Sn... that's drunk! A long while back, I took a look at a game called Psycho Dream. From a gameplay standpoint, it's a pretty standard action platformer, but from a visual and sound standpoint, it was anything but standard. The same developer, Riot, put their name to one other Super Nintendo game, or in this case, another Super Famicom game that never left Japan, Edonokeba. This one's not quite as crazy as Psycho Dream, but it's still worth checking out. It's a solid run-and-gun title with, uh... a lot of running. As you can see, in this first level here, your character runs by default while you press B to jump and Y to use a lightsaber attack. You can also hold down the Y button to create a makeshift shield, and if you hold forward when letting go of Y, you'll throw your lightsaber as a boomerang, easily the best attack in the game. You get 9 lives and 9 continues to get through only 5 levels, so this game is pretty forgiving. I mean, if you die, you respawn on the left side of the screen in the same place every time. But make no mistake, these levels are loooooong, and this playthrough still takes something like 40 or 45 minutes. You'll also notice your health in the upper left is represented by a number instead of a meter, but that's mostly just a cosmetic thing, since everything seems to take 10 or 12 health from you. I don't know, Kiba, does a nice job mixing things up with some variety here and there. The first level has you sprinting down a road 99 miles an hour like you're Usain Bolt, taking out other mechs riding motorcycles until you fight, uh, who is this, Gile, if he were a cyborg?  Only it's more of a garbage clown car, since there's an infinite number of cyborg android things that jump out to attack you.  Hell yeah! Level 3 has you flying around Silver Surfer-style as you get attacked by missiles by the dozen.  Level 4 has you walking again before you're underwater fighting what looks like that robotic dragon serpent thing from Mega Man X. And from there, you're flying on the nose of a rocket like something out of Run Saber before getting to this goofy final boss fight. What I like here is that the bosses here actually have health meters. I always appreciate being able to, you know, actually see if you're making progress or just spitting into the wind. This game has a pretty fun playthrough, but there's still plenty of flaws here, the most glaring one being the hit detection. It's really tough to actually hit enemies without taking damage yourself. I guess that's just one of the hazards that comes with having a melee attack in a run and gun game, kind of like Shatterhand for NES, but it still gets really frustrating. I mean, right at the beginning of the game, you're likely to lose a couple of lives just trying to get used to hitting moving targets while moving yourself, while trying to avoid bumping into things. I think there's more good than bad here, though. Yeah, this is a pretty simple game all told, but the boss fights are fun. Like here, you're fighting a boss that looks like something you might see at your grandma's garage sale, but it does do a cool pixelated effect when it takes damage. Plus, it's always fun to try and piece together the story, even when you have no idea what the heck is supposed to be happening. Alright, it's a foggy day in 2050. In fact, it's so foggy this guy crashes his car and it bursts into flames. I don't know, there's not much to work with here, although look at the background of this first level.  Is someone playing Light Bright with the buildings or something? But yeah, I don't know, Kiba is real simple. If you want to play as a badass mech that makes other mechs go boom with the lightsaber, you'll have fun with this one. Yeah, it's a bit frustrating because it's so easy to take damage, but geez, Louise, this game couldn't be more forgiving if it tried. I know on the surface this one looks a little bit like it would be something like Cybernator or Metal Warriors, but really it plays more to me like Runsaver, another solid run and gun title, and it's more along those lines in terms of quality. So it's not a must-play by any stretch, but it's still worth checking out any way you can. Alright, I want to thank you for watching, and I hope you have a great rest of your day.


So, for those who have fretted that market participants have become too sanguine, well, you got your wish today. It was a good old fashioned panic and it washed out all that overconfidence in most investors and, you know, something interesting because I've been pointing out for weeks the breath in the market, right, that it was worrisome. Even on updates, there were more declineers than advanced many sessions. And then, of course, there's my favorite and fastest way of taking the pulse in the market. New highs and new lows. The New York Stock Exchange saw nine stocks make new highs, just nine, five hundred and twenty-six close and new fifty-two be closed. And NASDAQ, thirteen new highs against four hundred and one new lows. Now, you could look at this carnage as an opportunity, but after an initial tide lifts most ships, I think the subsequent part of this rally probably could be even more selective than we had for the most of the year coming into this week. All right, back with us now to discuss Melissa Armo and Jeffrey Cleveland. So, Melissa, you know, under the surface, even before all of this carnage, coming into the week, two hundred of the S&P 500 stocks were down, sixty of them were down more than twenty percent, more than that were down more than ten percent, so it's been a very selective market anyway to begin with. Yeah, and tech has led the market, but Facebook hasn't looked in that sector, hasn't looked that great since July, since their earnings failed since they made new highs. So, really, Amazon was leading the way, Apple was leading the way, and those stocks can only do it for so long. Overall, again, we're getting into earnings season, I am optimistic, but I will say one thing, remember when we sold off very quickly earlier in the year, then we rallied, then we retested, and then we went nowhere's filled for months and months and months. I do not want to see that happen this time. In other words, what I want to see, whatever the buying does come back in, I want to see it continue. I want to see us go back up and over the highs. Well, what would make that happen? The market has to, we want to talk specifically, the Dow really needs to get over twenty six thousand and then go back up and get to twenty seven thousand. Because remember, we never got over it. We never really, we got it right there, right there, right there, right there. Jeffrey. Yes, sir. What do you what do you make of this? Even as the rally, when we hit the all time high, it wasn't brought participation and that was one of the great fears is that, OK, whatever happens to this rally, if the big tech names, it's a handful of a half dozen names, if they started to falter, we got our answer. And, you know, again, it's worrisome because I think even if we resume this rally, it's still going to be selective. I don't think investors can just throw darts. I think as an economist, I have no idea why stocks are down. I mean, I look at the market, it doesn't make sense to me that one of the big culprits that we've heard the last seven to ten days, interest rates, interest rates backed up. They've been backing up really since early to mid August. You could blame the Fed for that, perhaps. But in my mind, that's not a good reason for equities to be down. So if investors are at home seeing higher treasury yields and saying that's the time to sell stocks, I think that's where you might be wrong. The economy is strong enough to withstand higher treasury yields. Certainly treasury yields moving from 280 on a 10 year. Are you confident in this Fed? Are you confident in the Jerome Powell led Fed not to force the issue not to overdo it because the Fed has a very long history of overdoing it. I appreciate his humility, his practical approach. He's very open about they don't know where they will end up in the cycle. The bond market going into the last couple of weeks was very certain, Charles, about where they would end up. Bond participants would say they're going to stop at 3 percent. He just said, hey, no, we don't know exactly where we're going to go slowly, which I think they are going slowly, one hike per quarter is slow. And they're going to wait, see if they break anything and then continue along. And I think a 6 percent pullback across broad indices is not breaking things. Sure. We're not in a downtrend. People are saying, well, we're close to a downtrend. We're nowhere near a downtrend. I'll tell you that right now. Not even in any of the stocks that have dropped are we nowhere near downtrends because they have rallied so much in the last 24 months since Trump got elected where we're almost two years. The Dow would have to break 23,000 and I'm being very technical here, but that's the number for us to be technically in a downtrend. It's not the 200 per moving average. And to his point too, as far as why, sometimes there isn't a reason why. Sometimes sometimes it's more sellers and buyers. That's right. And when you have selling, guess what people get scared and they panic and there isn't a reason. Sure. Sure. And of course, you add in the machines and the algorithms and all the other stuff. And here you have a cauldron and that's where we are. Thank you both very much. Want to turn to the other big story in the last 24 hours and that's.


