» The Government Needs Critical Accounting
The CCPA tried to measure how much we benefit from public service. But they noted that the biggest problem with their study is that actually the only data available is to measure the cost of public services consumed by households. Government cannot use the market theory of value because the things government produces (mostly as a monopoly) are not traded in markets; instead, government accountants use the cost-of-production theory of value.
Cost theories of value have been rejected by neoclassical economics. Not having any way of measuring the value besides the cost means that cost-benefit analysis is meaningless. So when business people look at government services they see them as at most zero net benefit.
This is similar to the problem of measuring government’s success by changes in gross domestic product (GDP). Government needs critical accounting more desperately than the private sector does.
My feeling is the “benefit” part of cost-benefit is politically determined.
Cost seems like a reasonable metric to keep the system running, because there’s an assumption that the government only does things which are beneficial*.
Any kind of critical accounting would have to be case-by-case, probably paid for by NGO-SIGs and used to lobby for political change.
* “I did it for the lulz” shouldn’t fly — guvment is srs bidness.
Jack
17 Jun 09 at 4:18 pm
For those that were there for it, further to my shroom rant about the dangers of too much government, and to counter my “there’s an assumption that the government only does things which are beneficial” point from the previous comment:
When Z and I got to R-town we caught a couple of headlines:
Public outcry! Richmond decides not to carpet-spray pesticides.
70 Prisons built in Texas in the last 10 years.
Jack: “See, Z? This is what I’m talking about: Government gets big, covers the land in jails, and then tries to gas the people who aren’t criminals.”
Jack
17 Jun 09 at 4:22 pm
The government does and should do many things that could be provided by the private sector (eg: police vs security). The government could increase taxes and provide more services or decrease taxes and provide less services. How can you make these comparisons when all your accountant can tell you is “yeah, you blew all this money on something – who knows if it was worth it?”
Jared
17 Jun 09 at 7:36 pm
Yeah, that’s what I’m saying — whether spending is worth it is a discussion for politicians and lobbyists, not accountants. Unless, that is, we start measuring Gross Domestic Happiness instead of GDP, like Bhutan. I’m all for doing that, if anyone wants to start a populist uprising…
Accounting is a tool of business and capitalism that’s been hacked to work for the public sector. It’s primary objective is to measure income, so it’s not surprising that it doesn’t fit well for analyzing non-profit activities.
Similarly, an accountant will never tell you that putting a game studio in downtown Vancouver is a cost-effective decision. It’s up to management to decide that the expenditure is worth it because high-value employees like high-value offices.
That said, an accountant’s analysis is usually broken down into quantitative and qualitative factors. While there’s not really a standard quantitative framework for evaluating non-profit activities (that I know of), she could develop a performance measure qualitatively (eg/ number of homeless people housed per dollar, number of doctor-hours per patient, etc.).
Then you can compare across similar programs (this homeless program is better than that homeless program), and you can tell if a program’s efficiency is changing (doctors in the Yukon help fewer people per hour in Winter), but it’s quite difficult to formulate statements like, “housing the homeless is more beneficial to our society than hiring a marginal doctor.”
That’s why I say “critical” government accounting probably has to be done case-by-case and used to lobby the politicos.
Jack
18 Jun 09 at 10:11 am