Ethical Policymaking? A good idea waiting to happen

A recent article by Paolo Mauro, Deputy Director of the IMF's Fiscal Affairs Department, looks at putting moral perspectives into public finances. Mauro argues that policy decisions on taxation and expenditure and inherently moral decisions which have, to date, been viewed from the perspective of economic efficiency. Income redistribution, he says, have not been based on moral considerations, possibly for fear that they may be viewed as subjective. In an Irish context, Dáil debates around Budget time may suggest otherwise. And that might be good news (depending on the morals applied). Mauro points to recent work by evolutionary moral psychologists which suggests that "policies can be better designed and muster broader support if policymakers consider the full range of moral perspectives on public finance".

 

WEIRD Science

The desire for perceived objectivity, according to Mauro, may be because public finance scholars are educated, and hold, WEIRD values. In this context, WEIRD stands for Western, Educated, Industrialised, Rich and Democratic. But this supposed objectivity has been called into question by the work of moral pschologists who determined that, rather than objective decison-making, humans faced with a moral dilemma make decisions on instinct, later justifying those decisions by applying an objective framework.

Mauro cites the great pioneers of the modern economy, David Hume and Adam Smith, both philosophers of the Scottish Enlightenment, who acknowledged the importance of sentiment on people's views of morality. This view is demonstrated in an extract from our recent publication, Measuring Ireland's Progress: Sustainable Progress Index 2022 in which the authors state:

"Smith referred to wealth and greatness as “mere trinkets of frivolous utility” (1976a, p. 301) and stated that the “disposition to admire, and almost worship, the rich and powerful, and to despise, or, at least, to neglect, persons of poor or mean condition, is…the great and most universal cause of the corruption of our moral sentiments. That wealth and greatness are often regarded with the respect and admiration which are due only to wisdom and virtue; that contempt, of which vice and folly are the only proper objects, is often unjustly bestowed upon poverty and weakness, has been the complaint of moralists in all ages” (Ibid., p. 126). According to Smith the false promise that riches will bring happiness is a deception that “nature imposes upon us” and that this is good because it “arouses and keeps in continual motion the industry of mankind” (Ibid., p. 303) claiming that all economic progress has its roots in this deception. This is more “sleight of hand” than “invisible hand”".

Clarke, Kavanagh, and Bennett, 2022:6

Designing policies with an understanding of the moral and instintual judgements of a population can foster greater political and policy engagement. This in turn, allows  for greater collective ownership of the decisions that are made. People's experiences automatically influence their decision-making. Mauro's article gives the example that "communitarians' opposition to progressive taxation declined among individuals directly hurt by the pandemic through job loss or illness". Of course it did. When sectors of society feel that policies don't affect them or don't benefit them, they are less likely to engage with those policies. 

Research by Stantcheva (2021), cited in the Mauro article, indicates that fairness is more important to individuals surveyed in the United States than efficiency, when it came to their attitudes towards taxation and progressivity in the tax system. Another influencer was in how people understood their own perceptions of a policy issue. It was found in another study by Green (2013) that when people were asked their view on controversial policy topics, then asked to read up on those topics before being questioned again, respondents were more likely to moderate their views having realised their knowledge deficit. 

Mauro's article concludes that designing the presentation of a policy to be more appealing to citizens with "different moral perspectives" can be a helpful start in developing consensus. So how do we make this happen?

A New Policy Framework

To achieve a new policy perspecive, we need a new policy framework. Social Justice Ireland has previously proposed a policy framework for a new Social Contract that identifies five key policy outcomes and sets out three key areas for action within each (Table 1). Each of these five key policy outcomes must be achieved if the more societally beneficial policy outcomes are to be realised. It is not enough to have three or even four of the five, while neglecting other areas.  All five must be worked on simultaneously.  Its not a question of getting the economy right and everything else will follow.  That approach has led us from boom to bust to boom to bust.  This must end. 

Table 1 - A Policy Framework for a New Social Contract

Vibrant economy	Decent services and infrastructure	Just taxation	Good governance	Sustainability
Deal with the Deficit	Increase Investment	Increase the overall Tax-Take	Open, transparent, accountable structures	Climate Justice
Financial Stability	Quality Services	Taxation Governance	Social Dialogue	Protect the Environment
Boost Public Investment	Minimum Social Floor	Broader Tax Base	Real Participation / Deliberative Democracy	Balanced Regional Development
Decent Jobs				Sustainable Progress Index
Reduce Inequality

We need the investment in infrastructure and services to develop a thriving economy.  We need just taxation to fund this.  We need good governance to ensure people have a say in shaping the decisions that impact them.  We also need to ensure that everything that is done is sustainable; environmentally, economically and socially. 