Elections in Brazil are just over one week away. On October 2, over 156 million people will vote in the first round of elections. This is the largest electorate in Brazil's history. They will be electing the next president of the country, along with 27 state and federal governors, 27 senators, and 513 federal, state, and district deputies. How does voting work? In Brazil, a computerized voting system is used. This system considerably eliminates human intervention in the counting and tallying procedures and guarantees greater security and transparency in the electoral process. The computerized voting system also means that results are available in record time. The superior electoral court, TSE, will begin counting as soon as the polling stations close at 5 p.m. local time and the process is usually completed in two hours. What are the polls saying? There are currently nine candidates contesting in the presidential race, but all major polls have indicated two frontrunners. Former president Luiz Inácio Lula da Silva of the Workers' Party of Brazil is leading in all major voter-intention polls with 45 to 47 percent. Some polls have even predicted that the former president will win in the first round. After Lula, incumbent far-right president Jair Bolsonaro, candidate of the Liberal Party, is polling at around 31 percent. Ciro Gomez of the Democratic Labor Party is polling at 7 percent. Simón Tabet of the Brazilian Democratic Movement is at 5 percent. And Zoraya Thorike of União Brasil is at 1 percent. The other candidates did not reach 1 percent. If the leading candidate does not receive more than 50 percent of the total valid votes in the first round, a second round will be held on October 30th. Let's take a look at the leading candidates. Luiz Inácio Lula da Silva is running for president on the ticket of the left-leaning Workers' Party of Brazil. Lula served as president of Brazil from 2003 to 2011. He reached a record high 87 percent approval rating in 2010 due to his robust public policies focused on lifting millions of Brazilians out of poverty and hunger and amplifying access to higher education, health care and employment. Lula himself hailed from a humble beginning in Brazil's northeast due to drought and poverty, he moved with his family to São Paulo when he was 7 years old. He began to work at the age of 8 and did not complete primary school education. In 1966, in the midst of the military dictatorship in Brazil, he became a metal worker and started his trade union militancy. By 1975, Lula was elected as president of the union of over 100,000 workers with 92 percent of the votes. In February 1980, he co-founded the Workers' Party and continued to lead militant workers' struggles including a 41-day strike with over 300,000 workers. He played a key role in the struggle for democracy and helped rewrite the country's constitution. In 1986, after several presidential campaigns, he was victorious in 2002. With a coup against his successor, Dumar Rousseff, in 2016, the lawfare campaign against the Workers' Party intensified. Lula was wrongly accused and convicted of corruption charges and went to jail for 580 days. This stopped him from contesting the 2018 presidential elections and paved the way for the victory of Jair Bolsonaro and made a storm of fake news and misinformation. Lula has since been exonerated of all charges. Leading up to these elections, Lula has managed to galvanize even more support across broad sectors of society, from militant social movements to bankers, promising to bring hope back to Brazil. Some 10 points behind Lula is incumbent Jair Bolsonaro, who is the candidate of the Liberal Party. Bolsonaro served as a federal deputy for nearly 30 years, but only two of his bills became law. He became known for his explosive and hateful statements about LGBTQI people, women, black people, poor people, left and progressive activists, and human rights offenders. During his time as president, 149 impeachment requests were presented to Brazil's Chamber of Deputies. The impeachment requests were related to his disastrous management of the COVID-19 pandemic, such as the spreading of fake news about medication, the blocking of vaccine approval, and lack of isolation measures, as well as for his anti-democratic statements and attacks on other branches of power, among others. Bolsonaro's term was also characterized by attacks on the environment, including the authorization of hundreds of pesticides and a 52.9 increase in the deforestation of the Amazon. Bolsonaro has also harshly criticized the country's electronic voting system, calling for a return to paper ballots and suggesting that he won't respect the results otherwise. The Supreme Federal Court is another one of his targets, and he has called it for it to be purged and even suggested that the armed forces should intervene. His incendiary discourse has created an uneasiness around the electoral process, and many analysts have suspected that he might attempt a military coup if he loses. These elections are already taking place amid an acute political, economic, and social crisis in the country, which began in 2015 and has worsened in recent years. This is seen on a structural level with deindustrialization, the decline in exportation of raw materials, and privatization of lucrative state enterprises. The currency has also reached a record low rate. The impacts on the Brazilian people have been grave. Last year, 33 million Brazilians were reported to be hungry, the highest number recorded in the last 30 years, and nearly 125 million people are suffering from some level of food insecurity. There has also been a dramatic increase in homelessness, unemployment, and prices of basic commodities. The over 685,000 deaths from COVID-19 continue to cast a shadow on the lives of millions. With the two very different projects for the country on the slate, the October 2nd elections will certainly be decisive. Stay tuned to all the latest updates on Brazil's elections with People's Dispatch.


Applied from Las Vegas. It's theCUBE, covering AWS Executive Summit. Brought to you by Accenture. Welcome back everyone to theCUBE's live coverage of the Accenture Executive Summit here at AWS Reinvent. I'm your host, Rebecca Knight. We have three guests for this segment. We have Dan Sheeran, the Director of Global Accounts at AWS. Thank you so much for coming on the show. We have Ken Schwartz, Vice President Enterprise Analytics at Health First. Welcome Ken and Shale Jane, Lead Data Business Group in North America. Accenture, thank you so much. I'm glad to have you all here. Good to be here. Yes. So we're talking today about driving digital transformation via data and analytics. I'm going to start with you, Ken. Tell us our viewers a little bit about Health First as a business. Sure, Health First is the largest not-for-profit health plan in New York City. It's a 26 year old company. It's owned by 15 sponsor hospitals. So the business model is a little different than most health plans. The sponsor hospitals who own us, we actually share risk with the sponsor hospitals. So if our members obtain their medical services at sponsor hospitals, we have the same goal of keeping them out of the hospitals, essentially. And we, the revenue stays within the healthcare delivery system. So it's a little bit different business model. We've been very successful. We're a very local plan. So we have a big footprint in the communities, the very diverse communities of New York City. We're kind of part of the fabric of New York City. And that's really very much part of our brand. So your patient population is mostly, I mean, who are, who comprises? 1.4 million members, 1.4 million people mostly in New York City. So we like to say, if you ride the subway in New York City, it's very likely that one in eight people are health first members. One in three if you're in the Bronx. Mostly underserved populations in a lot of cases. And people that really, like I said, sort of the real fabric of communities in the city. So what were the reasons that Health First embarked on this data transformation? Really just, again, a 26 year old company kind of outgrowing its infrastructure and really wanting to make sure that we can keep up with growth because we've been lucky to grow steadily over our entire history. And at a certain point in time, the legacy systems and legacy data systems don't support the new ways to do things, prescriptive predictive analytics, some of the great new capabilities that you can do in the cloud. So it became really important to get off the legacy hardware, get off the legacy approaches. And a big people change management to make that happen. I mean, that's kind of what we've been living for about the last three years. So what were some of the goals? The goals are just to be able to do things at scale for, in the legacy systems, I think we really didn't support analytics across our entire membership and our entire 30 million claims a year, 1.4 million members, 37,000 providers. So just being able, initially, just being able to query and do sort of business intelligence at scale across that much data. The old infrastructure just didn't support it. From there, we've gone into launching our data science platform and things like that. So like I said, just being able to keep up with the times and provide more information, get to know everything we can possibly know about our members so that we can reach out to them in better, more effective ways. So, Shale, I want to bring you in here a little bit. How did Accenture partner with Health First in helping it achieve this goal? Yeah, so we work with companies like Health First all the time and you almost have to embark on a journey that starts with a concept, almost the imagination, if you will, and then you take it into a test mode, a pilot mode, and a scale-up mode. And we were fortunate enough actually to be involved in the journey that Health First has had all throughout those stages, if you will. And it's been a very rewarding experience because Health First is one of those companies that actually took a very early lead on moving to the cloud, moving to the new data architectures, and actually trying new technologies such as we recently finished a knowledge graph project with them as well, which is relatively new in the space. So it's been a rewarding experience for us as well. So what are some of the challenges that you faced along this journey, organization of lead technically, and how did you overcome them? I think early on it's whole new roles and new technical paths that just didn't exist at the company. So Accenture, being partner, good support from AWS really helped us. So we didn't have machine learning engineers and data engineers and cloud practitioners. So you don't grow that overnight. So having professionals come on graph as well. We oftentimes you start off with the use case and you have somebody just download things and get going, right? And that's great, but that doesn't really land it. So getting professionals who have done things in the new environments on board to help us out was really key. In the challenges side, I really think the people change management can be really hard. Again, if you're sort of a brand new company or startup and you have to do your business on the cloud and it's dependent on that from day one, it's a lot different then. We have a lot of people, our company's been successful for 26 years. We have to look to the future to make these changes, but we've been doing pretty well sort of on our legacy platforms and things like that. So it's not always easy to just get people to change streams and say like, hey, you really should be doing this differently. So I think the people change management, realizing you have to kind of sometimes lead with use cases, lead with pilots, lead people by the hands to get from point A to point B. Was kind of surprising, but we've learned that that's true.  