Architectural Policy Design: How Policy Makers Try to Shape Policy Feedback Effects When Designing Policies

Policy Feedback Effects
When Designing Policies
Policy Feedback Effects
When Designing Policies
ISBN: 978-87-7335-238-0
Published November 2018
Aarhus BSS, Aarhus University
Denmark
I am deeply grateful to all those who helped and supported me
during the last three and a half years!
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1. INTRODUCTION ................................................................................ 8
2.1 The Policy Feedback Literature and Its Historical-Institutionalist Foundation ...... 21
2.2 The Policy Design Literature in the Policy Sciences and in Public Policy ................ 31
2.3 The Emerging Research Field on Policy Feedback and Policy Design ..................... 37
2.4 The Deficits of the Policy Feedback Literature and the Policy Design Literature
and the Promise of Combining Both Perspectives ................................................... 40
PART II: THEORETICAL AND METHODOLOGICAL FRAMEWORK OF
ARCHITECTURAL POLICY DESIGN ...................................................... 42
3. THEORETICAL FRAMEWORK ............................................................. 43
3.1 The Five Lenses of the Architectural Policy Design Perspective ............................. 44
3.2 Key Terms and Underlying Assumptions of the Architectural Policy Design
Framework ................................................................................................................ 54
4.2 Case Selection .......................................................................................................... 68
4.2.1 The Existing Literature on Case Selection .................................................... 69
4.2.2 A New Approach to Case Selection in Theory Building Research ................. 75
4.2.3 Applying the Approach in the Investigation of Architectural Policy
Design .............................................................................................................. 81
4.3.1 Data Sources: Available and Selected Material ........................................... 90
4.3.2 Evaluation of the Generated Data Pool.......................................................... 95
4.4 Data Analysis ......................................................................................................... 100
4.4.2 Types, Interpretation and Use of Evidentiary Material .............................. 103
PART III: EMPIRICAL INVESTIGATION ......................................................109
5. THE EMPIRICAL CONTEXT ................................................................ 111
5.1 The Context of Public Policy Making in the late 1960s and early 1970s ................. 111
5.2 The Party System and the Role of Christian Democrats, Social Democrats
and Liberals ............................................................................................................ 114
5.3 The Political-Institutional Context of Public Policy Making in Germany .............. 119
6. THE CODETERMINATION ACT OF 1976............................................... 125
6.1 Introduction to the Case Study ............................................................................... 125
6.2 Legislation on Codetermination Prior to 1976 and the Provisions of the
Codetermination Act of 1976 .................................................................................. 132
6.3 The Programmatic Positions of Social Democrats, Liberals and Christian
Democrats on the Reform of Codetermination ...................................................... 136
6.4 Architectural Policy Design Strategies in the Reform of Codetermination ............ 141
III
6.4.2 The Christian Democratic Policy Design Strategy: Weakening and
Fragmenting the Labor Movement .............................................................. 156
6.5 The Political Skirmish around the Codetermination Act of 1976:
Policy Design as Strategic Political Struggle ........................................................... 162
7. THE PAY CONTINUATION ACT OF 1969 .............................................. 167
7.1 Introduction to the Case Study ............................................................................... 167
7.2 Legislation on Sickness Benefits Prior to 1969 and the Provisions of the
Pay Continuation Act of 1969 .................................................................................. 172
7.3 The Programmatic Positions of Christian Democrats, Social Democrats
and Liberals on the Reform of Sickness Benefits .................................................... 177
7.4 Architectural Policy Design Strategies in the Reform of Sickness Benefits ............ 179
7.4.1 The Christian Democrats’ Architectural Policy Design Strategy:
Setting the Statutory Health Insurance on a Reform Path towards
a Reimbursement System with Cost Sharing ............................................... 185
7.4.2 The Social Democrats’ Architectural Policy Design Strategy:
Protecting Achieved Victories and Broadening the Statutory
Health Insurance towards a Citizen Insurance System .............................. 191
7.5 The Political Skirmish around the Pay Continuation Act of 1969:
Policy Design as Strategic Political Struggle ........................................................... 199
PART IV: IMPLICATIONS, DISCUSSION AND CONCLUSION ........................... 205
8. THEORETICAL, METHODOLOGICAL AND EMPIRICAL IMPLICATIONS ....... 209
8.1 Theoretical Implications: A Typology of Policy Feedback Effects
Anticipated by Policy Makers ................................................................................. 209
8.1.1 Inward- and Outward-Oriented of Feedback Effects Anticipated
by Policy Makers ........................................................................................... 212
Policy Makers ................................................................................................ 219
and Dynamic Design Processes .............................................................................. 224
8.2.1 Empirical Footprints of Architectural Policy Design in Data
Material ........................................................................................................ 224
8.2.3 Policy-Design Strategies as Subject and Object of Policy-Design
Processes....................................................................................................... 229
Strategies in Public Policy Making ......................................................................... 230
9. DISCUSSION AND CONCLUSION: THE CONTRIBUTIONS OF THE
DISSERTATION AND A PLEA FOR AN AGENCY TURN IN POLICY
FEEDBACK RESEARCH ................................................................... 236
9.1 The Two Key Contributions of the Dissertation..................................................... 236
9.2 A Plea for an Agency Turn in Policy Feedback Research ....................................... 239
REFERENCES ....................................................................................... 244
Overview of Edited or Digitalized Archival Material .......................................................... 272
Description of Indicators for the Evaluation of Potential Cases ......................................... 274
Overview of Preliminary Case Evaluations ........................................................................ 278
ENGLISH SUMMARY ............................................................................. 299
DANSK RESUME ................................................................................... 302
Tables and Figures
Table 4.1: A Systematic Guideline for the Selection of Positive, Instrumental
Cases ...................................................................................................................... 78
Table 4.2: Indicator List for the Evaluation of Potential Cases of Architectural
Policy Design ......................................................................................................... 84
Table 4.3: Evaluation of Potential Cases of Architectural Policy Design ................. 87
Table 4.4: Overview of Collected Material by Archive and Selected Case ............. 100
Table 4.5: Overview of the Process of the Empirical Investigation ......................... 101
Table 4.6: Overview of the Process of Data Analysis (Material from the
Parliamentary Archives) ..................................................................................... 102
Table 4.7: Overview of the Process of Data Analysis (Material from Party
Archives) ............................................................................................................. 103
Table 6.1: Key Legislation on Codetermination Prior to 1976 (Selection) ............. 134
Table 6.2: Key Provisions of the Codetermination Act of 1976 .............................. 136
Table 6.3: The Programmatic Positions of Social Democrats, Liberals and
Christian Democrats on Codetermination .......................................................... 141
Table 6.4: Policy Design Elements and Attributed Policy Feedback Effects in
the Social Democratic-Liberal and Christian Democratic Policy Design
Strategy ............................................................................................................... 145
Table 6.5: The Proposed Policy Designs of Social Democrats, Liberals and
Christian Democrats on the Reform of Codetermination Reform and the
Final Codetermination Act of 1976 ..................................................................... 166
Table 7.1: Key Legislation on Sickness Benefits prior to 1969 (Selection) .............. 175
Table 7.2: Key Provisions of the Pay Continuation Act of 1969 .............................. 176
Table 7.3: The Programmatic Positions of Social Democrats, Christian
Democrats and Liberals on Sickness Benefits ..................................................... 179
Table 7.4: Policy Design Elements and Attributed Policy Feedback Effects in
the Social Democratic and Christian Democratic Policy Design Strategy ......... 183
Table 7.5: The Proposed Policy Designs of Social Democrats, Christian
Democrats and Liberals on Key Contested Issues of Pay Continuation
Debate ................................................................................................................. 203
Table 8.1: A Typology of Policy Feedback Effects Anticipated by Policy Makers ... 211
Table 8.2: Conducive Contexts for Anticipations of Inward- and Outward-
