e-government

Been doing a little bit of catch-up reading today and I just finished last weeks special report on the Economist about e-government. The report covered and explained how the public sector lags behind the private one in the implementation and efficient use of technology and the internet. Same recurring themes – government has no competition, therefore has no incentives to do things properly and within budget.

Nevertheless, the adoption of technology, and particularly the internet, within governmental organizations is great news on many fronts. As the report mentions, the state using the internet comes hand in hand with the opening of governmental information to the masses. This is particularly important to developing countries plagued with corruption. Openness is perhaps the biggest deterrent to corruption and therefore a great incitement for development.

It was a welcome surprise to read about the progress that the municipal administration of DC has made. Apparently under Adrian Fenty, the new mayor, DC now benefits from a portal that provides citizens a wealth of access to state services. More importantly, in my opinion, the administration seems to understand the importance of efficiency. They are not trying to reinvent technology, as is often attempted by governmental offices, but instead use private solutions to accomplish their goals. Information is hosted remotely and word and data processing is done via Google’s free online applications. All these savings can now be used to invest in what really matters – equal opportunity – education, healthcare and public infrastructure.

It seems that the administration is now handing police iPhones, which apparently turn out to be a cheaper alternative to police radios. I would love to see the police beginning to use communication services like twitter to report incidents.

I think this is all a great message. Arguably the purpose of government is to maintain a standard of living. This requires resources, and resources can be extracted in two ways: more taxation or more efficiency. In business terms: increase revenues or decrease expenses. For a number of reasons, I suppose, greater emphasis is placed on the top line. The private sector needs to focus on both revenues and expenses, but I think the public sector should place a much greater emphasis on expenses. The reason for this is that any increase in governmental revenue (taxes) has a direct and inverse effect on public disposable income and therefore national investments. This relationship does not really exist in the private sector and therefore growing revenues indefinitely is generally seen as a virtuous goal.

In other words, as the economist puts it, “Citizens are not only the state’s customers; they are also its owners.” From a philosophical point of view, since cash taken from tax payers is ultimately spent on tax payers, an emphasis on top line is circular and thus much less important than one on expenses. Only by increasing efficiency (reducing expenses) do governments add value.

Once you begin to account for socio-economic differences within a population, however, people may argue that the above logic is faulty, or at least is incomplete in today’s reality.

In any case, it is my belief that all other things equal, in the long run the nations that grow the fastest are those that invest the most. To achieve greater levels of investment you require greater levels of disposable income. Consequently, it is the smaller more efficient governmental solutions that should triumph in the end.