac, two government-sponsored enterprises, and the Federal Reserve System are the main culprits of the crisis.

Proponents of government intervention offer alternative approaches. They contend that the root of the crisis must be found in a lack of government involvement in the financial system. People that have lost – and continue to lose – their homes have been victims of information asymmetry because mortgage companies had pushed exotic mortgages onto millions of consumers while many of them had not been mindful of what they were getting into (Stiglitz, 2010). The failing in the mortgage market, Stiglitz adds, “were symptomatic of the broader failings throughout the financial system, including and especially the bank” (Stiglitz, 2010, p. 5).

A third explanation for this crisis comes from Robert Skidelsky, Keynes biographer. To him symmetric ignorance, instead of information asymmetry, is the root cause of the crisis. A good definition of the term symmetric ignorance is provided by Moss (2000) in his book When All Else Fails: “in some cases, a market for risk may function poorly or fail altogether, not because one party has better information than the other, but because neither party can obtain sufficient information about the risk in question”(p. 39). In the case of the 2008 subprime crisis, the symmetric ignorance seems to hold because the innovative financial products invented by banks and credit-rating agencies to entice borrowers not only have adverse impact on borrowers but also on the banking system. The collapse of Lehman Brothers and the implosion of Bear Stearns’s hedge funds seem to support the symmetric ignorance argument.

The instance of the 2008 financial meltdown shows that mutually exclusive explanations of a single event can be offered when lenses that are used to look at the event differ from one another. Allison and Zelikow (1999), in Essence of Decision, show how the Cuban missile crisis is explained using three different lenses: the rational actor model, government behaviour as organizational output, and government as politics. Despite objections raised against Allison and Zelikow’s approach, I believe their eclectic contribution to public policy is very insightful. In philosophy, specifically in hermeneutics, this approach is called reflexive analysis[2]. An analysis is reflexive when the focus is on the lenses that are used to explain the event. For example, a specific question involving reflexive analysis about the missiles crisis is: how the 1962 Cuban missiles crisis could be explained, had we looked at it from a different framework? In other words, what would it look like, if instead of using a RAM, we had used governments as politics model? And the same logic holds in the case of the subprime crisis because the way that an advocate of the free market understands the event is quite different from the way a Keneysian understands it. 

                                                            
[1] For much more about the history of financial crisis, see Charles P. Kindleberger and   Robert Aliber, Manias, Panics, and Crashes: A History of Financial Crises (New Jersey: John Wisley & Sons, 2005); and Carmen M. Reinahrdt and Kenneth S. Rogoff, This Time is Different: Eight Centuries of Financial Folly (New Jersey: Princeton University Press, 2009).


[2] See Farmer, 1993, The Language of Public Administration

This week’s readings highlight the importance of Institutions to the policy process. Howlett and Ramesh (2003) define institutions very narrowly as structures or organizations of the state, society and the international system. While Elinor Ostrom (2007) defines institutions as many different types of entities, including both organizations and the rules used to structure patterns of interaction within and across organizations. Ostrom in “Institutional Rational Choice: An Assessment of Institutional Analysis and Development Framework” presents the IAD framework as a general language for explaining how rules, physical and material conditions as well as attributes of the community affect the structure of action arenas, individual incentives and outcomes. The Bird paper and Romer essay could be interpreted as applications of the IAD framework to specific policy issues, decentralization and institutional reform respectively. In a similar vein I will apply the IAD framework to the present Unemployment Insurance program to highlight some of the weaknesses in this program.

The UI program was intended to act as a countercyclical mechanism to help stabilize the economy during economic downturns. The federal government established rules and standards, primarily on minimum coverage and eligibility criteria as well as a minor tax to finance the overall administration of the program. While individual states determined their own benefit amounts, duration of assistance and means of financing that assistance. Unemployment Insurance in the US is a near perfect example of fiscal federalism as while the federal government established the program its management was delegated to individual states. In “Assignment of Responsibilities and Fiscal Federalism” Bird, Dafflon, Jeanrenaud and Kirchgassner (2003) argue that while fiscal competition can lead to greater efficiency in the provision of public goods and services it can create allocative and distributive problems if responsibilities for taxation and finance are not properly assigned. Furthermore these problems lead to increase demands on federal resources to achieve equalization across institutional jurisdictions. The Unemployment Insurance (UI) program provides example of how decentralization creates allocative and distributive problems.

