PCV´s thoughts on government back testing policies:
As I am a business volunteer working with coffee, I have realized how government funds projects and the private sector acts. Thus, after reading an economist article regarding problem solving lawyers and opportunity seeking business, I found that I had a unique perspective of how government & businesses respond to debt, investment, & new ideas.
The government officials have the ability to fix problems with huge amounts of money, which they receive regardless of efficiency or not in their project’s investments. However, instead of the government interested in a return on investment or a societal important investment, they concentrate on the project’s budget being clear, sending the budget back 3-4 times to correct $2-3 differences due to slight changes of currency values. As the money is not dependent on the bureaucrat’s work, they neither are aware of the tedious process of acquiring capital, nor the need to be efficient in its use and to use it for the most necessary project for the whole, rather than just their district and a good PR project. It would be a far better study of a politicians or bureaucrat’s job to test the return on investment or back test all money provided to the individual & that individual’s project. Currently, the most inefficient means of rewarding bureaucrat’s is dependent on their budget’s or revenue used, not efficiency nor benefit for society. Thus, as the largest companies in revenue largely are broke and owned by the government Fannie Mae & AIG, they have adopted to a government system of increased revenue, reduced inefficiency & inability to learn from their mistakes, which is a reason the market does not see much hope for these companies, minus AIG.
Basically, as a company starts earning more from a good year, which coffee farmers in Honduras are experiencing, they pay down their debt, look to reinvest in improving their infrastructure that is hurting their products quality, and look into investing to increase output. This is only due to an increase in their returns for their products, which largely happened due to climate change, a largely accepted phenomenon discussed by those with any real hands on experience with farming or climate dependent entrepreneurs. One can also blame the inability of governments to maintain any value in their monetary systems, which really hurt the bean farmers, after their product was sold. Whereby the cash lost value quickly and the bean prices soared leaving them too poor to re-buy beans on the market. Basically, this commodity and general food crisis is representative of the farmers not seeing the trade of a necessity for valueless money that will buy less next year or a bad investment. Thus, they are requiring more and the market is recognizing that the farm product will require security in case money continues to lose value compared to their product.
Businesses survive by searching for opportunities to improve their products returns, while governments solve problems with large quantities of money. The coffee business requires many years to obtain the money to take advantage of a visible opportunity, yet continually have the long term plan for expansion & the need for more money. The government has more secure credit, poorer return on investments, larger debts, an increasingly worse state of their finances, yet they print the money providing profits to banks, not to the government. This printing of money may be replaced with businesses printing their own money, as private bonds return higher rates than government bonds. Either way the government’s throwing money around to fix a problem may help the society for the next couple of years, while causing extreme problems for society in 8, which could be avoided by back testing political branches, projects, and basing government projects on success at stated goals with independent International organizations, university professors, or private companies investigating & publishing their findings. This would force governments to be more responsible to society’s best interests and not short sighted politically smart, yet very dangerous for everyone. This calls for a means to punish a politician for pursuing short term goals that he/she pursues knowingly aware that it will have much more drastic negative effects on society in the long run. However, this will be hard to prove and is hard to push with many laws protecting politicians from witch hunts or citizen’s holding politicians accountable for actions while in office.
The real problem is that voting is neither dependent on their performance, nor depends on any back testing or benefit of the politician for society. Basically, the individual with the most to spend or highest revenue, not efficiency of use of limited resources will be elected or given a promotion. With a clear limit of $50,000 election fund for all, the politician with a more efficient campaign & better investment in time would win. However, this is a great challenge to how politics works, as competition is largely the greatest fear of all governments & their employees. With a limited campaign fund, a simple study with numbers for returns and independent reports on the performance would be the cheapest means to show a good incumbent. This would make his campaign & expense for all much reduced, while leaving the political field without the smear campaigns & more with logical spread sheets like those of companies or athletes showing their contribution to their success. However, I doubt that there would be an organization to do this, unless it would be a profitable business recording the data and publishing batting averages or return of equity for projects of politicians. This could be a nice business plan, yet the real issue is to get politicians to think not in quantity & throwing money at problems. Rather, they should understand the cost of capital and difficulty of acquiring it, before using the money of others for projects for all.
What do you think of introducing this idea of an annual report on politicians?
Do you think the US population is too dumb or occupied to care?
Do you see any dangers in forcing competition between governments & political candidates in an annual report by professors, international organizations & businesses?
Do you know of a country using these back testing tri reports mentioned above or one considering it?
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