What do you make of what he said about the people change and how that is, in a lot of ways, the hardest? I couldn't agree more. In fact, that was the first point that Andy Jesse led off with this morning in his keynote, that in any of these projects, if you don't start with leadership that is both committed to the change and coordinated among themselves, then you've got no chance of success. Now, that's a necessary condition. It's not sufficient. You do need to drive that change through the organization. And the scenario that Ken described is very common and what we see in that you start with enthusiasts typically that we often call builders who are going to be at a department who are playing around with tools because one of the advantages, of course, of AWS is it's all self-serve. You can get started very easily, create your own account. But it is tricky to make sure that before that gets too far along that an enterprise-wide architecture and strategy is agreed upon or else you can get sort of half-pregnant with an approach that really is not going to serve the long-term objectives. And that's the reason why working with Accenture, getting the reference architecture for a data lake really agreed on early on in this project was essential. And that's what allowed once that foundation was in place all these other benefits to accrue pretty quickly. So on a project like this, how closely are you all working together and to get the job done? And what is the collaboration? What is the process and what does it look like? Well, I'm sure that each of us is going to have an answer to that. But our perspective on that at AWS is to always be customer-led. We have some customers who themselves want to use a journey like this to become a builder organization. And one of their strategic objectives is that their developers are the ones who are really at the controls long-term building out a lot of new features. We have other customers who really want to be principally buyers. They'll have some enthusiasts here and there in their organization, but they really want to principally define the objectives, participate in the architecture, but then really lean on somebody like an Accenture to implement it and to also stand behind it afterwards. So in this case, Accenture played a central role, but we really think that the very first meeting needs to be sit down and listen to what the customer wants. Yeah, I'd say we're builders, but with guidance that against some, we want people who have hit their heads on things and kind of learn from that. And that's the force multiplier instead of having. And we definitely jumped into use cases that we wanted to just build. Like I said, and a year later, we're a little bit spinning our wheels. It's not really hurting anything because it's not necessarily anything anybody else is for anyway. It's standing up a graph database. It's just something we wanted to do, right? So having these guys come in as force multipliers has been really useful. So we reach out to AWS, have really good support from AWS. When we need it, AWS also has great online training, the loft in Lower Manhattan, or in SoHo we go to things as well. So we can help ourselves. And then Accenture has just really been embedded with us too. We have seven or eight data engineers that have really walked pretty much every mile with us so far on this journey. So, yeah. The only thing I would add to it is that we have a very strong relationship with AWS. And as such, we become privy to a lot of the things that are coming down the pike, if you will. So that can add value. At the same time, we have very good access to some of the top technologists within AWS as well. So we could bring that to bear. So that all kind of works really well together having a partnership with AWS. And then with our, we have different parts of the organization that can also bring not just the technology skills, but also domain skills as well. So we can add to some of the thinking behind the use cases as well. So that's another part of the collaboration that happened. That's right. Including in the security model, right? And if we don't have that right from the beginning, then nothing else becomes possible. And there's a lot of that domain expertise within Accenture that helps us scale. One of the things that I've heard a lot today at the Accenture Executive Summit is this idea of thinking differently about failure. And this is an idea that's in Silicon Valley. Failed, failed better, fail happier, fail up, all these things. Fail fast, exactly. Fail forward. Fail team. But all of them. How do you, how, but how does a non-profit in New York City, how does it embrace that? I mean, as we've talked about a lot here just now, the people are the hardest part. That's a really different mindset and a really big change for an organization like Health First. But the business model of working with AWS too is pay as you go and everything. It's like failing cheap is very possible. We're not putting out huge upfront costs to turn something on. We can turn it on for pennies sometimes and do a use case. So it really does support experimentation. We've been, one of our successes I think is we really just, we try a lot of things. So we've had to learn how to do that and learn how to sort of either pull in more experienced people to help us or just cut it off kind of in some cases. So yeah, the cloud patterns and AWS business model just makes it really easy. And it's also key of course to have some quick wins that are highly visible. So it's my understanding that in the case of Health First there was, you know, whether it's reimbursement claims or there's potential fraud that can be detected that is a lot easier to start doing once you got your data into a common data lake and you've got world-class analytics tools that are available directly to the business analysts instead of requiring lots of hand-holding and passing data sets around. When you get those initial quick wins that builds the kind of enthusiasm that allows you to then take this from being a project that people are skeptical about to people really seeing the value. And people get excited about it too. So talk about some of the benefits that your members have seen from this. Sure, so again we have 1.4 million members. So just something pretty simple. Every health plan wants to prevent readmissions. So someone's been in the hospital and then they have to go right back with the same condition. That's bad for the member, bad for the plan, bad for everybody, right? So just being able to take a day's science model on our own data, train it up for predicting readmissions. Again, we have large care management, community, many nurses go out in the field every day and meet members, but now that we can give them a list of the 500 most important members and it's also self-service, it's in a dashboard that's running in Redshift and people can go and just get their lists. I mean, that's really profoundly satisfying and important to change our members' health outcomes. That's only one example, that was kind of the first model we built, but we have models for people being adhered to their medication. Just a lot of things that we can do targeted interventions instead of kind of having a bunch of business roles kind of in your head of who you think you should reach out to. This is the data is telling us who's most at risk. And sometimes empowering the call center personnel when you can give them access to data that allows them to really personalize that phone call experience with somebody, it's a relatively low cost way to surprise and delight the patient or the health plan member. And that then drives customer satisfaction scores, which are very important in the health care industry for all sorts of reasons related to accreditation, related to reimbursement and also frankly just related to enrollment and retention. I speak from experience when I say the best companies are the ones with the good call centers that you just are happy and you get off the phone and you don't want to slam it down, you're happy to talk to them. So final pieces of advice for companies that are trying to drive change through data analytics, what is the best practice, best piece of advice? Well, because you looked at me, I guess I'll go first. I'm sure we each have our answer to that. We always, it sounds obvious, but it's surprisingly often not the case once you get past the initial, five minutes of a conversation. Really stress, are we actually focused on a real problem as opposed to something that sounds cool or fun to go experiment with? Because these tools, as Ken said, these are, it's fun to play with these self-service AI tools, you can predict all sorts of things. Is it an actual pain point for either an internal customer or an external customer? Yeah, I think you hit it on the head as well. Best advice to starting this is get some wins, get some early wins, and then don't be afraid to experiment and don't be afraid to think outside the box. Shale? I think I'd say there are two pieces of advice. One is focused on strategy, like Dan was talking about before, because with tools like AWS where you can literally use your credit card to get started, you can lose sight of the big picture. So have a data strategy that is directly tied to your business strategy is very important. And the second is, instead of thinking about building a data pipeline for a specific use case, think about building a platform, a data platform that can serve the need of today and tomorrow as well in an architecture that is fit for purpose architecture, like Andy Jesse talked about today. So don't go for a Swiss Army knife approach. Go for fit for purpose platforms, products, models, if you will, that can allow you to build that platform that can serve the need of the future as well. Excellent, thank you so much. Shale, Ken, and Dan, thanks for coming on theCUBE. Thank you, thanks. Thank you. I'm Rebecca Knight, stay tuned for more of theCUBE's live coverage of the Accenture Executive Summit.