The 1935 law that established the Unemployment Insurance program failed to adequately assign fiscal responsibilities for financing the program, which has resulted in the inability of the program to achieve its intended purpose. The present unemployment program has a multitude of problems varying from unequal income replacement rates and benefit duration periods across states. The current UI program is a federal-state system in which the federal government establishes rules and standards, primarily on minimum coverage and eligibility criteria and sets a minor tax to finance the overall administration of the program. Individual states set their own benefit amounts, duration of assistance, and means of financing that assistance. The eligibility criteria for receiving assistance are based on monetary and non-monetary determinants established by the federal government but application varies by state. This leads to program inconsistencies for example worker’s who quit to move with a spouse or because of sexual harassment but meet the monetary eligibility criteria may receive benefits in states like California and New York but may be excluded in Connecticut and New Hampshire (Kletzer and Rosen, 2006). This is a clear examples of where rules have not properly been established which has led to the failure of an institution to achieve its intended purpose.

Recipiency rates across states vary and nationally have declined indicating that unemployed workers are actually not receiving the assistance they required (Kletzer and Rosen, 2006). Additionally benefit levels vary across states, which are set as low as $133 in Puerto Rico to $826 in Massachusetts. This has led to varying income replacement rates across states, 38 states had income replacement rates less that 50% of earned income while the average national replacement rate in 2006 was 38%. Benefit duration periods also vary across states and have been increasing from an average maximum of 26 weeks in most states to 28 weeks in Montana and 30 weeks in Massachusetts. While these inconsistencies might be interpreted as efficiencies in the matching of income levels and revenue generation abilities with program beneficiaries. When welfare, equity and economic stability concerns are taken into consideration it is clear that inconsistencies in the present UI program could be the cause of compromised living standards, higher unemployment rates and reduced risk taking behavior which all lead to economic instability.

Analysis of the UI program using the IAD framework would require an examination of the program as an institution with its own rules and norms of behavior. As the preceding discussion has shown there are many inconsistencies present in the in UI program that indicate weaknesses in the rules These rules must be addressed if the program is to achieve its intended purpose. Policy reform would have to examine the specific situations that exist within individual states to explore how the established rules could be improved upon to bring about parity provided it is warranted.


Submitted by Deon Gibson

References

Howlett and Ramesh, Chapter 3: “Policy Actors and Institutions”

Sabatier, Chapter 2: “Institutional Rational Choice: An Assessment of the Institutional Analysis and Development Framework” by Elinor Ostrom

Bird, Richard, Bernard Dafflon, Claude Jeanrenaud and Gebhard Kirchgassner, “Assignment of Responsibilities and Fiscal Federalism,” Politorbis, No. 32, 2003

Romer, Paul, Technologies, Rules, and Progress: The Case for Charter Cities, Center for Global Development Essay, Washington, D.C., 2010

Lori Kletzer and Howard Rosen, “Reforming Unemployment for the 21st Century Workforce”, Hamilton Project discussion paper, 2006

A Comment...

This is interesting. Perhaps an institutional rule that shapes the differences in generosity of IU system between states is whether or not the state is more consumerist or producerist. Producerist orientation tends to “revolve around rights and interests on the supply side (such as workers, small shopkeepers). A consumerist orientation tends to “focus on rights and interests on the demand side of market, on the consumer economic interest, understood primarily as an interest in competitive prices” (J. Whitman, "Consumerism versus Producerism: A Study in Comparative Law,” Yale Law Journal, 2007). So, those states with a producerist orientation are more likely to be pro-worker (i.e. more generous UI) and those with a consumerist orientation are less so?  Jermaine

In an influential TED talk, leading development economist Paul Romer unfolded the idea of charter cities; the concept of charter cities although at first sight deceptively simple, might be one of the most interesting designs searching to provide solutions to the challenges of urbanization and international migration.

