CS99I Meeting 13 Notes: Role of Government

Started by Gio Wiederhold, 26 Jan 2000, updated 22 Feb 2002.

Topics Covered briefly

Note that `Government’ consists of Institutions and People. It is unwise to see Government as a monolithic entity. Nearly every decision made in government is a compromise between public costs, public benefits, private costs, and private benefits.

Government as a supporter of the Internet

Is the government the proper source for Internet support?

There are differences between European/Asian and U.S. approaches. Some have to do with maturity. When technology is mature, can be commercially supported, governmental support is unwise, and can even have a negative effect of discouraging investment.

There is also a difference in the business model of government and private business.

A major difference of government income and private income is that government income, Taxes, is largely independent from productivity.  That means that government can take longer term investment risks. It also means that government can slow down spending when income falls short (rods can take a long time to be completed). Failure to succeed embarrasses public officials, delays are easier to explain -- and if the problem is deferred to the tenure of the next office-holder, so much the better.

In business, once expenses have been incurred, there is a motivation to complete projects to the state that they can provide income, even if they are not perfect (buggy programs). Having income overcomes embarrassment, and is typically cited as a measure of success.

Government hence should invest in ventures where there is little chance of payout:

·        Long-term research

·        Education

·        Infrastucture – highways – but not toll-roads, Internet backbones – if they cannot be recharged (for some time in the future)

·        Libraries – including Internet access in libraries

·        Military research

·        Medical research – unless it will rapidly lead to marketable drugs or devices

·        all the non-venture obligations, from social services to the military – but those don’t represent an investment with a quantifiable future payback.

The order here does not represent a ranking. The ranking is again an issue of compromise, i.e., politics.

More formally, investing in risky ventures requires a setting where the value of the potential gain outweighs the cost of the potential loss. For an investor who has not-needed cash -- or can collect such a group of people -- the equation is simply:

gain * p(success) * n(success) >  loss * p(failure) * n(failure)

if the amount of gain is >>  (100 times ?) than the amount of loss (the investment made), then lower values of p(success) versus p(failure) and n(success) versus n(failure) can be tolerated.

That seems also be true for a government, since it represents a very large group of individuals, so large, that in total they wouldn't be very sensitive to loss.

However, the actions are executed by actual people, bureaucrats. An employee of the government, as an individual, is not very tolerant of loss. If money is gained, the bureaucrat will gain little, perhaps a promotion, a 10% raise, a few years earlier than would happen otherwise. However, a failure will cause loss of promotion and raises. So for the bureaucrat the value of gain = loss.

There some ancillary conclusions from that reasoning:

    1. Don't blame the poor bureaucrat for foolish investments, it is the setting and the reward mechanism.
    2. Relieve bureaucrats of responsibility when dealing with them: Never ask them `Can you do X', but rather `How should I do X'.

In business dealing with people is of paramount importance, and all institutions have people in their interfaces.

Government can also set regulations. The cost and benefit is often not made clear.  The promoter of a regulation will only cite the benefits, say better health due to cleaner air, but not cite the costs. The distractors will focus on the costs. If the benefits are not quantified in the same metric as the cost (typically dollars, but it could also be days of a health life) then rational decisions are difficult.

Comparing fundamentally incommensurate items as dollars and days is often attempted, as when processing insurance company claims.  They focus on mortality (death). Is the life of a 25-year old worth twice as much as that of a 45-year old, because the older person has twice the income potential? The life of a homeless versus that of an engineer versus that of a poet  versus that of a housewife/househusband? What about morbidity? What is discount for living with say arthritis versus not having pain. And mixed: what is the value of risk of death due to heart-replacement surgery, versus being partially healed, but needing anti-rejection drugs and suffering their side-effects for many years?

 

Government as a provider of information

Often motivated by its own need, as making decisions for fair or for optimal distribution of public funds.

Census

Decennial collection of data.  Is constutionally mandated to assign congressional House seats.  Is that still valid?

Many other data, in addition to a simple count have been attached to the census form. For instance, does your family have a TV. That measure was once an indicator of being well off.  Today, not having a TV probably means that you don’t want that intrusion in your house. I think that query is no longer valid, but statisticians like to collect consistent data over long periods.

Race is another issue, used for politically-motivated decisions. The recent census for the first time allowed people to consider themselves of mixed heritage.

Important motivations are allocations of support, as discussed above.  Which diseases have priority? See www.PharmGKB.org for a recent data system, which with government support. is supposed to provide guidance on relationships between genes and diseases, drugs, side effects. etc. to medical reseachers.

The government is often logical place to aggregate data so that weak tends can be spotted, for instance disease outbreaks, where instances observed by physicians rarely show a pattern, but aggregations through county public health departments, state public health departments, and eventually the National Center for Disease Control (CDC) can make trends and spreads visible.  Use of the Internet in that chain can speed detection by months, potentially saving many lives and much pain.

Should data customers pay for government collected data? Today the view in the US is that the raw data are free, but when additional services are needed they can provided, perhaps through commercial intermediaries, for a fee, perhaps at cost, perhaps with a profit.

 

Privacy

The government has authority to collect data which many people would like to keep private. Raises many issues and requires constraints on release.

Concepts for Effectiveness

'The Internet is the Database' [Scott McNealy, SUN]

"If it's not on the web, it doesn't exist" [Louis Perrochon, ETH]

Government as a consumer of information

Funding decisions are aided by having data, although the problem for the government, more than for business, is that factors are incommensurate.

Give that government is a large fraction of the GNP, we’d expect it to be at least a proportional consumer.

Notes

A view of the Internet from a Social Science Viewpoint [Shortliffe and Patel: 2000].

See also the references.