All right so we've been talking about policy implementation and we're gonna continue today by looking at these implementation inducements then I want to go on and pursue a couple of other issues today and in particular the problem of feedback this notion of street level bureaucrats and implementation and why it's important but I want to pick up what we left off on Tuesday by focusing on some general implementation strategies. We looked initially at the issue of central imposed rules as a strategy and talked about some of the challenges they face and I want to go down and look at market incentives, partnerships and education and information in a little detail and I want to focus on market incentives initially to kick this off this morning. Let me say this, there's been an increasing emphasis in the United States and also in many other developed countries in recent years on using so-called market incentives to implement public policies. There are so many examples of this has become so ubiquitous and widespread that it's almost become a kind of a political theology that well you know the best way to get things done is to use economic incentives, pay people for doing the right thing, give them reductions on their taxes, tax credits, whatever kind of inducements you come up with. One of the best examples recently is in the base over environmental policy and in particular over climate change. The major initiative of the Obama administration for example is the notion of cap and trade which essentially means that emitters of greenhouse gases in particular utilities and large industrial sectors would get a credit if they contain their carbon dioxide emissions within a prescribed cap and to make that cap economically worthwhile if they exceed their compliance which is to say if they reduce their emissions even further than the cap will regulate or prescribe then they can do what with those conditions that they say. They can basically sell them to somebody else that's having a difficult time achieving those reductions because they can't afford carbon capture technologies or fuel substitution or other means to obtain emission reductions. So it's an economically efficient means of achieving the goal of reducing greenhouse gas emissions. So far, the Congress of the United States has not approved a cap and trade policy under the Clean Air Act for carbon dioxide so the policy remains just theoretical policy. Is there precedent for cap and trade in environmental policy? Anybody know? Europe's been doing this for a couple of decades now in parts of Europe and even here in the United States the Clean Air Act of 1992 has a cap and trade allowance for sulfur dioxide and air pollution. In fact, it's been working utilities about the United States actually trade emission rights and the evidence is very very strong that it has reduced sulfur dioxide emissions because what it's done is large utilities that can afford to use clean coal technologies have brought down their level of sulfur dioxide emissions. They sold their tradable emissions allowances to poorer utilities and they're allowed to pollute more. So cap and trade being one example of market incentives. Some advantages and disadvantages. Clearly, market incentives are flexible. Basically they give you a lot of room for discretion. You can participate or you can't participate. It's up to you. It's an inducement to participate. You can actually earn greater revenues so on programs like the environmental protection programs it's a good strategy. However, strategies are sometimes unclear. When we talk about market incentives we assume that there's a clarity that everyone understands what it means to be efficient or everyone understands precisely what price point, for example, a charge or a fee or an allowance should be set. And that's not true by experience. What has to happen, what does happen is that it takes a long time before the market sorts itself out and we can learn in fact how much savings can actually be engendered and whether or not it will be worth your while. And in fact what often happens is that a lot of organizations that participate in these strategies participate through what's called low hanging fruit which is an expression the economists use that means you participate if it doesn't cost you very much and if it's easy to enter and let's say you're a large utility company and you were going to convert all of your old coal plants to natural gas anyway because the old coal plants are so old and can't meet emission standards you were going to shut them down and convert to natural gas which is not fairly economical and plentiful, right? So you were going to do that anyway as part of your business strategy so okay we'll participate, we'll participate in this program. Also how does one assess compliance? Is progress measured through, sorry I should have corrected that, but is progress measured by participation or is progress measured by actual achievement of some larger goal and oftentimes you'll hear in market incentives programs people say well this is a good program because lots of members of the affected universe participate so it's progress measured by the number of participants or is progress measured by some objective goal like the bringing down of emissions so that's something to participate and how do you assess compliance level of change how much gain is genuine and how much is a pecuniary effect and let me let me stress what I mean by pecuniary effect here. You recall some weeks ago we were talking about assessing public policies from an economic perspective a benefit-cost perspective economists often argue in policy analysis conversations that what we often define as a real benefit isn't like redevelopment agencies being an example isn't an actual gain to society it's just taking a gain that would have been one location moving it to another. Did you see how that might play out in something like emissions training policy? It should be pretty obvious basically someone say you're paying for the right to pollute you know Southern California Edison can afford to convert its old power plants to clean coal and natural gas and they even have some allowance for renewable energy because in California there's lots of economic incentives to adopt that so they'll trade emissions with some utility in Arizona or Utah and that utility is basically buying the right to pollute more so all we're doing is moving the pollution from California to Utah that's a pecuniary effect it's not a real gain so something to think about. Questions about that so market incentives market incentives are widely used in environmental policy it's probably the one area where we see market incentives more widely used than in any other policy area it's starting to be used in as we'll see it a little bit education to some extent field of public education with mixed results we'll talk about no child left behind. Mary? Can you say how you think that relates to like in Orange County we cite them like the gas in the landfill and we sell it through the third party back to the blessing company as fuel so it's like a county entity selling it the landfill back to itself but it's through yeah you have different agencies that are in charge of the generation of power versus those that are managing the solid waste. Right, but it still ultimately comes back to the county budget but it's just done through this. Right, but it's a good way it's because the county can't necessarily enforce environmental policies on other like transportation agencies which operate independently so this is a good way to do yeah but you're inducing other actors that you don't have a direct command or control over to do certain things that benefit the county as a whole. Yeah yeah a lot of local governments do this in the United States it's sort of like school systems school systems are parts of counties and cities but they're often governed by their own special districts and government doesn't have the county government may have control over buildings school buildings but they don't necessarily have control over other aspects of the budget so you try to induce through various ways the school system to do certain things or an orange county transportation orange county transportation authority is an independent agency that has its own does get money from the county but also has its own revenue source right and it's own director and as a result does it always do what the county wants it to do? No, in fact that's real sources of controversy. The county would like more bus lines, would like more transit oriented development in some areas of the county, OCTA says well we operate on a narrow budget margin, you don't give us any funds, we have to take it out of ridership so we have to set our priorities differently. So a couple things about voluntary partnership I mentioned last time this is an innovation that's also been done in a lot of different areas of public policy but it basically says that the government cannot be solely responsible for implementing programs cannot be solely responsible for implementing policies so they need to work with non-state actors they need to work with the civil society and again environmental example seemed to predominate in this area because these are where most of the innovations in implementation have taken place but there are many ways in which this works particularly in the United States the Environmental Protection Agency for example has decided to negotiate with all 50 states what are called the performance agreements in which basically they delegate to each state ways of complying with the Clean Water Act, Clean Air Act, the Autistic Substances Control Act, all of these variety of out of that soup of federal environmental laws out there and basically the states are given the discretion for carrying out implementing the laws. What do they get for it? Well what they get for it is a promise that if they comply in their own way they will get funding for non-environmental programs. If you agree to meet environmental requirements and do it in your own individual way we'll make sure that you're getting that highway funds included in your highway system. We'll make sure you get public works funds for improving your infrastructure. The idea is to transfer it into some non-environmental area to induce compliance and one way that the federal government can induce compliance is to transfer block grants of money for various programs. This is a fairly old concept fairly old meaning it goes back to the early 1970s. One of the interesting things about these performance partnership agreements is they began, I feel compelled to say this given the state of our federal budget, this began in an era when the national government was running surpluses and states were never running surpluses to speak of very much but the federal government was running surpluses and so the theory was you have all this extra money you can either reduce taxes or you can take these surpluses and use them in some constructive distributive fashion to achieve a social debt and so the idea was to transfer money to states to induce them to do certain things. Federal facility compliance agreements another form of partnership. Throughout the United States you have lands that are owned by federal agencies, military bases, weapons sites, national laboratories, all kinds of things that are run by the federal government many of which have been shut down and many of which like the great park which before it was a great park or before it was in becoming the great park was what was a marine airbase, El Toro and of course it's pristine and clean, your kids can play in the dirt. Seriously it's a pretty contaminated place in spots that's a lot of work