Romer’s concept starts through a modest realization: in many places, especially in developing countries, weak or outdated rules hold people back; given national borders and migration restrictions poor people in developing countries have the ability to vote with their feet only within their national borders and therefore are unable to escape the trap of established rules. Romer proposes the creation of urban enclaves with new, radically different rules within such national contexts. Under his view and based on the idea of meta-rules (rules about rules), one can develop a new set of rules on a specific geographic location. People will have the free choice to opt in or out of the new set of rules.

While the concept above might seem abstract and vague, Romer decided to implement his thought through the creation of a charter city, a city built from scratch, based on a specific charter-set of rules, allowing free choice for people to opt in and out. Even if Romer’s idea may sound revolutionary, in practice the NYU economist does not propose anything radically different than Hong Kong or the development of Shenzhen in China. The first charter city experiment started in Honduras. The president of the country and its Congress passed a law at the beginning of 2011 to start the process. A site was selected and the charter was developed; what initially sounded like a sci-fi urbanization scenario - especially in the Honduran context, one of the least developed and most violent countries of Central America – seemed feasible and clearly underway. But one year later, Romer decided to abandon his own project, once he found out that the Honduran agency set up to oversee the project had signed a memorandum of understanding with its first investor group, without consulting the temporary transparency commission that Romer had established.

One could argue that Romer was a victim of his own idealism or naiveté. Expecting transparency in the highly corrupted environment of Honduran politics is somewhat unrealistic. But considering that Romer omitted this important considerations (political environment, corruption etc.) would be equally, very unlikely. Perhaps the failure of establishing a charter city stumbled on the nature and theoretical basis of Romer’s concept, the notion of rules. In that sense, as argued by Malkin, an internal contradiction in the theory is playing out: To set up a new city with clear new rules, you must first deal with governments that are trapped in the old ones.[1] How reasonable is to consider that the establishment and elaboration of such rules would be performed in isolation to the current policy and political environment?

The charter cities example poses very interesting questions in terms of policy analysis. It showcases the path-dependent nature of policy decisions, the difficulty of establishing punctuation and policy change but perhaps more importantly, the need to elaborate and think of policy actions within an institutional framework. In that sense, Ostrom’s framework of institutional rational choice provides a useful spectrum in understanding the charter city case. Ostrom underlines that “Rules are shared understandings among those involved that refer to enforced prescriptions about what actions (or states of the world) are required, prohibited, or permitted.” At the difference of Romer she does not establish a value judgment on the quality of rules (good vs. bad). On the contrary, Ostrom pays particular attention to the origins of these rules. She notes “With governance, one needs to ask where the rules that individuals use in action situations originate.” Perhaps this is the question that Romer forgot to ask. Where the rules originate is perhaps as important as who or which institution establishes the rules. And in the case of charter cities the rules originate through external institutions, disconnected to the reality of the Honduran people, the people who are expected to opt in. Shouldn’t these rules be based on a set of norms established within the Honduran society?

It seems that the failure of the first charter city experiment relies on the false belief that an institutional framework, a set of rules, is some sort of a deus-ex-machina that establishes the necessary change out of nowhere. Unless this structural issue is not addressed, I believe that future attempts to establish charter cities will equally fail. For a framework to be successful, it needs to be established upon rules that are generally accepted, respecting societal norms and other attributes of each society. Romer’s charter city concept relies on the free choice of people to opt in or out of the new rules established; shouldn’t these rules be elaborated and established by the people who later on will decide to either opt in or out?

Achilles


[1] Retrieved from http://www.nytimes.com/2012/10/01/world/americas/charter-city-plan-to-fight-honduras-poverty-loses-initiator.html?_r=0, accessed on March 11th, 2013.