This will require new approaches to the world of work and a recognition of much of the work done in society that goes unpaid, under-recognised and undervalued.

It will also require recognition that our tax and welfare systems are not fit for purpose in the twenty first century.  The time has come to set a minimum floor of income and services below which no one should fall.  The social welfare system and the income tax credits system should be replaced by a Universal Basic Income which would be far more appropriate for today’s economy. This should be accompanied by the development of Universal Basic Services to secure the wellbeing of all.

A new Social Contract will also require us to give climate action the priority it urgently needs. The response to Covid-19 shows that society can be mobilised quickly and effectively to address a real and present danger.  Climate change represents such a danger, but the policy response so far has been wholly inadequate.  We now know that we can respond quickly and effectively to major threats. An effective response to climate change must figure prominently in the new Social Contract.

Even at the earliest stages of this pandemic, the critical value of having an effective public sector was illustrated. The focus of recent decades on constantly reducing the role of the public sector has been shown to be wrong.  Countries with a functioning public sector that caters for essential health services for all have been shown to be better equipped to deal with the pandemic than those without, including Ireland with its two-tier system of healthcare.  We cannot settle for a two-tier healthcare system when this pandemic has passed.  Ireland will emerge from the pandemic with a larger public sector.  We must ensure that this change delivers the foundation of a new Social Contract, that everyone benefits from a larger public sector, and that these much needed services and infrastructure are adequately resourced going forward. 

Some might think this is not the time to focus on issues such as the future of the Social Contract. History says otherwise. Before World War II had concluded, plans were already being laid for a major re-structuring of societies. In 1941 President Franklin D. Roosevelt and Prime Minister Winston Churchill issued the Atlantic Charter, which led to the establishment of the United Nations. In 1942 the Beveridge Report, with its commitment to a universal welfare state, was published in the United Kingdom.  In 1944 the Bretton Woods conference put together the post-war financial architecture.

The Wellbeing Approach

In the past year, the Government has worked to deliver a Well-being Framework to “to better measure Ireland’s progress as a country and better align policy decisions with people’s experiences.” Aligning that Framework with the SDGs would also ensure policy coherence between our national targets and our international commitments.

The First Report on a Well-being Framework for Ireland was published in July 2021, setting out the work undertaken across stakeholders to that point. The overarching Vision set out in that First Report was:

enabling all our people to live fulfilled lives now and into the future. It is ingrained in well-being across person, place and society. (p.14).

This Vision had two elements, firstly to provide an overarching framework for policy making and deliver greater policy coherence across Government Departments; and secondly to improve the impact of policy on people’s lives. Determining the second element, of course, requires the ability to measure that impact. It is said that what is counted is what counts, and so the indicators used to measure the impact of the Well-being Framework are critical.

In developing the dimensions, the Department drew primarily from the OECD Well-being Framework, consisting of 11 domains. The National Economic and Social Council (NESC) also established a Subgroup of Stakeholders and Experts, of which Social Justice Ireland was part. This Subgroup provided consultation supports throughout the development of the Well-being Framework with a focus on equality and inclusion. The NESC Report on Ireland’s Well-being Framework Consultation (NESC, 2021) identified three overarching and inter-linked priorities – Equity, Agency and Sustainability, ensuring that all voices are heard, particularly those who may be furthest away from the policy space (but likely to be among the most impacted by policy changes).

Ireland’s Well-being Framework consists of 11 dimensions:

1. Subjective Well-being
2. Mental and Physical Health
3. Income and Wealth
4. Knowledge and Skills
5. Housing and Local Area
6. Environment, Climate and Biodiversity
7. Safety and Security
8. Work and Job Quality
9. Time Use
10. Community, Social Connections, and Cultural Participation
11. Civic Engagement and Cultural Expression

According to the First Report, each of the dimensions were explored in three ways: an overarching definition that reflects on the capability approach; several aspects to illustratre how the high-level definition will directly relate to people’s lived experiences; and some examples of how the dimensions link with each other. This linking together, or interconnectedness, is illustrated within the First Report as a series of concentric circles, placing the person at the centre, place around that, and society surrounding both.

But this is just one illustration of how these dimensions interconnect. Civic Engagement and Cultural Expression is as much a personal dimension as it is a societal one. Subjective Well-being can depend on the place as much as the person. Housing and Local Area certainly spans all three. In aligning the Well-being Framework with the SDGs, the interconnectedness, and need for policy coherence, is again apparent.

Proper implementation of the Well-being Framework could not only help build more coherent policies, but also support Ireland to meet our Sustainable Development Goals.