that needs to be taken place and there's actually a federal facility compliance agreement between the state of California and the Department of Defense on cleaning up El Toro and in fact much of the federal monies that are going to the great park are not going to the park that's coming out of development funds that are being raised by the city of Irvine as you know working in partnership with private sector. The federal government is has an agreement with the state of California to clean up El Toro and to make it suitable for the things that Irvine and the state of California would like to do in Orange County. So these are highly flexible, they're negotiable for both sets of actors that the state federal government state governments and local governments all of these and at the agreement this is very important the agreement has the force of law even though it's not something that was made by Congress even though it's not a piece of legislation it's not a statute it's something that's simply negotiated by parties. Once it's negotiated it has the force of law and that's significant because it's one of the few examples that we see in the United States of a situation where a state can actually force the federal government to obey a law and usually the other way around federal government says we under the Constitution of the Congress pause with the Trump state well once you agree to this you agree it's a it's like a contract so but they do have criticisms and I wasn't thinking of the great part when I said this but I guess it is. Critics charge that such agreements tend to be negotiated in secret often away from public visibility. Kandor is an advantage in the agreement you know if you could be candid and secretive and do all kinds of negotiated things out of public view you can often come to a real agreement we know this to be true in international relations it's also true in domestic policy but it can be a problem in terms of later enforcement because people will often criticize things oh I didn't know we would be committed to doing that oh wow so in exchange for the federal government promising to clean up El Toro Orange County and the state of California commits to transforming this into a part and that wow okay gee wish I would have known that they should have covered that fact and then Orange County register well they couldn't because the agreement was negotiated in secret and the other aspect of this has to do with policy analysis I think this overlaps with much of ratings discussion and beyond that development policy analysts when they look at these agreements oftentimes they evaluate the process of agreement they'll say this was an effective process because the parties came together and agreed on ABC and they concentrate on the negotiations they concentrate on the substance of agreement what they don't pay as much attention to is the results the agreement bring about now I would argue that that's partly a function of time you don't know how to evaluate them until you see their results which may take years to occur but nevertheless this is a problem in the literature and when you look at policy analytic studies of these partnership agreements what you'll notice is that the agreements oftentimes emphasize the process by which stakeholders came together and agreed on something and that even say it was successful because they agreed to do the following things a far greater number of things that had would have been achieved if they didn't come together but that's not the same as as analyzing the outcomes this makes sense and then finally education and information I want to say a little bit about that lots of consumer programs not just environmental programs but health nutrition all kinds of labeling and alerting processes that are used to induce you and I directly as citizens to do certain things in our lives that will achieve certain policy objectives some people would say that if centrally imposed rules are the most intrusive way of inducing people to do things because you have said rules that are compelling institutions change the way they do business and so on down the line education and information is the least interest turn off the TV don't read the magazine don't look at the sign don't read the billboard it's up to you it's a totally voluntary and it's supposed to a page on individuals there's no real way to control it which is also one of its problems or challenges it's highly flexible as we know information can be tailored to a variety of audiences and a variety of context and governments spend a lot of time trying to use people to change their behavior many examples of this you know particularly in terms of consumer product safety so that's a good thing but clarity and transparency is a problem you have to be very careful in crafting a message for the affected audience and you have to ensure that you prescribe a solution it's not enough and there's been a lot of research on this it's not enough to simply warn people about something don't do this you have to tell them why they shouldn't do it what would happen if they did you one of the most direct examples of this and there's been a lot of political debate in the public health community about this there's warnings on cigarettes or tobacco products years ago those warnings used to say in a warning cigarettes maybe has it is to your health major maybe not it's kind of indifferent indecisive now what do they say anybody know there's no person here what they say on the packs of cigarettes they have no carcinogens that would dissuade me yeah it's pretty direct it's not only telling you not to do something but it's telling you the consequences if you do it so can choose to ignore warnings or not because education and information can be ignored or misunderstood it's difficult to assess effectiveness we do know a number of studies that have been done on this suggests that when the information is relevant to people's interests the information tends to be effective now what makes something relevant well that depends on the audience but for example we know this in california with things like water and electricity utilities if you can convince people that if they do certain things they will save money they will pay less on their bill if they shut off their lights you know the debate that the new fluorescent bulbs how many of you found can i read it with those strengthway of asking questions okay uh but we have to buy these new fluorescent bulbs because incandescent bulbs have been banned and one of the things that um federal credit commission and others have tried to do is to figure out a way of abusing people to use them to buy them a lot of consumers are still resisting and one of the most effective tools is the fact that they use about 75 percent less electricity for the same illumination and they last longer which means that in the long run you save money both on your electricity bill and on the bulb itself isn't there a major issue with the disposal of them i mean i think they have certain chemicals that should be landed on yeah not so directly you're supposed to be taking them to a special location yeah with your batteries but it's a great question it's a great question and the message is extremely mixed there is less mercury in the average fluorescent bulb that's used in regular electrical appliances uh than there is in the kind of household thermometers that you use when you have the fever and when you break those it's a kind of dangerous thing there's less mercury in them but the question is how much is a lot with mercury because it's a very pernicious substance that it gets in the environment that's inhaled particularly children and elderly it's very very dangerous it's very toxic worse and some of you have seen this on the packages that come with the bulbs and they give you this elaborate set of instructions what to do with breaks open the windows put a mask on sweep the contents into a sealable plastic container you know and then dispose of it separately from everything else it doesn't sound very uh concerted i mean it sort of sounds like wow i just went out and bought toxic waste in my house what a cool thing uh but it's a great question because i think it really gets to the heart of this matter what's relevant is the saving money relevant or is the health and safety of my household more relevant that's one of the bases going on within the consumer community on this and it started to resonate in Congress Congress is considering reconsidering whether or not there should be this national mandate on replacing incandescent bulbs because of this concern so if the issue of relevancy is cost savings then people will do it the other thing i will say in conclusion about all this is that you'll notice that these inducements like other policy elements we've talked about over the past few weeks are not conducted in isolation normally what you have is a set of implementation strategies that use some combination of these devices so there's regulation but there's also some market incentive at some level plus there's education plus there may be a partition well an interesting example of education and information um strategy is Mexico uses soap operas to promote family planning yeah and one of the reasons they do that is the government doesn't want to come out as being like an active policy that is pro family planning yes the church has that that's that's a great example because yeah it is effective and and it shows the combination which is culturally shaped of using a kind of a partnership and a form of education form of partnership that makes sense because as you go out of the government promoted the record family planning in Mexico there'd be tremendous political opposition from those political parties like the pond which is very very strong strongly aligned with the Catholic Church and there'd be tremendous political opposition political risk but if you can do it through a very popular medium that many people in Mexico enjoy namely soap operas then you can get the message through without seeming to come from government and of course Mexico does have unlike the United States the government and the media work in a very close partnership some people would say that's you know bad because it's sort of in terms of what we consider freedom of expression or freedom of speech is not something that's as embedded a part of the tradition as it is in a liberal libertarian society of the United States but it works it works other questions availability so we can spend all the time we want to talking about the challenges of various strategies to induce implementation but when you talk about inducements whether it be rules and regulations or the marketing incentives or economic incentives or educational programs or partnerships you still have to talk about resources there has to be money and people and talent available to implement public policies and i want to spend some time on this because resources not only are becoming but i would say in virtually every country in the world have become perhaps the paramount issue in shaping implementation strategies and helping governments decide how and why they're going to try to implement policies in certain ways and let me suggest that we can actually unpack this problem as having sort of three distinct but interrelated aspects the first is the collecting of revenues they might say well what's the issue there you know governments always tax it's easy and then it's just a question as we saw last week and we talked about redistributive policies and before that distributive policies where you set your priorities how you want to allocate those revenues well not so fast it's it's a difficult challenge it's a difficult challenge