Fiscal Transparency (is Not Enough)

OpenSpending.org has simple goal that is extraordinarily difficult to achieve: wherever you may live, you enter in how much you earn per month, press a button, and poof, a stunning visualization of where your tax money goes.

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Let’s say I’m a British taxpayer who makes nearly £40,000. That means that every day I spend about £3.60 on running the government, £8 on health, £6 on education and £0.70 on the environment. I can keep clicking to get more detailed information. For example, of the £3.60 I spend each day on “running government,” more than half is spent on “public debt management” while only £0.36 goes to overseas economic aid.

In order to give every citizen in every country a basic idea of how the government spends his/her tax money, OpenSpending.org needs a lot more data. Here’s a map of their current datasets:

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Not only do they need more information about how governments spend money, but they need it to be more or less in the same format. To do so they need a global movement for standards around how governments publish their budgets and spending. Its name? The Global Initiative for Fiscal Transparency, or “GIFT.” (If you’re really into this stuff, you can check out their initial report on setting global norms.)

So let’s say that GIFT is successful in convincing all governments in all countries to publish minimum requirements of budget and spending data in standard formats so that we can have beautiful visualizations like this one from Where Did My Tax Dollars Go:

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Such visualizations help me understand that I spend $10 a year on “community development” and $3 a year on “Indian programs,” but I don’t really understand what that money is going toward, nor does it enable me to hold government agencies accountable in how they spend that money. Sure, there are interesting stories hiding in all that data, waiting to be told, but it takes people to investigate and narrate them. Fortunately, Open Knowledge Foundation (the same organization that built OpenSpending.org — and a grantee of my employer) received funding from the Knight Foundation to launch Spending Stories, a journalistic project to tell stories in order to hold governments to account. Privacy International, for example, collaborated with Spending Stories to better understand which surveillance technology companies receive the most government (that is, taxpayer) funding. However, there are surprisingly few journalists using this wealth of data to report on how government spends its money. Lucy Chambers and the Spending Stories team has been giving workshops at journalism festivals with the hope that more journalists will “follow the money.”

Telling Stories

Let’s take a few steps back. First, raw data is not enough — we need visualizations to understand it. Second, visualizations are not enough — we need journalists to investigate and tell stories about the data. But is telling stories enough? Let’s look at four such stories here in Mexico:

First, the story of the millionaire presidential candidate who received farm subsidies while he was the governor of Mexico State. If there was ever an argument for an NGO to share its data with the larger public, this is it. The Mexican transparency NGO Fundar developed the Subsidios al Campo website all the way back in 2008 to better inform the debate about the country’s agricultural development strategy (you can see my case study here). The website is a public-facing database of individuals who have received agricultural subsidies — subsidies that are allegedly supposed to protect small-scale farmers from the flood of industrialized agricultural imports following the North American Free Trade Agreement. Fundar’s research revealed that ten percent of recipients receive 57% of all subsidies. In other words, the subsidies were supporting the wealthiest farmers rather than the small-scale producers who most needed the help. But it never occurred to Fundar to search the database for the names of this year’s presidential candidates. Fortunately it did occur to @AleUrbina, a supporter of candidate Andrés Manuel Lopez Obrador, who has a relatively humble 560 followers on Twitter. She found that an individual named “Enrique Peña Nieto” from Mexico State received roughly $30,000 pesos in federal agricultural subsidies. Some of those subsidies he received while he was governor of the state. Furthermore, his father, Enrique Peña del Mazo, who was a low-ranking public servant with the federal electricity commission before retiring to a ranch, also shows up in the database as having received roughly $450,000 pesos in agricultural subsidies. The story began to spread on Twitter like wildfire. @andreangel13, a Mexican living in the UK with a humble 50 followers, dug even deeper and found that Peña Nieto’s mother received no less than four agricultural subsidies in 1995 and 1996.

This anecdote is interesting for two reasons. First, we would expect that this story would come about from a partnership between Fundar and a professional investigative journalist. But no, this story was investigated, told, and distributed by non-journalist users of social networks. Ordinary folks who don’t want to see Peña Nieto become president. Second, it is interesting that Peña Nieto never responded to the charges. He never explained why he received federal agricultural subsidies. And there is no regulatory commission that forces him to do so.

Second, the story of the $20,000 magic wand that is so sensitive it can detect Tylenol. Back in 2009 the Mexican government began purchasing the latest devices in the cutting-edge field of paramagnetic remote substance detection. What is paramagnetic remote substance detection, you ask? It’s an utter fraud, not unlike investing in Nigerian sovereign wealth funds over email. Incredibly, the Mexican government had already spent more than US$ 10 million on the fraudulent, plastic divining rods before the British government sent them a memo to let them know that they were wasting their money and probably arresting innocent people in the process. Marc Lacey has a must-read piece about the episode in the New York Times. Less entertaining, but more serious, is a 2011 El Paso Times story about a US citizen who was detained and tortured after soldiers scanned his car with the plastic magic wand at a military checkpoint. Further investigations by the blogger Andrés Tonini found that so far the Mexican government has spent at least US$ 26.5 million on the fake plastic wands.

