OpenGov - Open Government Brainstorm

Government and industry must stretch limited resources to simultaneously rebuild public confidence in the wake of a sense of betrayal because the regulatory system failed to detect and deal with problems such as sub-prime mortgages and rebuild the economy at the same time.

Fortunately, there is already a successful model, the Dutch Taxonomy Project, that can not only deal with the crises of confidence and economy but also streamline governmental efficiency in the future. It offers a win-win solution.

Basically, the Dutch model gets rid of the wide range of government reports that businesses have to file with a variety of government agencies and instead allows them to file a single data file with all of the relevant information. Because of the way it is structured, all of the relevant agencies can instead automatically extract the information that applies to them. For the average company, that means the number of reported data items decreased from 200,000 to 8,000.

Quarterly reporting is a relic of the days when it took a long time to prepare such reports. Going to the Dutch approach would also give us the option of instant reporting, which might be very helpful in dealing with reporting on volatile issues such as the TARP funding.

In the past, such simplification probably would have undermined regulation. Today, it can actually improve it. One of the real benefits of this approach is that it would allow a variety of agencies to simultaneously analyze a given company’s record, instead of each working in isolation. Since it’s likely that a company that violated one agency’s regulations probably violated others, this kind of simultaneous review will both speed and strengthen regulatory review.

The same data files can and should be made public as well, earning public confidence through a “don’t trust us, track us” approach.

The benefits of this approach increase the more universally it is used (and it is based on a world-wide open standard of data “tags” or information about information, that is free and easily available to anyone, so it is economical as well) so transparency and efficiency would increase if it, for example, also became the standard for state and local governments’ reports to federal agencies as well, and if federal agencies themselves structured data and provided it to their own work forces on real-time basis.

One expert on the Dutch system, Prof. Saeed Roohani of Bryant University, says that if a similar system had been in place in the US several years ago, not only would we have escaped the global economic collapse, but also many of the bad subprime mortgages wouldn’t have been written in the first place because more people within the affected companies would have been able to analyze the applications and realize they were insufficient.

Governmental and corporate openness and transparency will both increase if the system used for reporting is inherently easy to access and interpret. The Dutch Taxonomy Project approach offers us a ready model for such an approach.