Comment: Achilles, in your last 2 paragraphs you've asked the same question twice though in the first instance it was focused on the Honduran people and in second it is generalized. I believe that the initial establishment of new rules in the case of charter cities should not include the people who are expected to opt in or out. I think what is instrumental to the success of the charter experiment is the isolation of the city from the rest of the society and similarly the initial formulation of the new rules should also be undertaken in isolation from the already established social rules and norms. The potential lesson to be learned from the Honduran example you discussed is the potential negative impact of the influence of already established norms of behavior. The Honduran officials were merely acting in a way that is "normal" to their current state of the world and they were able to do that because nothing was established formally (stated) and informally (accepted) to prevent them from doing so. so they reverted to the generally accepted behavior. The experiment failed because necessary rules were not put in place...which may have been a planning oversight...not idealism of naivete

Deon

Andrea

This week, a nearly yearlong policy controversy in New York City reached a turning point when a Manhattan judge struck down Mayor Bloomberg’s proposed large sugary drinks ban. New York State Supreme Court Justice Milton A. Tingling, Jr., found it “arbitrary and capricious,” explaining that the laws rules and loopholes made it unwieldy and unenforceable. Here, despite the leap in contexts, it seems Romer’s essay, “Technologies, Rules, and Progress: The Case for Charter Cities,” is applicable. Romer (2010) argues that the principle constraint to improving quality of life is limited rule implementation capacity.

In the City of New York, the Mayor’s attempt to limit and tax the sale of sugary drinks in an attempt to curb the growing obesity epidemic is an attempt to use available local resources (enforcement by the NYC Health Department) to implement new rules. The conflict here is between what is traditionally understood to be the role and implementation capacity of policy at the sub-national level, and Bloomberg’s attempt to stretch local government rules to new frontiers. There is no question that Bloomberg’s intention is for his sugary drinks ban be a “rule-that-changes-rules.” When the proposal was announced last spring, it hailed a breakthrough by public health officials. Other municipalities have followed suit, making plans to enact similar policies.

In New York, the nation’s largest city, Romer’s argument about one of the key features of new technology, that it is are sharable, as opposed to the scarce availability of other resources, is also applicable to this policy (2). As the proposed copycat initiatives being undertaken in other cities demonstrates, the positive effects of innovative urban policymaking can also be shared can also be shared in other cities and have substantial external benefits. In just New York, the sugary drinks ban can potentially improve health outcomes for New York’s 8 million residents, as well as the millions of commuters who work here each day, and the thousands of tourists and other visitors.

As Romer explains, that fact that cities are where millions of people co-exist is part of what makes them so important; the effects of urban policy have wide-reaching impact. Like technologies, urban policies are often easily replicable, and can be applied to other local contexts to improve quality of life there.

In his argument about new technologies, Romer also points out that new technologies require new rules. The same can be said for innovative policies. In his ruling, Justice Tingling deemed the rules of the sugary drinks ban unworkable and complicated. While it is no doubt true that the contextual enforcement of the rule (only in food establishments under the jurisdiction of the NYC Health Department) might potentially make things confusing at first, perhaps this policy calls for a rethinking of rules and rule enforcement strategies.     

Just as Romer argues that new technologies and rules can facilitate the development of new systems like charter cities, so can “prosperity-inducing” policies be used improve living standards. In the context of the sugary drinks ban, the correlations are very straightforward: discouraging consumption of high-sugar drinks will improve health outcomes, lowering obesity-related chronic disease rates and substantially lowering long-term health care costs. Bloomberg’s proposed sugary drinks ban is indeed a meta-rule; the growth of which can drive progress in improving health outcomes in the rest of the country (10).   

             
Resources:

Grynbaum, Michael. “Judge Blocks New York City’s Limits on Big Sugary Drinks.” The New York Times. March 11, 2013. 

Romer, Paul, Technologies, Rules, and Progress: The Case for Charter Cities, Center for Global Development Essay, Washington, D.C., 2010.