for developing nations because they simply don't have the capacity to raise large amounts of revenues which by the way great example that you pointed out with mexico really fits this perfectly i think you know the state does not have a huge capacity to regulate family plan even if they had it in their mind to do so they don't have the capacity to do so in terms of the of a public health sector that penetrates to the lowest level of society you're using other vehicles that do have those resources like the media right which is a good strategy it fits fits the the cultural constraint but let me suggest this is also a constraint in more developed societies where a policy strategy and this is an increasing trend not just at the national level but within states of what we call self funding we see this in california oftentimes when a new public policy is introduced particularly in recent years the expansion of the community college system the expansion of our water resources system the legislature will say well that's fine but we're not going to impose the responsibility for those policies on all californians who pay taxes not every californian attends community college not every californian benefits from expanding the state water project i know probably turning around and saying well but we all consume water and we all eat food which was grown by the water provided but the way legislators think about these things tends to be geared very much to this distributive model of policy we've been talking about so what they'll do is they'll require self funding and we're going to look at an example of this in a few minutes and how this game can be played in a variety of directions self funding which is done in many developed policies simply says that a public policy has to in effect have its own trust fund that is prescribed and allocated for that policy now sometimes the reasons for doing this are really very good economics social security and we talked about pension systems a couple weeks ago social security is a very good example of this when the social security system was established in 1935 the united states and later european governments that adopted comparable systems adopted a strategy in which they said the only way this can really work is if the money that pays for people's retirements is put into a separate off-budget category it can't be intermingled with expenditures for environmental protection building roads or post offices or whatever national defense it has to be kept in a separate fund want to build public trust if you're asking people to set aside a portion of their income that they may never see they may not live to see it of course their children might benefit from it their spouses might benefit from it but they may never see the benefits to build trust and confidence you've got to ensure that those revenues are put in a kind of a lockbox that is devoted specifically to that program that's how social security was designed it built public confidence it became an enormously popular third rail of politics as we say in the united states precisely for that reason now lock boxes and still run out of money that's another reason another day but the point is is that it makes the program separately and independent from other variability in tax revenues or in policy decisions or policy priorities made by other government agencies in the united states social security isn't the only policy we do this for in the 1950s beginning in the 1950s we did this with a number of public works programs and probably the best example is called the highway trust fund which was established back in 1956 at the same time the federal government created a national system of interstate and defense highways and why did they create a separate trust fund first of all let me ask how is this trust fund funded taxes on the gasoline which constitute a secreted portion of what you pay at the pump you can read the fine print on the pump and say how many pennies are going to for you that's right petrol taxes why did they establish this why not just take tax revenues and just say what we're going to build more highways this is people who are using highways paying for them yeah the idea is highways really should be paid for by those who are the beneficiaries of it which means those who drive motor vehicles both trucks as well as automobiles and came with a massive increase of the taxes as far as i know it did so that was kind of a way to depend that increase precisely if we're going to charge you for using the highways essentially it's a user fee if you stop and think about you don't pay at all we don't californians hate to pay tolls but we do pay at all the time you go to the gas station and fill up your car you're paying a user fee use the road system highways the idea was really too full one there would be a dedicated fund that would be paid for equitably by those who benefit from the public works which means that it would not be a burden to the rest of society the government knew the private sector knew that roads particularly super highways would not only need to be built but would need constant maintenance over time in a sense similar principle to social security what you're saying is this is not a one-time deal you've got to build the thing and then you've got to maintain the thing and if you're going to maintain it into the distant future indefinitely you've got to be able to have some assurance that to build public confidence this thing will actually work so that was the first reason second reason very interestingly is that it created a guaranteed source of revenue to support the ever expansion of the system according to needs the theory is as the population grows as society becomes more urbanized there will be more people who will drive they will drive further in the 1950s these were all thought of as good things oh and you'll have a bigger car which is even better and it'll get 6.5 miles okay all right so you'll have bigger cars you'll drive faster further that's good for the economy and we'll have a guaranteed way of improving the system as the revenue stream expands hiring training and equipping of personnel is another issue it's very important to regulate and to bestow benefits many programs as raiding i think elegantly points out are complex precisely because unlike the past where the job of the government was simply to pass money for or to simply enforce some regulation increasingly government programs are very complex and that they require people who are expert in monitoring results people who are highly trained to be able to measure effectiveness and monitor effectiveness of programs to evaluate them on an ongoing basis that means as raiding points out that people who work in the public sector have had to become better trained and educated in precisely the way that the audiences being affected by the policies are sadly on issue to manage health care you have to know the intricacies of health care to manage housing or transportation programs you have to be expert on the substance of those issues that means that government has had to pay more to hire and train and equip people who are a droid at doing these things that's another resource issue and it's a relatively recent horizon resource issue in a lot of countries around the world it's a big public policy challenge final observation on that this phenomenon has tended to blur the distinction this is one of the things i think that raiding points out implicitly it's blur the distinction between the public officials and the policy analysts that in fact over time many middle level bureaucrats within federal and state agencies have in effect become analysts and not only carry out a policy that they're compelled to evaluate we see this in california and the state treasurer's office for example they not only report on how much income the state is earning and how much is going out but now the policy the state treasurer's office is sort of expected to assess various public policies and whether or not the money is being spent in a wise way notice that in effect it's the imposition of a policy analytic set of skills on the very people who are not necessarily supposed to be doing that but it's a combination of resource scarcity and yet the media have that expertise next week we're going to talk about evaluation but i do want to give you a heads up because it's related to this issue of implementation and falling away another resource issue there are no policies and certainly no recent policies anywhere in the world that do not require almost intrinsically in their strategies for the gathering of information to monitor effectiveness and to carry out the policy almost all public policies today have within them the requirement that the beneficiaries of the policy or the people that implement the policy have to evaluate the policy you know where you see this really clearly uh in california is with our public university system both the cal state system and the uc systems uh the office of the president to the uc system in uh oakland one of the functions they perform is they have to report to the state on a annual basis what the university is doing the state revenues and moreover how is contributing to very specific sets of parameters that the regions have outlawed not just how many students are being graduated but how many patents are being registered to the university of california because that's a source of revenue to both the university and to the state the economic spinoffs from university activities inventions economic productivity improvements in the quality of life and the fact the university puts on a yearbook every year it's very nice a lot of pretty pictures in there but it's not just for that consumption it's a way of reporting your effectiveness as an institution some people would say it's a good example of the feedback loop in public policy what you're doing is you're reporting back on the demand side what you've achieved with the resources you have and why the system should continue to support you so in recent years as you could imagine as resources have become scarcer greater thought has been given to how to present those outcomes it's an effect of self analysis the self-assessment of what the university does and every great public university does this has to be done in order to to do this there are some issues here and we'll come back to these issues in more detail next week but i do want to highlight them now because they underscore the resource demands which is what we're talking about is long-term trend data available if it's not then you're going to have to go out and get that data you're going to have to mine it you're going to have to hire people to find it if you're dealing with public health problems you're going to have to come up with a way of reconstructing epidemiologically things that have happened in the past so that you can actually make a bona fide taste that we've made progress in spending money our presumed relationships compatible and can causality be well established i know these are questions that we get asked all the time in methods classes but here's the payoff in public policy governance and government agencies get asked the same question if you're claiming that the spending of money or the creation of a set of rules or the establishment of a set of partnerships are changing x improving health increasing nutrition making sure that more families are being fed remember our discussion of food stamps on tuesday people are going to ask you to establish causality can you in fact relate to variables in some way and if you can't if there's some intermediate intervening set of variables can you establish what those are and this costs money and are the data