Oriented Policy Feedback Effects ....................................................................... 215
Table 8.3: The Selection of Positive, Instrumental Cases and the Identification
of Conducive Contexts ........................................................................................ 227
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Figure 3.1: The Five Lenses of the Architectural Policy Design Perspective ............ 45
Figure 3.2: The Formulation of Architectural Policy Design Strategies in Public
Policy Making from a Strategic-Relational Perspective ...................................... 50
Figure 3.3: Policy Makers’ Motivations during Policy Design .................................. 59
Figure 4.1: Categorizing Potential Cases of Architectural Policy Design ................ 85
Figure 6.1: The Architectural Policy Design Strategies of the Social Democratic-
Liberal Government and the Christian Democratic Opposition in
Codetermination Politics .................................................................................... 144
Figure 7.1: The Architectural Policy Design Strategies of Christian Democrats
and Social Democrats in Pay Continuation Politics ........................................... 182
Figure 8.1: The Intertwinement of Concept Formulation and the Identification
of Conducive Contexts in Qualitative Research ................................................. 228
employee matters)
deration of German Employers‘ Associations)
BDI Bundesverband der Deutschen Industrie (Confederation of German
Industry)
Employees’ Association)
Union of Germany)
CDU/CSU Political alliance of CDU and CSU, who form a joint parliamentary
group in the Bundestag (also referred to as “Union” or “Union par-
ties”)
ion Federation of Germany)
CSU Christlich-Soziale Union in Bayern (Christian Social Union of Ba-
varia)
Union)
Unions)
Sized Business)
Medium-Sized Business Association of CDU/CSU)
SPD Sozialdemokratische Partei Deutschlands (Social Democratic Party of
Germany)
est organization for middle managers)
VfLA Vereinigung für Leitende Angestellte (interest organization for middle
managers)
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1. Introduction
How do politicians use policies strategically for their own political benefit and
to achieve long-term political goals, and how does such strategic behavior in-
fluence the design of policies? Answering these questions is crucial for under-
standing key dynamics, challenges, limitations and opportunities of public
policy making, for explaining strategic choices policy makers make when they
design new policies and political struggles they engage in with their oppo-
nents.
Recent attempts by Republicans to demobilize public sector unions and to
undercut the Democratic Party’s political base in several U.S. states offer a
good example of the political phenomenon this dissertation investigates: the
long-term strategic design of public policies by policy makers. In fact, the
case has recently also received attention from scholars of policy feedback (cf.
Anzia and Moe 2016; Hertel-Fernandez 2018), who study how policies influ-
ence subsequent politics but typically do not inquire systematically whether
or to what degree policy makers have tried to shape these effects strategically.
When researchers want to analyze long-term strategic policy making, they
must draw an important distinction, namely between long-term political ef-
fects of public policies and short-term substantive effects. In the given exam-
ple, short-term substantive effects of public labor policies pushed by Republi-
cans concern the ways in which unions interact with the state, how they collect
dues, and how they recruit and retain members. That is, they concern the sub-
stance matter, the actual issue, problem or field that the policy is intended to
regulate. Researchers must separate these short-term substantive effects ana-
lytically from long-term political effects of the policies, which – as Hertel-Fer-
nandez discusses – policy makers can try to design strategically to achieve
long-term goals. The long-term political effects concern public sector unions’
political clout, the mobilization of their members, and, thus, the strength and
viability of an important base of the Democratic Party. In Hertel-Fernandez’s
powerful formulation, Republicans essentially try to use the feedback effects
of public labor policy as a “political weapon” against the Democrats.
Further examples help underline the distinction between short-term sub-
stantive and long-term political effects of policies and demonstrate the preva-
lence of long-term strategic policy making in different political contexts. Take
U.S. Social Security. Here, policy makers tried to bind their political succes-
sors through strategic political choices they made during the design of the pro-
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gram. As Jacobs (2010) argues, policy designers chose a funded, actuarial pro-
gram because they wanted to prevent their successors from exploiting the pro-
gram and using it to cultivate constituencies and win votes. The funded actu-
arial program would help them achieve this goal because it does not use cur-
rent payroll contributions to finance current social expenditures but saves
them to cover the costs of future outlays.
