Government Financial Transparency.

I have been thinking lately about what total transparency could look like in government. While this is an extremely broad topic, I’d like to narrow it down to financial transparency and ask the question:

How would government behavior change if all spending was fully transparent to the public, down to the line item? So every expense could be viewed — and scrutinized — by the public.

There is an issue with many large organizations, not just governments, of spending budget just because it exists, and especially in the last few weeks of a financial reporting period, to ensure that future budgets do not go down the following year.

Opening up the books could be an interesting way to counter this, and ensure that budgets are spent in a planned and rational manner, instead of rushed last-minute spending that results in little value to citizens.

I understand why this has traditionally not been done, and this is because the technology has not been available. But, I wonder if now this is possible?

Most likely — yes.

An open-source, transparent, and perhaps uneditable ledger of transactions could be created, which acts as close to real-time as possible. You would be able to see all key data for any transaction:

  • Who authorized it (including multiple levels of approvals).
  • Who it was paid to.
  • The amount
  • The date
  • Some type of categorization along the lines of GAAP reporting.
  • Additional description to ensure that an uninformed member of the public can easily understand what this transaction is about without having a significant knowledge curve to climb.
  • Related department
  • Related project.

I could imagine this as part of a wider transparent system that shows all government projects with their details and budgets, and even the ability to navigate and see all payments made to a specific vendor, and so on.

Apart from the costs that this would involve in creating and setup, I don’t see many valid reasons for taxpayers to not have access to this level of information.

What would be even more interesting would then be to have read-only APIs publicly available to let third parties such as news organizations think tanks and auditors review data, build their models, and compare actual spending to budgeted spending.

Algorithms and models could be built that could detect patterns of fraud or misspend of funds, especially when comparing vendor payments to the names of the people who approved the spending.

It would ensure that everyone is working with one single source of truth, and it would increase the trust in government, which I believe is quite low lately.

The importance is ensuring that the general population has trust in our institutions cannot be over-estimated. From this, all types of positive behaviors can arise. For instance, if the average person believes that their governments just waste large amounts of money, then they are less likely to want to pay their share of the tax bill. If they see that government spending is highly efficient, and the government is, for once, using its large purchasing power to ensure taxpayers get great value for their money, then paying taxes might be just that little less painful.

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