and conclusions trustworthy and high-end confidence questions questions i have a question because it seems like some of the problems one problems with like the negative view of the stimulus bill is because causality hasn't been permanently established that's a great yeah it's great how would you establish causality in a situation like that because you can't really have control no that's right and part of the problem is there's a fundamental disagreement over methodology one of the debates that's come up with the stimulus bill of 2009 that i think exemplifies this very well is the fact that the no government agency not the labor department not the commerce department not the treasury department of the consul on economic advisors none of them by their own admission have been able to establish categorically how many jobs have been created as a result of the stimulus bill there have been guesses a number of advocacy organizations have of course made their own guesses based on what they are advocating for you to believe and they've used all kinds of models to try to ascertain it there's no consensus on a viable model what is interesting however is that the official view of the federal agencies that are in charge of monitoring these numbers is they've tried to come up with a consensus in the other direction and they apparently have some methodologies that seem to not only have consensus within the government but externally are externally being validated by economists and academic institutions and elsewhere who don't really have a dog in the fight and the the statistic i'm talking about is not how many jobs were created but how many jobs were probably not additionally lost you've been following this argument yeah it's it's kind of a reverse logic on the unemployment rate well given the number of jobs that were being lost on a month by month basis as recorded by the labor department and given the sectors in which those jobs were being lost in it since the stimulus bill and its expenditures on public works on infrastructure on what am i leaving now public service work you know police teachers and so forth you can see a direct relationship between the decline in job loss or the stabilization of employment and stimulus expenditures that seems to be a a statistic that does resonate within the government and external communities as well now how fine a point do you want to put on these things you know if you're trying you know from a political standpoint if you go before voters and you say well we spent x billions of dollars and unemployment is the rate of unemployment is declining compared to what it would have been if we didn't do this that's not an easy set that's not the kind of thing that's going to hit you a five minute sound bite on the evening news and make you look like a hero well fewer jobs have been lost than they have been lost but it's true for it seems to be true and that is a important thing so one can say from a policy analytic framework if the goal was to somehow change to somehow create a delta a change in what would have been a trajectory of events without the policy intervention then you can say there definitely has been change whether it's the change that many people would agree late people would agree is the change you'd like to see which is an upward trend of jobs no does that help so there is this methodology today it's a very very important issue that's a good question and it depends on the policy area and what congress decides uh increasingly the trend has been that the agencies do their own initial evaluation and they in effect kind of choose their own methodology however uh increasingly with an understanding that the same data that they used must be made available to independent auditors and the principal independent auditor is the government accountability office the GAO and it's very interesting if you ever read GAO reports they don't go out and gather new data what they do is they go into an agency and they just take the numbers that you generate the defense department says we spent so many billion on this new weapons system and by gosh it's good weapons system so the GAO comes in they take your data then they go out to the factory where the new airplane was built and they go out and they talk to the people that fly it and they go out and they and they say well hmm you know we're getting kind of a different set of outcomes here you're taking these numbers and you're not using them in the right ways or you're making assumptions about certain things that don't seem to be holding up about the liability or safety or security but they don't do independent research they basically take the same data but independently evaluated so that's kind of the way it works the first step is internal evaluation the next step is an external audit and if needed a third staff might be having a special commission to investigate or validate what's going on it's not feasible to generate data how other people come in with evaluations yeah different data different related data you said totally different about that that's right that's right and so that's one of the reasons you have to be very careful in making a comparison that's viable in value so let's talk about trust funds wanted to focus in on this this is about as recent as it gets the federal fiscal year 2012 budget what will that take shape well it was supposed to take shape last fall okay but of course we missed that we always miss budgets in the federal that's kind of perennial but the obama administration is proposing something very significant somebody might be aware of this i think it really dovetails with our discussion about the sources and implementation they're proposing to alter the funding mechanisms for not just highways but other forms of transit and you can read it for yourself but it's very significant the administration through the department of transportation through secretary rave of the secretary of transportation wants to replace the fund by renaming it the transportation trust fund what do you think why should all of that money go to cars go to highways what about high speed rail what about low speed rail what about any kind of rail yes and that's the problem it's too small in the obama administration's opinion because it's too prescribed to be a small percentage so it's a very good point the point here you would have separate accounts for highways transit high speed rail what's called a national infrastructure bank i love it very interesting phrase a national infrastructure bank in the near term highways would see only a small a slightly smaller share of the trust fund that also go to inner city transit rail but longer term it would move away from a dedicated highway trust fund signaling the administration's desire to leave the country away from the automobile that is a quote from secretary rave essentially we now are a critical history where we have to think very seriously about real alternatives to private automobile these disparate pots would over time be streamlined by putting them into a larger pool that would make the department of transportation more nimble in funding good projects now there's more detail here that permit on the slide but good detail some of these things have already been appearing in other parts of transportation policy over time what would be a good project how about an integrated transportation instead of coming to the federal government with a plan to build a new highway or to build a new spur instead cities and states that want money from the trust fund have to come up with an integrated plan to chose how there's going to interlink roads with rail with inner city transit maybe even with greenways and bikeways now in fact the number of federal transportation laws ice ski early part of the decade in fact is aiming at that direction but the change here which is a very subtle but important change is by changing the nature of the trust fund and allowing monies to be shifted around that you may pay out of gasoline taxes into the fund to allow the government to more nimbly shift from account to account depending on the needs as they're defined within these integrated plans is a major change in resource implementation what do you what do you think the odds of this change being made are a terrible question to be had do you think chances would be good i think there will be opposition to this the road building industry would maybe not be so broad about this still pretty hypothetically um and they kind of i mean saying okay we want to shift that on long term means and but but they kind of don't fix it in any law or anything or any regulation means that you could easily just don't do it in other industry no that that's exactly right this is part of the budget but it has to be approved by congress which means congress of course authorizes the budget so the change in the trust fund has to be authorized by congress the obama administration is using the argument we're not asking for more revenue it's already established as a trust fund revenue is already coming in through a guaranteed source we're not asking for more revenue we're not even going to ask for an increase in the existing taxes we're just asking to be able to manage the trust differently to reflect on that you're right you can see states and regions arguing that it's going to mean the money is going to be allocated more disproportionately because transit and high speed rail benefit very specific areas and are less distributed in the country right that's exactly right and it's going to be kind of an electoral college effect in in in essence by which i mean larger more populated states particularly that are also by definition practically more urbanized would be more favored under this trust fund rating one of the things that the federal highway trust fund and one of the reasons it's been so popular as it's configured is utah in effect gets as much benefit as california have fewer people but they have interstate highways you got to go through utah to get you know the california go that latitude of the country if you change it to this you are in effect redefining what constitutes needs which means it's going to favor it's a very good way of thinking about it again we keep coming back to these issues of the sub-government and how these calculations play out among interests what interests will be winners what interests might see themselves as being losers i feel like even though every state has highways i mean in south dakota and north dakota they certainly have highways there's still you know a different amounts of highways i mean there's less highways in south dakota and utah than there are in california so there are any sort of um an apportioning of highways based on population the same thing would happen with any kind of high-speed railing right so what grounds would they really have to complain at their needs or satisfy is what they're and if you know utah is okay with having less highways based on the smaller population then she wouldn't be also okay with less well in north dakota i pay so much in federal gasoline taxes i don't think that money should go to california to build a high-speed rail system that i'm not going to use i think that money should come back to north dakota i mean that's kind of how the argument plays out but your point is the very old table and you see that the equity debate here and this is exactly how congress is going to argue florida california other northeastern corridor states will probably say this is a good thing to do but in the senate where every state has the same number of votes it's not going to quite probably pay a play on it so yeah i'm just afraid like i mean yes like california for example is a place that definitely