Once again this anecdote is interesting for two reasons. First, as this Wikipedia article observes, the Mexican mainstream media hardly touched the story. The investigative work was done by university professors and bloggers. Second, the Mexican military refuses to defend their decision to spend so much money on a device that has been proven to not work. When the Mexican Association for the Sciences offered a free double-blind investigation of the devices, the Mexican Army declined, stating in a written response that their contract with the GT200 supplier prevents them from accepting the offer.

Third, the story of the US$ 3,600 USB memory stick, the US$ 32,000 baseball bat, and the US$ 2,500 prosthetic penis. Why did the Federal Police department spend $3,600 on a single 2GB memory stick? Why did the state oil monopoly, Pemex, spend $32,000 on a wooden baseball bat and $2,500 on a prosthetic penis for severe erectile dysfunction? I wish I had something resembling a hypothesis.

These three anecdotes stand out for the same reasons. First, they were discovered and reported by bloggers and Twitter users, not journalists. And, once again, the respective government agencies never responded to the complaints, much less were they sanctioned for the waste of taxpayer money.

As blogger Ileana Fernández asks after discovering the Federal Police’s purchase of a $3,600 USB stick, “what are the consequences? What use is a transparency portal when inadequate uses of public resources are detected but there is no punishment or correction?”

Accountability Pathways

This brings us to what Jonathan Fox calls “accountability pathways” in his paper “The uncertain relationship between transparency and accountability.” Fox notes that we tend to use the word “accountability” to refer to two different activities, “answerability” — the government’s obligation to respond to its citizens — or “sanctionability” — mechanisms and processes in place to punish illicit government behavior. The paper goes on to argue that all transparency projects should have clearly defined pathways to either answerability or sanctionability, depending on the project’s objectives.

The problem with fiscal transparency portals is that there is no mechanism to oblige government agencies to defend the purchases they make, much less sanction them when they mis-spend public funds.

Well, that’s not completely true. Here in Mexico there is the Auditoría Superior de la Federación, which in theory is the equivalent of the US Government Accountability Office.

The Auditoría Superior de la Federación, which is managed (or mismanaged, Aimée Figueroa would argue) by Mexico’s House of Representatives, is responsible for holding all other government agencies to account for their spending. They do this by issuing an annual report that attempts to portray an entire year’s worth of government spending and mis-spending. Then a commission of legislators discuss the report, make a lot of complaints, and then repeat the exercise the following year.

In theory, any concerned citizen can also report government financial mis-spending using the online complaint platform of the Auditoría Superior de la Federación. I tested out the system; I figured I’d let them know that one of Mexico’s presidential candidates received farm subsidies while he was governor. Unfortunately, throughout the process I received multiple server error reports, was not able to upload my evidence, and I have still not received confirmation that my complaint is being investigated.

The lack of oversight and accountability in how the Mexican government spends money (and behaves more generally) has inspired a network of organizations to demand the creation of an independent federal tribunal to act as the ultimate guarantor of government accountability. Even the Auditoría Superior de la Federación, which often has its hands tied by the lower house, is supportive of the proposal.

Imagine if such a tribunal not only had the political autonomy to actually sanction corruption, but what if it were also designed from the ground up as a 21st century institution? What if it hired a team of 50 citizen ambassadors to search blogs and social media all day long for reports of corruption and financial mismanagement? What if they managed citizen complaints using a Get Satisfaction model, similar to New York City Comptroller John C. Liu?

Fiscal transparency is a big topic. It’s easy to get distracted by a $3,600 USB memory stick and forget that the Mexican government spent nearly $300 billion in 2011 alone. It’s also easy to criticize how much the government spends without appreciating what we, as taxpaying citizens, get in return.

The deadline to file taxes in the United States is next Tuesday. If you’re a US citizen, it’s a convenient time to discover where those tax dollars land.

2 Comments

  1. Hi David,
    Thanks for a great post. I completely agree re the need for answereability/sanctionability mechanisms and that there’s an assumption floating out there that fiscal transparency alone is enough that needs busting.
    Just to point out another assumption that needs exposing – sites like openspending won’t make us trust government more. Open government does not necessarily mean that citizens will trust government more (an argument made by some politicians as well as advocates). If fraud/waste/corruption is discovered and nothing is done, it is more likely to increase cynicism/distrust in government and next time around, the bloggers/citizen journalists may not bother to worry about the $5,000 USB stick. We need to open up spaces for people to participate, whilst they are still interested/engaged!
    best, martin

    Reply
  2. Hi David

    My thoughts follow a similar trajectory as Martin’s, that it’s more about trustworthiness than answerability/sanctionability. The Mexican Auditor General would be pleased that your 21st Century institution is created to do ‘the hard yards’, just so long as it doesn’t fall within his bailiwick.

    I can understand your zeal to have the culprits named/shamed in public and prosecuted, but Robespierre and others have tried inquisitions in the past. They always seem to get the wrong guy or, at least, a lot of sacrificial lambs.

    Better that the feedback loop goes into the political process, making the legislature accountable to the ballot box (the way democracy works) or, in more autocratic states, by having those responsible sent off for re-education.

    Here in Adelaide, we’ve had the ‘toner cartridge scandal’ and claimed that we alone in the Federation didn’t need an Independent Commission against Corruption (ICAC). I’m skeptical too that a statutory authority should enshrine Corruption in its name – gives some recognition that we have it and it’s never going to go away. But we’re now getting an ICAC.

    Thanks for the thought-provoker, Chris

    Reply

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