2011 July 04 Monday
Public Release Of US Federal Data Cut

Vivek Kundra just quit as Barack Obama's Chief Information Officer. The reason for his quitting: His most important initiative, Data.gov, had its budget slashed. Data.gov was set up to release more data sets into the public domain so that individuals and other organizations could more cheaply do more with the data and cut costs. The initiative to fund data.gov has been cut from $35 million to $8 million.

The program was off to a great start, with hundreds of thousands of data sets becoming available, and entrepreneurs building thousands of innovative applications. Then the ill-considered race to slash the Federal deficit started. The Obama Administration agreed to cut e-government initiative funding from $35 million to $8 million. Never mind that Kundra’s programs had already saved taxpayers $3 billion over the past two years.

If it really saved billions and really can save more then the cut is pretty stupid. But then why was it done? A different guy, Vivek Wadhwa, argues that breaking the data out of expensive legacy systems threatens the contracts and jobs that maintain those legacy systems.

Here is the problem: the people who own the legacy systems often fear for their jobs if they give their data away. What happens when entrepreneurs from all over the world build systems and software that are a hundred times better than the junk they are maintaining and cost a fraction to run--that is the fear.

So the pressure has to come top down from our political leaders, and bottoms up from the electorate. We are wasting tens of billions of dollars at the city and state level.

I can believe that the US government has a lot of old expensive legacy IT systems with vested interests defending their continued existence. But we can't afford this sort of waste. The US government is headed for a sovereign debt crisis. Therefore it would be extremely timely to try to replace old IT systems with newer, cheaper, and more useful systems. The people in the US government, like the general US public, need to understand that we are poorer than we used to be and that we've got to take a far more frugal approach to running our society.

There is probably a lot of potential for cost-cutting at the state and local level by sharing IT infrastructure and by basically open sourcing software to be used by multiple governments. Take each state's Department of Motor Vehicles. A group of states could share software development costs for an IT system shared between them. Ditto for many other agencies common to multiple state, county, or local governments.

Share |      By Randall Parker at 2011 July 04 10:42 PM  Economics Government Costs

Ross N. said at July 5, 2011 9:33 AM:

"The US government is headed for a sovereign debt crisis." Not really:

A sovereign issuer of credit can never have a debt crises. Let me rephrase that..."it would be really really difficult to have a debt crises." The government is not like you and me. We are not alchemists that can make gold, but a sovereign can make new money.

The sovereign insures that his money is used, otherwise see the man with the gun if you don't pay your taxes. That reality is not going to shift anytime soon.

What WILL create a debt crises is when the players of the game (us, the users of money) decide we don't like the rules, and play a different game. For example, if we were playing monopoly, and the banker kept giving himself low cost loans, we might pack up and play a different board game. In the same way, American's could store their wealth not in dollars, but in other instruments. The only thing constraining the Sovereign is "debasing" the money to the extent that the other players want out. If the Alchemist produces too much gold, then the value of gold is reduced.

We are not Greece, where somebody else creates our money. Greece would be more akin to a State in the U.S., and if the State needs more money, it prostrates itself before the bond markets. At the sovereign level, we simply raise the debt ceiling and print more new digital dollars.

Our Federal govt. creates money, and it spends money. How it spends is the real crucial question. Government can spend in these ways: 1) Spend to consume from the private sector 2) Spend to buy your votes e.g. unemploment or other gravy 3) Spend into infrastructure to help the private sector 4)Spend with targeted taxes 5)Spend to help banks

Since we have a credit money system, all new money comes into being with debt, then what should we do? We better spend that money wisely and make sure the usury comes back to ourselves. At the private bank level, loans have credit/debt attached. At the government level, more debt is attached. All new money is debt based. The FED rebates 85% by law, and thefore that deficit spend money is a good deal if it is spent properly.

The more accurate debate should be about the debt nature of our money, and HOW it is spent. If it extremely mal-invested, then eventually our economy clunks to stop and we may owe our productive output to foreigners or a plutocracy. People will then abandon the monopoly game. We will have a debt crises when confidence is lost and people can readily store their wealth in insturments other than dollars. The underlying economy is the base of everything, and if it gets destroyed because our politicians don't understand the money system, then it is totally "our bad." For proper spending, the people must watchdog the Government and force it to follow laws and common sense.

Part of making data.gov less available is special interests wanting to consume for themselves and rent seek. We do need to deficit spend, but we should spend into labor in order to reduce our Balance Sheet Recession. The balanced budget push is ill conceived when the money sytem is examined. But, it is not ill-conceived when considering that government mal-invests and consumes for itself, and that needs to be addressed.

We don't have the right framework for addressing these questions because our money system is convoluted with smoke and mirrors. The solutions cannot be conveyed in easy sound bites. The average person knows that spending too much money improperly is wrong, and thefore their sentiments for balancing the budget (to get rid of waste) are correct. However, by not deficit spending (properly) in a balance sheet recession, the credit money system will start collapsing and bring on a depression.

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