Or take the political struggle for a reform of the U.S. immigration system.
Here, Democrats advocate for legislation that creates a path to citizenship
while Republicans take a more restrictive stance on who and how many should
be “allowed in”. The Democrats’ plans would not only legalize millions of ille-
gal immigrants and integrate them into the U.S. labor market and social secu-
rity system. It would also add millions of new voters to the political system
who are traditionally affiliated with the Democrats and, thus, empower the
party systematically in the long term.
Research on the effects of policies on politics emerged in the late 1980s and
early 1990s primarily in the United States, but the phenomenon of long-term
strategic policy making and the strategic design of feedback effects is not ex-
clusive to the U.S. context with its highly polarized party system, or to major
political issues like immigration reform. German health policy making is an-
other fitting, yet quite different case. In German health politics, policy making
is characterized by a quick succession of piecemeal reforms rather than by par-
adigmatic policy changes that would define the policy field for decades. As
Döhler (1995) shows, also in and through piecemeal reforms, policy makers
can act as “architects of political order” and strategically design policies that
create, rearrange or destroy structures of interest representation. That is,
through the strategic design of policies, policy makers can try to engineer the
effects that health policies have on the strategies and preferences of interest
groups. For example, they can strengthen federal and regional health fund as-
sociations as negotiators in order to tame competition between individual
funds and in the long term balance out unequal bargaining relations between
providers and health funds that result in cost increases.
Long-term strategic policy making is also not exclusive to the field of social
policy, the traditional focus of policy feedback research. Take a final example
from renewable energies policy. Here, early and modest feed-in tariffs can
support the emergence of new industries and foster the creation of new actor
coalitions under the radar of politically powerful big utilities (cf. Schmidt et al.
2018). Once the big utilities identify their new opponents, they can already
draw on a solidified power base while the big utilities’ own support base has
started to erode. Renewable energy policies can be locked in, and policy mak-
ers can achieve long-term political goals by strategically designing policies and
their feedback effects.
The Architectural Policy Design Perspective
These are only a few of many possible examples. They demonstrate that policy
makers frequently use or attempt to use policies strategically in order to
achieve long-term political goals (cf. also Anzia and Moe 2016). The disserta-
tion argues that is it necessary to develop an analytical toolkit for studying
these attempts systematically in order to be able to explain crucial dimensions
of public policy making, in particular policy makers’ strategic choices during
policy design and patterns and dynamics of strategic policy design and policy
feedback processes. The literatures on policy feedback and on policy design,
whose job it would be to provide such an analytical toolkit, fail to do so and do
not pay sufficient attention to the phenomenon of long-term strategic policy
making. Instead, the policy design literature focusses analytically on how pol-
icies can be designed instrumentally to solve objective policy problems, and
the policy feedback literature focusses analytically on which feedback effects
policies produce without investigating the agential sources of these effects (cf.
chapter 1 for a substantial discussion). In consequence, both literatures strug-
gle to capture, understand and explain long-term strategic policy making.
To remedy these deficits, the dissertation puts forward the concept of archi-
tectural policy design and develops an analytical approach for investigating
long-term strategic policy making. In brief, this architectural policy design
perspective understands public policies as “rules of the game” that prescribe
and proscribe behavior and shape the lives and interactions of citizens and
organizations. Policies are arenas of conflict in which actors constantly try to
(re-)shape and (re-)interpret rules and bend these towards their priorities and
preferences. Actors do this because policies are tools of power that shape, re-
structure, and reconfigure political processes in meaningful ways through pol-
icy feedback effects. Policy makers can therefore use policies strategically to
gain power and control, further their political interests and achieve political
goals in the long term.
