FTI’s policy framework (analytical structure to design policies)

FTI has a policy framework which provides the analytical structure for all FTI policies. This framework is subject to continuous improvement. [Word version]

Freedom Team of India
Policy Framework
This framework provides guidance on how FTI members (proponents) should propose their policies. The framework creates a clear line of sight between (a) the philosophy of freedom (classical liberalism), (b) FTI’s vision and mission, (c) FTI’s basic principles, and (d) the proposed policy.

Please use this template
Proponents of a particular policy should use this template. Questions listed below should be included – as is – in the draft proposal, along with detailed answers (in the boxes provided).

Please use a google document to prepare your draft policy proposal.

Title of the policy:

1. Describe what would happen without any role for government (i.e. not even licensing/ registration)
  • Imagine there is no rule or regulation or subsidy of any sort. Use historical literature or theory to explain what would happen. This will form the baseline for further analysis. All policy must do better than this baseline to be accepted by FTI.

2. Identify the problem with (1) and explain why it is a problem
  • List the problem/s (if any) precisely, and identify evidence that such problems actually arise
  • Describe the magnitude of these (real – not imaginary) problems
  • Explain why each of these is actually a problem (e.g. what’s the precise nature of harm caused?)
  • Explain why free citizens in their individual acts (the market) can’t resolve these problems on their own
  • Only retain real problems that citizens are unable to resolve by themselves for further analysis

3. Philosophical test (FTI principles)
  • Does the ‘problem’ (or do the problems) relate to a first order or second order function of the government? [Refer to FTI’s basic principles]
  • If not, why does the proponent want FTI to consider this issue?
4.Options: What can government do about the problem/s?
  •  What can a government do that could solve the problem/s?
  • List the entire range of options, from most onerous to least onerous, for government intervention
  • Which of these options will work better than the market does on its own?
  • To what extent does the proposed policy option allow free markets to determine supply, demand, and prices?
  • If the policy establishes administered prices (e.g. for petrol/ education), how will the policy assess actual demand and supply?
If the government can’t demonstrably do better than individuals acting voluntarily on their own (the market), there should be no further discussion, and FTI policy’s would note why FTI would not do anything in this regard (and let the market operate freely).

5. Freedom test
  • Do the options reduce anyone’s freedom? Whose? How? Why? [Freedom test]
  • If freedom is reduced, explain why it is necessary to constrain freedom (e.g. what’s the harm caused?)
  • Demonstrate a direct link between FTI’s advocacy of freedom and the proposal to reduce freedom.
If the intervention is not based on FTI’s principles, or if restrictions on freedom (of those who have not directly harmed anyone) cannot be strongly justified, FTI’s policy should note why FTI will do nothing in this regard (and let the market operate freely)..

6. Strategic gaming test

  • Imagine that the policy is implemented, and now put yourself in the feet of businesses and consumers. In this situation, explain how people will game the system (how they will discover loopholes), and if so, what kinds of unintended consequences are likely to occur [Good intentions do not make good policy]
  • Does the policy prevent such unintended consequences (e.g. excessive use a government service, or use by those not targeted by the service)?
7. Government failure test
  • Describe how the proposed policy will be implemented by indifferent (and often self-interested) bureaucrats
  • How will the proposed policy deal with the incentives of bureaucrats (public choice analysis) for secrecy, gaming the evaluation/ monitoring results of the policy, hiding the truth from government and the people, etc.
  • In particular, what is the independent scrutiny of the implementation of this policy and how will people be able to find out whether this policy is actually working
  • How will the policy avoid regulatory capture by business?

8. Real experience test
  • Has such a policy (or similar policy) been implemented anywhere else, before?
  • If so, what was the experience of such implementation?
  • And what were the gaps/shortcomings?
  • How will the proposed policy address these gaps?
9.Cost benefit test
  • Describe the detailed overarching theoretical economic model (if available) that underpins this policy
  • Identify net benefits (net of costs) of the policy to society.
  • Where such net benefits can be quantified, quantify them.

10. Transition path
  • Is it possible to phase the introduction of this policy (from current arrangements), or does it require a sudden break from existing arrangements?
  • Who are the policy’s stakeholders?
  • Are there any political constraints to implementation of this policy?
  • Who are likely to be the losers from this policy (e.g. people whose existing property rights might be reduced, or chances of corruption reduced)?
  • Who will oppose the proposed policy?
  • How will the opponents be brought on board? (e.g. compensation, if any)
  • What transitional arrangements are proposed?

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