China’s Pearl River Delta is rich estuary containing breeding areas for many species of migratory birds and fish, and serving as a source of subsistence for 45 million people in the surrounding basin. The inner bay of the estuary was added the Ramsar List in 1995, signifying its global importance as a wetland.  However, over the past thirty years, the Delta has been compromised by the rapid industrialization and development of the surrounding Pearl River Delta Economic Zone, containing the Special Economic Zones of Shenzen and Zhuhai, and the spillover economic development that has dominated the surrounding area.

The Delta is now one of the most notoriously polluted ecosystems in China, and is the focus of environmental efforts by International NGOs, local and global activist groups, and the United Nations. Threats to the estuary include: changes is topography and land use, such as filling in of wetlands, dredging and canalization, hardening of surfaces and elimination of permeable surfaces; increased volume and toxicity of stormwater runoff, and an explosion in the number and magnitude of point sources of water pollution, including highly toxic by-products from poorly regulated industrial processes and massive amounts of raw sewage deposited into the river daily. Furthermore, increased upland use of water from the delta’s contributing rivers has contributed to saltwater intrusion into the delicate estuary ecosystem and further reduced the estuary’s ability to flush toxins into the South China Sea. As a result the Pearl River Delta, a locally and internationally important common resource, is experiencing a marked loss of landmass, biomass and biodiversity, localized acidification and eutrophication, ecosystem-wide bioaccumulation of toxins, and a general decline in health.

The creation of the Pearl River Economic Development Zone and its resultant Shenzhen Special Economic Zone in 1979 is specifically hailed as an example of the benefits of developing countries co-opting successful economic development models, policies and procedures from developed countries (As economist Paul Romer terms them, metarules and rules) to further the pursuit of economic development via speculative specialized development models or “Charter Cities”. While Shenzen’s population has exploded from 300,000 in 1980 to over 10 million today, GDP per capita has risen six fold and Shenzhen’s highly specialized electronics sector is responsible for one quarter of Guangdong Province’s GDP, which leads the nation. However it raises the specter of the commons tragedies that can result when the organizational foundation supporting dynamic new developments, or charter cities, lacks the foresight or will to set adequate standards for the leadership of such models.

China’s government has recently come to the table with efforts to reduce the impacts of economic development on the Estuary, including a 2010 attempt at comprehensive regulation planning and prosecution of several large companies for pollution exceedances under China’s cleaner production and waste electronics laws.  However, with regards to the estuary’s impacts from development, the damage has been done and likely cannot be un-done; with regards to ongoing impacts from industrial and commercial activity, China’s enforcement of environmental regulations is notoriously lax owing to a number of political and structural conditions which ultimately favor local economic development over preservation of ecological health.

This concern is particularly relevant with regards to environmental concerns, where the creation each new “charter City” effectively invade or destroys an existing ecosystem that contributes to greater ecological stability. For example, with regards to climate change, a new city will result in an increase in greenhouse gas emissions, while simultaneously eliminating the existing ecosystem that was contributing to global thermoregulation through transpiration and absorption of solar radiation.  Advocacy for “Charter Cities” and specialized economic development models should be accompanied by strong advocacy for a commitment from the authorizing state to set and enforce strong standards. 

Sheryl Sandberg’s book “Lean In: Women, Work, and the Will to Lead.” has become a hotly discussed book about women empowerment.  Although I have not read her book I have watched her 210 TED talk, the precursor to the book, where she outlines her message for “Lean In” and suggests that women in the workplace should focus on three things to be successful: sit at the table, make their partner a real partner and not make decisions based on figure resource getting pregnant and allowing opportunities to pass them now because of the future constraints they will encounter when they are pregnant or with children, which she argues is wrong.  Ultimately, Sandberg is suggesting that excuses in the workplace do not help you climb the corporate ladder, and until the moment you need to step out of the workplace to take care of a child, you should negotiate and work yourself up to the highest position so that you some leverage.  This message was received well in her NY Times books review, also.

