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Why Is It Hard to Let Software Eat The Government?

Saturday, October 15, 2016 5:09
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Mattermark posted an article about civic tech.  Software has eaten up all kinds of jobs and made all kinds of businesses more efficient.  The promise of artificial intelligence and other technology is there.  Truly, we are seeing things daily that we never thought we would see before.

For a lot of people that brings fear.

What the heck is everyone going to do?  It brings up the basic income argument.  But, I try to quell my fear because while I see the promise and the danger of new technology, I don’t see the jobs it will create that never existed before.  Last night, I saw Jordan Melamed’s documentary style movie on Futures Past.  I knew everyone in the movie.  It hit home for me.  My job was engineered out of existence.  I know what it’s like.  Would basic income have helped me?  No, I had to recreate myself.

I still have a lot of fear.  But, I try to figure out how to use it to my advantage.

Not surprisingly, Finance is the number one area of civic tech.  Governments and money have been intertwined for centuries.  Given what I am doing and my past, I am highly interested in this.  I have made investments into government technology.  Streamlink Software can save governments millions and millions of dollars simply by adopting their software.  The sales cycle inside governments is brutal.  It’s not just value you have to prove, but you have to deal with the politics.

Dealing with government bureaucracy is a nightmare.  It’s chewed up plenty of good startups.  What are the hurdles?  The obvious one is power. Once governments control power they do not want to cede power over to the people that they rule over.  See the fight over Uber. Wait until we start fighting over more efficient payment systems and cryptocurrency.  Wait until blockchain can establish trust versus government identification.  There will be a time when software will be able to disintermediate large swaths of government bureaucracy and make everything function a lot better.

Mattermark tells the story of BallotReady.  Students from the University of Chicago started the company.  Upon launch, they found governments didn’t even have API’s for companies to plug into.

But BallotReady faces one of the most prevalent challenges of building technology for governments and civic institutions: poor technical infrastructure on the government side. In order to provide the correct information to users, BallotReady needs to know the boundaries of various electoral districts. Obtaining that data isn’t as simple as querying an API because one does not exist.

There are local election boards, many of which are very behind the technical curve. Niemczewski discovered that 30% of these boards don’t have websites. Her team had to buy a fax machine because that was the only way to get the data her company needed from some local boards.

“One time, we had to physically send someone to an election board office so they could take pictures of paper maps,” Niemczewski told Mattermark.

I remember back in 1999 when I was on the CME board.  We didn’t have an API either.  It took months to build a fix API so everyone could easily plug into Globex.  I can’t remember the cost, but it was in the millions of dollars.  Today, that process is a lot speedier and significantly cheaper.  For governments, it has to be done.  However, there isn’t a strong economic incentive to get them to do it.

The other not so obvious one is many governments aren’t interested in actually doing anything efficiently.  They exist to be a jobs program.  Sometimes, you need to be politically connected just to get an audience with the potential buyer.  One software company I know called on a Chicago government agency.  In the pitch, the head of the agency realized if they adopted the software, they could get rid of most of their staff.  That was a non-starter.  However, adopting the software would have saved taxpayers money and made government more efficient.  They didn’t get the sale.

That experience reminds me of a Milton Friedman anecdote.  Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: “You don’t understand. This is a jobs program.” To which Milton replied: “Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.”

What economic incentive can we put in place to change that attitude? Because it permeates government.

Regular readers of this blog know I am not a fan of the Obama administration’s view of the future.  His policies have been pretty poor in my opinion and many have failed miserably.  However, I’ll give him some credit.  Obama was the first President to appoint a national CTO.  Unfortunately, technology and government isn’t something we will see debated anytime soon.

It’s abundantly clear to me that technology can save governments millions of dollars in operating costs.  That would decrease the tax bite on citizens and decrease the amount of debt they’d need to operate.  What is not clear is how it happens.

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