The design of policies, policy instruments and specific rules and stipulations
matters for future policy development because it shapes what feedback effects
emerge from a policy. Policy makers have an acquired aptitude or working un-
derstanding of the effects different policy designs produce and can therefore
act strategically in the design of policies. They try to design policies that bring
about beneficial policy feedback effects in order to gain power, achieve policy
goals in the long term and be electorally successful in the short term. Policy
makers’ strategic design attempts therefore shape future policy developments
via policy feedback effects. Policy makers’ design strategies themselves are
structured by situational contexts of policy making according to which policy
makers review, revise and reform the goals they want to achieve and strategies
they follow to do so.
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As analytical approach, the architectural policy design perspective addresses
a number of puzzles concerning long-term strategic policy making. Its purpose
is in particular to explain patterns and dynamics of long-term strategic policy
making and strategic choices policy makers make during policy design. The
existing literature struggles to explain these key aspects of public policy mak-
ing because it fails to understand the role of strategic action in policy feedback
processes and policy design dynamics and because it lacks an analytical toolkit
that can capture, understand and explain it.
In consequence, the literature struggles to answer basic questions about
public policy making. Why do policy makers choose one policy design over
another even though both designs might be instrumental in pursuing the same
policy goal? What reasons do policy makers have for such choices, and what
role do strategic considerations of policy feedback effects play in these deci-
sions? Remember the example of renewable energy policies: a variety of policy
instruments (e.g. feed-in tariffs, direct subsidies, CO2 emission caps, taxation)
can lead towards the targeted policy goal and increase the share of renewable
energies of total energy mix, but how can one explain why policy makers
choose one over another? Are choices between policy instruments only a mat-
ter of assumed instrumentality, of efficient and effective problem solution, as
the analytical focus of the policy design literature would suggest? Or aren’t
they also political choices – choices in relation to which policy makers strate-
gically consider the long-term political implications of different reform de-
signs?
A key puzzle for the literature is how policy makers weigh short-term sub-
stantive and long-term political benefits during policy design, when they pri-
oritize one over the other or how they try to maximize both. Relatedly, why are
policy makers willing to give up certain elements of a policy design but not
others in negotiations with their political opponents, i.e., which political fights
do they pick and which compromises do they accept? The literature often ap-
proaches these puzzles by looking at policy making as the result of the relative
political strength of political actors, interest group politics and institutional
characteristics like veto barriers or gate-keeping. The dissertation under-
stands these factors as important conditions of public policy making that
shape the outcomes of policy design processes. However, explanations that do
not take into account policy makers’ design strategies are often underdeter-
mined. They may be able to explain general directions of public policy making
but not “within-design choices”, i.e. not the specific design elements, instru-
ments, stipulations and policy wordings policy makers choose. Understanding
those choices, however, is essential for explaining which feedback effects pol-
icies generate and how policy makers can design them strategically.
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The literature also cannot explain how, under what conditions, or to what
degree policy makers are actually successful in strategically designing policies
and anticipating policy feedback effects in order to achieve long-term policy
goals. Regarding the introductory example, why could Republicans success-
fully attack the political clout of public sector unions in recent years and actu-
ally demobilize their membership and weaken Democrats systematically?
Again, institutional factors that structure the legislative process and give Re-
publicans leeway to impose union-hostile legislation, and the political balance
of power between Democrats and Republicans are important parts of the ex-
planation. But how did Republicans actually do it? Institutional and contex-
tual factors might open windows of opportunity, but policy makers need to
exploit these strategically to achieve long-term political goals. The puzzle is
then how “talented” policy makers are in doing so? How good are they at using
policies to make politics? How extensive or limited is their understanding of
long-term political consequences that emerge from different policy designs?
What types of effects do policy makers have on their mind and how do they try
to design those strategically?
These puzzles demand inquiry. The dissertation takes up the task and poses
a research question that carves out the problem at heart. Concretely, the dis-
sertation asks whether and how policy makers strategically try to shape pol-
icy feedback effects during policy design and how such attempts influence the
design of policies.
Addressing the outlined puzzles requires a particular analytical approach to
the investigation of public policy making. It also requires a particular ap-
proach to the research process itself. The dissertation is based on an abductive
conceptualization of the research process that is geared to build…