The introduction of the euro is accompanied by an independent European Central Bank (ECB) which is solely responsible for monetary policy in the euro zone. No European institution will be introduced to flank the ECB. This particular institutional design is problematic. This article argues that Economic and Monetary Union (EMU) suffers moderately from a democratic deficit. However, the case of Germany illustrates that it is not the independence of the ECB that should be cause for concern, but the absence of specific domestic features and a government. It is unclear which political authority will be held responsible if EMU leads to an uneven distribution of costs and benefits across the euro zone. Economic literature suggests that under EMU distortions could well occur and that a different design could deal better with these imperfections. The historical process leading to EMU explains the reasons for its particular design. Although imperfect, EMU is an improvement over the pre-EMU status quo in which Germany de facto dominated monetary policy. Nevertheless, the design of EMU remains suboptimal.

The paper examines three forms of budgetary rule applied to the food stamp program — discretion, entitlement, and expenditure caps. The different budget rules are modeled with respect to their reversion point, the outcome that prevails by default if no cooperative agreement is reached. Hypotheses concerning budgetary politics and policy are derived from the models and tested using historical data from one arena over time. The case study is relevant to the broader problem of welfare spending. The dilemma is how to reconcile budget protection needed for the impoverished against the fragmentation and fluctuations of routine political conflict, and budget integration needed for democratic deliberation regarding the multiple tasks of government. Entitlement status insures program benefits for qualifying households, but it also carves off a portion of total outlays declared to be relatively uncontrollable, outside of the annual mechanisms of review and adjustment. Discretionary budgeting, by contrast, incorporates welfare within ordinary collective decision-making that establishes priorities across competing claimants for public funds, but it also risks making the poor in society victims of their own vulnerability. Expenditure caps have recently been proposed as a solution to the dilemma, allowing outlays to grow automatically up to a given threshold but requiring conscious choice if they threaten to breach the threshold. Caps are celebrated by proponents as an instrument fostering enhanced managerial oversight and reasonable expenditure control. This study of the food stamp program, however, reveals that caps are more likely to engender procedural complexities and substantive policy bias. Moreover, these are logical and foreseeable results, easily deduced from the models of budgetary rule.

My aim is to explore an important feature of public policy that has been somewhat neglected: many policies are largely made by the way of making other polices. To examine this idea and tentatively explore some of its implications, I shall employ the notion of ‘policy by the way’. What I wish to convey with the help of this concept is the reality of many areas of concern which are touched by public policy entirely or primarily by the way of focusing on other areas of concern. The notion of ‘policy by the way’ is anticipated in some key concepts of policy research and policy analysis, but its specific features still seem to deserve more focused attention. I gradually build up the notion of policy by the way with the help of well-known contributions to the field and a few examples from Israel, albeit no claim is made that Israel is in any way representative of other western democracies. It is quite possible, however, that the reality of public policy as a byproduct, which I believe is universal, is more easily discerned due to the special politics of Israel, basically, a fragile coalition government with strong turf orientation and weak coordination.

This paper presents an analytical framework for comparing patterns of devolution to subnational governments and autonomous social insurance institutions in social security systems. The framework has two components. One is an analysis of financial structures along the dimensions of financial autonomy (indicated by the extent to which the administering institution raises its own revenue or depends on central grants) and financial responsibility (indicated by whether marginal costs are borne by the administering institution). The other component of the framework concerns the assignment of policy-making power; in particular, we contrast the effects of competitive and cooperative modes of devolution. The discussion uses examples from Denmark, France, Germany, the Netherlands and the USA. While we looked for ‘principal-agent’ relationships between central governments and administering institutions, we found that more complex multi-level governance structures prevailed in most cases.