Tag: transparency

Thursday Links

Financial Crises as Information Problems

If you haven’t seen it already, be sure to give a read to Friedman Prize winner Hernando de Soto’s recent piece in Business Week, “The Destruction of Economic Facts.” It’s a fascinating perspective on the economic and financial turmoil that is wracking the United States and the world.

As de Soto perceives more easily from working in developing economies, an important input into functioning markets is good information—about property, ownership, debts, and so on. The “destruction of economic facts” is one of the roots of instability and uncertainty in Europe and the United States: “In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.”

The law and markets are information systems, says de Soto:

The rule of law is much more than a dull body of norms: It is a huge, thriving information and management system that filters and processes local data until it is transformed into facts organized in a way that allows us to infer if they hang together and make sense.

If you’re interested in information and transparency, it’s worth a read.

Transparency: The Inside and Outside Camps

Late last week, the Project on Government Oversight’s Danielle Brian took a little umbrage at a Huffington Post piece by former U.S. Deputy Chief Technology Officer Beth Noveck, who had been implementing the Obama Administration’s Open Government Initiative until she recently returned to New York Law School.

Brian’s piece suggests a slight schism in the transparency community, between what I believe are the “insider” and “outsider” camps. Brian leaves to the end a crucial point: “[C]an’t the two camps in the open government world peacefully co-exist? There’s just too much work to be done for us to get bogged down in denigrating each others’ agendas.” They most certainly can.

Noveck was a bit dismissive of the open government movement as perceived by much of the transparency community. “Many people, even in the White House,” she wrote, “still assume that open government means transparency about government.” Actually, Noveck continued, open government is “open innovation or the idea that working in a transparent, participatory, and collaborative fashion helps improve performance, inform decisionmaking, encourage entrepreneurship, and solve problems more effectively. By working together as team [sic] with government in productive fashion, the public can then help to foster accountability.”

Visualize the difference between these two approaches: open government as a tool for public oversight and open government as a tool for public participation. When open government is about public oversight, the wording connotes the public looking down from above on the work its servants are doing. When open government is about collaboration, the public is at best an equal partner, allowed to participate in the work of governing. Noveck’s unfortunate language choice treats accountability as a kind of dessert to which the public will be entitled when it has donated sufficient energies to making the government work better.

The administration’s December 2009 open government memorandum predicted this divide. In calling for each agency to publish three “high-value data sets,” it said:

High-value information is information that can be used to increase agency accountability and responsiveness; improve public knowledge of the agency and its operations; further the core mission of the agency; create economic opportunity; or respond to need and demand as identified through public consultation.

As I noted at the time, it’s a very broad definition.

Without more restraint than that, public choice economics predicts that the agencies will choose the data feeds with the greatest likelihood of increasing their discretionary budgets or the least likelihood of shrinking them. That’s data that “further[s] the core mission of the agency” and not data that “increase[s] agency accountability and responsiveness.” It’s the Ag Department’s calorie counts, not the Ag Department’s check register.

Noveck wants us to put the calorie counts to use. Brian wants to see the check register.

There is no fundamental tension between these two agendas. Both are doable at the same time. The difference between them is that one is the openness agenda of the insider: using transparency, participation, and collaboration to improve on the functioning of government as it now exists.

The openness agenda of the outsider seeks information about the management, deliberation, and results of the government and its agencies. It is a reform (or “good government”) agenda that may well realign the balance of power between the government and the public. That may sound scary—it’s certainly complicates some things for insiders—but the “outsider” agenda is shared by groups across the ideological and political spectra. Its content sums to better public oversight and better functioning democracy, things insiders are not positioned to oppose.

I think these things will also reduce the public’s demand for government, or at least reduce the cost of delivering what it currently demands. But others who share the same commitment to transparency see it as likely to validate federal programs, root out corruption, and so on (a point I made in opening our December 2008 policy forum, “Just Give Us the Data!”) There are no losers in this bet. Better functioning programs and reduced corruption are better for fans of limited government than poorly functioning programs and corruption.

Forward on all fronts! The existence of two camps is interesting, but not confounding to the open government movement.

House Leadership’s Transparency Leadership

Last week, House Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) wrote a letter to the House clerk calling for new data standards that will make Congress more open and accountable. Spot on.

The THOMAS legislative database was a huge improvement when it came online in 1995 at the behest of the new Republican Congress, but the Internet has moved on. Today, publishing text or PDF documents is inadequate transparency. It’s more important to make available the data that represent various documents and activities in the legislative process. “Web 2.0” will use that data various ways to deliver public oversight.

I’ll have much more to say in the near future, but here are the kinds of things get to full transparency, which the House leaders’ letter appears meant to imply:

  • Specific Formats: Documents and data must be published in specific formats that allow Web sites, researchers, and reporters to interpret and use text and data easily and automatically. The SEC recently began requiring businesses to report financial information in a format called eXtensible Business Reporting Language (XBRL). This will improve corporate transparency and enable investors to make better decisions. The public should have equally good information about government.
  • Flagging/Tagging: Within these data formats, key information must be “flagged” or “tagged” to highlight the things that matter: spending proposals, agencies and programs affected by a proposed law, recipients of federal money, existing statutes that may be amended, and so on. Flagging/tagging will make the relevance of documents and information immediately apparent to various interests.
  • Bulk Access and Real-Time Updates: Documents and information must be available in bulk, so that new users have full access, and it must be updated in real time, so the public can “see” changes as they happen. It also must be version-controlled so the “story” of a policy’s formation or execution can be told. The public should never have to learn what is in a bill after it passes.
  • Authoritative Sources: The mishmash of data sources that now exist must be replaced by authoritative sourcing. Congress, the White House, federal agencies, and other entities must publish and maintain their documents and data. The public must know once and for all where the definitive versions of documents and data will be.

