The Gov’t Found a Way to Significantly Shrink Itself: Invest in Tech


Techies in Silicon Valley often tell me that if they do their job right, it should cease to exist. The goal of a lot of technology is to reduce the amount of human labor necessary to get something done. A new study finds that this Silicon Valley maxim also holds true for the government — in a massive way.

Min-Soek Pang of Temple University found that for every $1 government invested in technology, spending decreased by $3.50. “I was surprised with the magnitude of the impact,” said Pang. No joke. Three times more is a huge number for any carefully controlled study.

Between 2000 and 2008, Pang analyzed government spending and the portion dedicated to information technology. After controlling for population, debt, grants, and other institutions that tend to bloat government, there was a clear relationship between states that invested in tech and lower-than-expected public expenditures.

Do You Have Any Examples Where Tech Shrinks Government Spending?

For sure! Here are two fascinating examples:

First, when a mobile provider piloted a program to pay Afghani police through direct transfers rather than cash, it dramatically reduced corruption. As cash makes its way to security forces, each currier in the chain can skim off the top. With smartphone payments, police officers thought they had unexpectedly been given a 36 percent raise, when in fact they were just getting paid the full amount.

“250 policemen came and kissed me on both cheeks and I wondered why and they said ‘thanks for giving us a pay rise,’” said Karim Khoja, of Afghanistan’s mobile operator Roshan.

Second, The San Francisco Municipal Transit Agency runs arguably the slowest and most expensive tansit system in the country, with an average speed of just 8.1 miles per hour and $19.21 per mile driven.

So, when the agency wanted to build an iPhone app to help SFMTA managers monitor whether buses were arriving on time, it had expected to shell out big bucks for a long-term contract.

But, as an experiment in 2011, it worked with local volunteer hackers to build the program, paying them nothing more than pizza and beer.

“The San Francisco Municipal Transportation Agency has every intention of spending a few years and untold dollars creating its own, more robust version of the tool. But the team hacked together the basic parameters of the SMART Muni app in a 48-hour stretch in late July, fueled by pizza and beer,” reported SFGate, on the surprising efficiency of the hackathon.

This is what Pang found: it’s not just investing in gadgets that shrinks government, but investing in tech talent that makes things run better.

Indeed, this is why the government is proposing a significant increase in budget for the newly created United States Digital Service, an internal IT consultancy group. The USDS was created out of the meltdown fiasco and pays sizable wages to attract top talent from the likes of Google and Facebook, who build government web services more efficiently.

The government can shrink itself, if it invests wisely. Read a free version of the study here.