The most compelling response to this internal empowerment strategy Sandberg has employed was a review in Forbes magazine by Elaine Pofeldt entitled, “Don’t Lean In. Walk Out”. The article addresses women (although also applicable for men) who are not looking to work in “big corporation, government or big institution” and recommends “self-employment as a route for women to succeed and make a difference”(Pofeldt, 1).

Pofeldt discusses in her article that for women, no matter ho hard one works, the inequalities due to gender discrimination are too high, and for years women have been attributed with all the qualities that Sandberg promotes are not allowed into the “C-suites” and it is time to reassess whether that is the goal that they should be striving to achieve.

Sure, there are executives within giant firms and institutions, like Sandberg, who want women to get ahead- I think she’s sincere about this- but it’s time corporate women take a hard look at what’s really going on within their workplaces…. Legions of women are already leaning in to corporate gigs- and have been for decades- and not getting their due (Pofeldt 2-3).

In such instances self-entrepreneurship might be the best course of action the women who exhibit all these qualities and are not getting ahead. Additionally, what owning your own business/consultancy offers is more flexibility. With self-entrepreneurship, often times you work more hours than corporate business, but the time is more flexible. The work-life balance that is offered in some positions not only promote productivity but also get more hours out of workers since they don’t stop at 5pm, and often start much earlier than 9am.

Sandberg’s advice is sound- don’t give up too early, have confidence and respect yourself to take a place at the table and have an egalitarian relationship- it just does not always help you raise to level of CEO and has you working very hard in workplaces that sometimes do not appreciate you. What Pofeldt offers the reader is another environment, where Sandberg’s advice would still apply but the boss you would be working so hard to provide for would be yourself.

What I have gained from these videos and articles is that there are a multitude of environments where one can work, and but often similar qualities that are required to be successful. To tie this into this weeks readings we could say that Sandberg’s suggestions for success in the workplace provide parts of a meaningful framework, and through application Pofeldt is providing theories by changing variables and operationalizing the framework in different environments (Munger).

The question remains for me, whether our education system and business system are set up in a way that people are to fill positions that are made available to them, or if they are to be enterprising and develop their own positions from their expertise and passions?  Last term we discussed whether people were fully trained to fill the positions that are offered to them, if we were educating people to be able to fill the jobs available, and if the government needed to supply re-training to better match people out of work to open positions. This line of reasoning makes me wonder if we expect people to be moldable, and fill positions open to them. If this is characteristic of our economy, it would make sense that economic growth is really the only kind of growth available to our citizenry. However, if people are to fully develop into experts based on their own passions and when opportunities for employment are not available to them, they create their own enterprises, this would create a very different picture of our economy, education system, and people.  I wish to explore these questions and ideas in the next weeks and throughout this course.

Resources

Munger, M. C. (2000). Analyzing Policy: Choices, Conflicts and Practices. New York, NY: W.W. Norton & Company, Inc.

Pofeldt, E. Don’t Lean In. Walk Out. (2013, March 10). Forbes Magazine. Pp 1-3 http://www.forbes.com/sites/elainepofeldt/2013/03/10/dont-lean-in-walk-out/

Sandberg, S. Why We Have Too Few Women Leaders. (2010 December) TEDtalks http://www.youtube.com/watch?v=18uDutylDa4

Slaughter, Ann Marie. Yes You Can: Sheryl Sandberg’s ‘Lean In’. (2013, March 7). NY Times. http://www.nytimes.com/2013/03/10/books/review/sheryl-sandbergs-lean-in.html?pagewanted=all&_r=0

Zoé Hamstead

Since before the New Year, a major issue dominating the news cycle in the United States has been the federal budget crisis. Relatedly, the failure of Congress to reach a budget deal, the Obama administration’s failure to effectively lead policymakers toward a compromise, and the resulting furloughs that affect numerous national programs and related jobs have been blamed primarily on political conflict and the extreme differences in the two parties’ ideologies with respect to federal spending. Far less discussion has focused on how organizational behavior within the governing bodies is related to the challenges they have faced over the last months. Allison and Zelikow (1999) describe major differences among governmental behavior models, including the Rational Actor Model (RAM), model of Governmental Politics and organizational behavior model. These perspectives can be used to contrast the different explanations for why the budget process has thus far failed.