needs something like this but i feel like people aren't going to use it because we're so accustomed to having our car yes and it's so convenient like i mean i went to school in tenor mario in 2015 the train took like six seven hours or as i could drive yes in jerry with less money than what the amtrak ticket cost so i think like there's just no cost benefit for people that's why they just use their car as much as gas and it's expensive now there's i mean to take the train that's going to buy my back is like seventy dollars i can fill up my tank for less than that i mean having my car with the whole trip that's a very good point and it raises a deeper question which i want to resonate back to all of you so this being the case how do proponents of these trust funds argue this anyway i mean why should uh you know well let me rephrase that once upon a time we didn't have freeways we didn't have interstate highways the federal government donated gave money to states to build a u.s highway system but those roads were really built mostly by the states federal government selected the routes but the states built the roads the states maintained the federal government would give a little money upkeep about 10 of the costs the interstate highway system flips at around 90 of the cost is absorbed by the federal trust fund 10 comes from the states okay states usually pay for the signage okay federal government pays for the concrete building these things uh there is an argument that has been made beginning of the 1950s that said effectively had it not been for federal intervention into a highway system maybe the automobile would not have become the favored way of intercity travel that in effect what the federal government did perhaps inadvertently was by creating an efficient at least in the fifties it was efficient an efficient system of interstate highways across the world across the country never stopped i remember my dad said this is great you can drive from new york to california without a stop sign stop one what a great thing okay all right well dad let me tell you oh thanks uh a little bit but yeah so what you've done is that you've made automobile traffic travel cheaper you've made it more economical you've made it you've increased the demand you've made it more viable prior to that people used to take trains right they take planes it trains it trains the united states in effect what i'm getting at is that subsidies of various sorts favor certain economic sectors which over time made bias against other sectors and this is how this argument i think resonates uh what proponents of this change are saying is we've been favoring the automobile for a long time we have in fact subsidized the automobile industry by building a cheap transport system even quickly erode taxes let's face it's not the money you know it was the last time you complained my gosh you pay that darn gasoline tax today and that just really irritates can't pay my rent no it just disappears you don't think about it right but you're getting this benefit that being the case the argument is used maybe it's time we subsidized another form of transportation for a while until it can get out of speed you've probably heard this argument made about rail but i just kind of throw that out there because i think there's a there's an important argument that can be made that all of these policies end up favoring or subsidizing or promoting certain sectors and the high speed rail industry will say sure we need a subsidy we're going to need something to jumpstart this but once it's jump started we can be self-sufficient just like the automobile industry other question it's a good point very good point this is the kind of uh logistical argument that is going to be taking place for some time to come for the more you like uh separate your own personal cost of the natural economy costs which are uh the way higher if you take your car since you have all the external factors this the perfect terms and accidents of health care that um like off accidents and all this and in fact if you have to pay all these yourself and developing something like that that never pays it um you might reconsider taking the car yeah you raised a very important point which i think resonates with uh particularly stones argument about symbols in public policy um externalities we pay gasoline tax and so we think we're purchasing the privilege of being able to use our automobile on these federally trust fund paid for roads but are we in fact paying for the pollution and its mitigation are we paying for the health effects that may be caused by the automobile as we pass through cities and schools located and built you know professor house has been doing tremendous amount of research on this makes a pretty compelling argument about environmental justice you know an interstate highway that passes through an elementary school that not a good thing okay so you know are those externalities captured and the answer is usually no we're paying for one specific slice of the policy pie we're not really paying for all of it so if you're really going to make comparisons in terms of nimble the dot might say well integrated transportation policy would be one that embraces efficiency but also embraces equity and further embraces environmental externalities and if you can nimble the move funds back and forth between different transportation modes you might achieve a more rational set of policy outcomes than you do if you simply funnel money in and funnel it out to one thing that makes sense that's kind of the argument that's been made by a lot of these proponents symbolically however the automobile is freedom and i don't want any restriction on my freedom let's end up this morning i want to talk about feedback and policy readjustment the phrase principal agent theory was used in another context a few weeks ago when we talked about information and it also applies very very strongly and directly and hopefully maybe we'll get to this case study this morning if not we'll pick it up on Tuesday but basically principal agent theory applies in that top level and what we called on Tuesday street level remember the distinction top level bureaucrats street level bureaucrats or officials and the public define public policy problems different in fact everything we've been talking about this morning i think example applies depending on where you stand in the policy process you might just find a problem from a different perspective it's partly a function of the different kinds of knowledge that people hold within society there is such a thing as local knowledge versus expert knowledge we see this problem in urban planning for example with anti-poverty programs and community development programs one of the criticisms of policies that are implemented from above and dictate from the top down what should be done is that they don't really take into account the needs of people who may be more aware of problems from the vantage point of a local neighborhood maybe they understand nutrition issues or environmental justice issues more acutely than somebody sitting at the top of the bureaucracy now here's where principal agent theory is a very important tool for understanding this according to p-a-t principal agent theory feedback is affected i get this very interesting social science concept by what subordinates think their bosses want to hear how many of us have ever worked in bureaucracies yes thank you okay what do they want me to tell it is this policy effective let me think about that for a while and the degree to which principles rely on subordinates for information about what's really occurring on the ground do principles really want to know do they ask do they inquire or would they rather not know because uh how did mr gore put it um a uh an inconvenient truth you know we've all known about inconvenient truths many examples of this i mentioned a couple of these last time and i want to focus in more detail about one of these law enforcement the three strikes policy in california the cop on the beat prosecuting attorneys penal officials have a more negative view of the implications of three strikes then does the state legislature and previous governors of california who have supported this because from their vantage point and say publicly popular issue people want to say yeah three strikes you're up sounds great it's a compelling rhetoric there's a lot of symbolic value the stone points out but it may not be effective if you're the person that has to charge someone with a crime or prosecute them through the system or pay for them to be incarcerated in education no child left behind which is a case we are going to look at specifically is how this plays out in this principal agent theory context classroom teachers and principals administrators have a somewhat different view of no child left behind then do the architects of the law and in fact it's not always clear it's not that there's consensus in fact as we're going to see there's a lot of dissensus both between subordinates and principals some subordinates think it's very good some subordinates think it's not so good some principals think it's very good some principals don't think it's very good it's a very complex interplay of principal agent theory as we'll see and a disaster preparedness emergency responders and healthcare workers often view disasters and the needs of disaster response very differently than principals remember Katrina one of the most visible and telling problems of hurricane Katrina was from the perspective of FEMA federal emergency management agency you might recall we're there we're on the ground we're aware of the problems we're right there we're responding we're attentive they should have asked people in the warlands they didn't the emergency responders and healthcare workers on the ground were saying there was a complete disconnect a complete and total breakdown the principals did not want to know and they didn't keep lines of communication open about how bad things were what resources were needed how quickly how urgently in this case the subordinates spoke up but they were often ignored and the principals often didn't ask because they did not want to think about the unthinker certainly every time a major disaster strikes we know what to do we're assuming here so let me leave you with this thought and next Tuesday we'll pick up with this case study which is also a good case study of evaluation in some ways we suggest that what principal agent theory teaches is that effective feedback and you do need effective feedback the policy is going to be implemented well effective feedback occurs when the street level bureaucrats and the upper level officials can freely communicate now that's easy to say but what do we mean by free communication well let me suggest a little deeper analysis here free communication means that the street level bureaucrats very significant can share information with the principals honestly and without fear of penalty or retribution what do you mean it's not working how dare you accuse us this is a real problem in public bureaucracies it's easy to ask why do organizations that implement policies fail but when we think of it in these terms it becomes a little easier to understand oftentimes people at lower levels are afraid to give information because they do not believe it will be embraced and that they will be seen as some way as either being insubordinate ineffective negligent or trying to reflect badly on their supervisors questions and comments how many of you have seen these sorts of experiences it's very common and it's a classic maybe the most classic implementation problem related to feedback all right i'll see you next Tuesday