Disclosure—simply “putting bills online”—was the beginning of the legislative transparency project, not the end. The many transparency Web sites out there have the bills, but they don’t have the data they need to help the public get their government under control.

As I suggested some months ago, House Republicans are positioned to take the transparency mantle from President Obama and the Democrats. Web 2.0 thought leader Tim O’Reilly—no Republican cheerleader—has already called the race, Tweeting last week, “The ‘R’s in Congress are doing better on this than ‘D’s did.” Assuming action consistent with this letter, the House Republicans will indeed soon have the transparency lead.

A Weak Defense of Disclosure

In an earlier post, I wrote about the problems with the Obama administration’s executive order to force government contractors to reveal their political activity.

The administration defends the mandate by arguing “taxpayers deserve to know how contractors are spending money they’ve earned from the government.”

For the first (and perhaps last) time, I rise to the defense of government contractors. The President apparently believes that anyone who sells a good or service to the government must account for the uses of the money received in the transaction in perpetuity? Obama’s press secretary said the President’s “goal is transparency and accountability. That’s the responsible thing to do when you’re handling taxpayer dollars.”

I do not understand this. The government extracts taxes and spends the money. Indeed, government officials should be accountable for that spending. But once the exchange is made, the money belongs to a private firm. It is no longer the property of the taxpayers.  Perhaps the use of a firm’s money should be disclosed, but you need a different argument to justify that mandate. The President seems to be proposing that anyone who does business with the government may have to account for the money they earn in those transactions. That assertion strikes me as a real expansion of government power.

The most troubling part of all this remains the President’s view that he can enact this mandate through an executive order. Americans should be wondering why a rule rejected by Congress can simply be enacted by fiat by the President. The President does not enjoy the power of a king, does he?

The President’s gambit may be in trouble. Sen. Susan Collins, a Republican from Maine, is questioning the content of the decree. I am glad she is concerned about the First Amendment. I would be happier if she questioned the Obama-Bush conception of executive power that informs this effort.

Federal Reserve to Hold Press Conferences

Today Federal Reserve Chair Ben Bernanke announced he would hold four annual press conferences, after select meetings of the Federal Open Market Committee.  The first such meeting will be on April 27 and will be webcast.

While I generally haven’t been a fan of Bernanke’s policy decisions, many of his “process” decisions, such as holding these press conferences, have been moves in the right direction of greater Fed communication with the public.  The Fed took some bold moves during and since the financial crisis – often without a word to the public.  Indeed, it is interesting that this announcement comes only a few days after the Supreme Court refused to hear the appeal of the Bloomberg suit demanding Fed disclosure of banks assisted during the crisis. 

It remains to be seen, however, if these press briefings provide any real substance or explanation of the Fed’s actions.  After all, I don’t think Bernanke’s appearance on “60 Minutes” really changed anyone’s mind.  But then again, the interview was fairly devoid of actual substance.  For these future press briefings to have any real value, the reporters involved are going to have to ask tough, insightful questions, rather than the fluff Bernanke is used to.

Then perhaps the real problem with the Fed’s communication strategy is that it has been only one-way.  By now we all know that Bernanke didn’t want to be the Fed chair that oversaw “Great Depression II,” or that he’s just a simple guy from Dillon, SC.  But how about some sense that Bernanke is not just lecturing, but listening?  Where’s the evidence that he understands the squeeze that rising food and gas prices put on the middle class?  Where’s the evidence that he gets that the “Phillips Curve” isn’t real?

I am going to hold out for the best.  Maybe these briefings will provide some substance where previous appearances have not.

The Transparency Contest Heats Up

Back in January, I wrote in Politico about the potential for House Republicans to “eclipse” President Obama on transparency. Perhaps the most important element of that piece was the subtle pun on the “government in the sunshine” motif. (Sunshine? Eclipse? Get it?) House Republicans appear to be more ready than ever to move forward on transparency with the announcement by Speaker John Boehner (R-OH) and Jason Chaffetz (R-UT) of a working group to update the House’s use of technology.

That could end up as so much window dressing—Twitter accounts for everybody!—or it could result in substantive changes, such as publishing bills and amendments in real time (from committee markups, too) and tagging them with semantic data to make their meaning readily and instantly available to the public. How about publishing the House video feed (committee feeds, too) with real-time tags indicating what bill is being debated and who is speaking? That kind of data will give the public entrée to the House like they’ve never had before.

Meanwhile, President Obama seems to have ducked a meeting at which he was to receive an award for his transparency work. It didn’t strike me as quite fitting for him to get such an award. He’s good on transparency but has not reached the lofty goals he campaigned on. The House Government Reform Committee is having a hearing on the Freedom of Information Act today (9:30 am EST start-time), an area where the administration seems also to have come up short of expectations.

Now, whatever miscue prevented the president from accepting his transparency award is not substance, and the formation of a task force is not substantive change either. But the Republicans appear to have the keener interest in transparency at the moment.

Watch this space for the results of work we’ve been doing to show both Congress and the president how to be more transparent. So the irony is not lost on you the way that sunshine/eclipse pun was, I’ll put it in italics: You can’t see our transparency work quite yet. But soon we’ll set out what House Republicans, Senate Democrats and the Obama administration should be doing to win plaudits on the transparency merits.