In the RAM framework, government action is seen as the result of choice by government agents. Within the context of international decisionmaking, Allison and Zelikow describe the actor within the RAM framework as a unified national government. However, in the case of national-level budget decisions, we would need to allow for multiple decision makers within the United States government, such as the Senate and the House, each unified around a separate federal spending ideology. Generally speaking, Senate Democrats would like to close budget gaps by eliminating tax loopholes that benefit corporations and wealthy Americans, while House Republicans would like to cut spending. The parties’ unwillingness to compromise is by perceived by each as their most strategic alternative. In other words, for each party, immediate spending furloughs are preferable to alternatives proposed by the other side. This perhaps simplified version of a cost benefit analysis has led to Congressional gridlock and across-the-board budget slashing.

By contrast, within the governmental politics framework, government behavior is viewed as the result of bargaining games. The government politics model would explain Congress’s failure to reach a budget agreement as a result of failed bargaining. Obama has been blamed for not sufficiently reaching across the aisle during the last four years in order to form relationships and norms of compromise with Republicans in Congress. In addition, constituents and interest groups have been very hard on Republicans who are seen as cooperative with the President. For example, Charlie Crist, former Republican governor of Florida and Governor Chris Christie have faced harsh political consequences for cooperating with the White House Administration and praising the President. Political commentators have suggested that cooperation with Mr. Obama on the budget deal could jeopardize Representative Boehner’s leadership position in the House, as well as Mr. McConnell’s Senate seat (Calmes, 2013). Meanwhile, Senate Democrats may be unwilling to propose policy that would be politically unpopular within the party. These potential political consequences, coupled with Mr. Obama’s inability to sufficiently engage republicans have set the stage for unsuccessful bargaining.

Finally, the organizational behavior model interprets government behavior as the result of patterns of behavior that are embedded within the institutional framework of organizations. This theoretical model is more difficult to apply to the budget crisis because some patterns of behavior that come into play during national budget negotiations are formed over a relatively short time period, which is linked to the election cycles of Congress. However, one could argue that “standard operating procedures” established over the last four years have meant that the Senate and House work on bills separately (Peters, 2013). Molding a unified national policy from two widely divergent proposals has been – to put it lightly – unsuccessful. Congress has developed patterns of interaction within and between both the two parties and the two congressional bodies. The Obama Administration’s attempt at new outreach efforts across the aisle are being undertaken in order to change the uncooperative pattern of behavior in the Senate (Peters, 2013), though this strategy may come too late for budget compromise.

Each of these perspectives contributes something to an explanation of why the budget decision has been characterized by gridlock. Although the political and RAM frameworks are perhaps more compelling in this case than the organizational behavior model, the latter may provide insight that is more useful in changing the course of future decisionmaking because decision makers may have more influence over patterns of behavior within decisionmaking bodies than over general political will or a political opponent’s ideology.

References

Allison, G., & Zelikow, P. (1999). Essence of Decision: Explaining the Cuban Missile Crisis (2nd ed.). New York, NY: Addison-Wesley Education Publishers Inc.

Calmes, J. (2013, March 11). In President’s Outreach to G.O.P., Past Failures Loom. The New York Times. New York, NY. Retrieved from http://www.nytimes.com/2013/03/12/us/politics/obamas-gop-outreach-hits-barriers.html?ref=us

Peters, J. W. (2013, March 11). House and Senate Work Simultaneously to Create Budgets, a Rarity. The New York Times. New York, NY. Retrieved from http://www.nytimes.com/2013/03/12/us/politics/house-and-senate-work-simultaneously-to-create-budgets.html?ref=us&_r=0