Friday, February 20, 2015

Innovation ideas in Government for earning exponential return?

What technologies could government invest in to earn an exponential return?

(thank you to Noah Reandeau for his question from back in 2008)

As Noah rightly pointed out, it is hard to quantify a return of government "investment". To just mildly qualify some assumption, while it is true and demonstrably so (thus even quantifiable) that every dollar invested in early childhood education or preventive medicine offers an exponential return, the return is in money saved, and not necessarily _earned_ by governments.

Governments however do not ever save money, they just _may_ collect "less" tax revenue, thus giving tax payers the chance to pay "less" taxes for (presumably) the same or better government services. The last part gets so fuzzy, that it is rarely if ever possible to assign weights to factors having determined the changes in taxation policies or budget priorities alone, so forget about tracing back "savings" as ROIs.

Shifting money spent on prisons and policing and welfare to spending it on quality of life improvement projects becomes the return on investment in early childhood education Noah, the original question author, seemed to be suggesting.

The same with preventive medicine. Healthy people make a happy and productive workforce. People advance in careers, have increased incomes which get taxed more, while also making employers better profits/profit margins which again get taxed more, but which also allow for further investments and thus sustained economic growth, and the government again taxes more...

It's been said for two decades now that Internet (from back in the dial-up era) was one of these areas of exponential return on government investment. Now the hype is all broadband in rural areas. I may agree and disagree with both. I disagree because wires or fiber optic do not change anything, services available over the medium do. So if broadband in rural areas improves the equity of access to education/knowledge or (preventive) health care of rural residents, then the technology would qualify under a positive for your question. Yet, if we stop at deployment of fiber alone and do not match said investment with an even larger one in making new targeted services available to beneficiaries, that investment in broadband alone becomes almost meaningless in terms of your question (exponential government ROI) [2015 update: we thankfully see that happening at mass level, but it is mostly from private initiative of hospitals, HMOs etc.]

The problem, as always and as you know better than I do, is that often government officials are usually naturally reluctant to tackle long term policies or problems, as on those it is always hard to see immediate results while in office or seeking reelection. Federally sponsored R&D in pharmaceuticals has been among those you ask about for years now, yet depending again whom you ask. Many military technologies later declassified and adapted to civilian use are among those too. We both read and write over the grand-grandchild of a former DARPA network turned the Internet, with huge exponential government ROIs, which have even enabled President Clinton to balance the budget during the .com bubble of the late '90s. How more quantifiable than that can we conceive something to be? Before that satellite tracking technology, again civilian disseminated in the meantime (as almost everyone has a GPS in their pocket/car these days--those firms get taxed), and did I say airplanes? For today,bioengineering, human genome research etc. the list is too long... I believe it is much easier to quantify ROIs on the latter cases, past, present, or future (when we find them)... Just my two cents, Adrian"

[note: I wonder if this is a good place where one can introduce personnel hiring practices and the second story with my Bulgarian friend, namely the one whereby his expert proposed strategies for a personnel and administration position dealing with working environment and health and welfare did not get him the position, but the person getting the position may have gotten it due to being an internal hire, even in spite of the other "equitable hiring distribution" policies of the hiring institution.  Would said story qualify as addressing one of the many factors that may lead to high ROI projects/problems not being tackled well/often enough? What is the private/public sector variance on this likelihood, if there is any?]

(C) Adrian S. Petrescu, 2008-2015

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