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When and why public administration innovates (pt. 1)

Today I delivered a talk at HSE Open Day 2015 in Moscow Gorky Park (pictured). Here is Part I of what is said:

Moscow is an innovation-driven city, according to the Innovation Cities Index 2014 (which ranked Moscow 63 out of 445). Or as The Economist recently put it – partly jealously, partly admiring – “Russia’s great strength throughout the centuries has been that its people can seemingly adapt to any conditions”.

No doubt, innovation is a top priority in Moscow. There are seven technology parks, young researchers are awarded and the city intends to further develop its innovation and research structure.

But this is private sector innovation. Infrastructure investments result in innovation in the private sector. An example is yandex.taxi. Using geospatial information from the Open data portal of Moscow the quality and quantity of taxi services has improved significantly throughout the last four years. Good. What about innovation in the Public Sector and Public Administration?

Innovative behavior means “to seek out new and better ways of doing things” (Fernandez and Moldogaziev 2013), and some public authorities try to improve citizen’s well-being by doing so. Aforementioned Yandex.taxi application builds on open Data. Moscow’s Open data portal (data.mos.ru) and its bigger sister, the Our City website (gorod.mos.ru) are public sector innovations; e-government innovations.

gorodmosruPlakat

Both sites have a potential to improve the public interest. Making administrative data publicly available creates transparency. It is a tool to hold people to account for their actions. Open data portal is not very popular (10,000 visits per day) so far compared to Our City Website (2,000,000). Nonetheless, it is a contribution to hold bureaucrats to account for their actions and the resulting outcomes. Even when the number of clicks is low, it sets incentives to achieve at least a baseline level of performance. Our city is the place where people complain, but also receive public services. It is a source to identify self-reported problems, and to fix them. People complain there, and monitor the implementation of requests. Posted photos show results from actions that were taken to address a reported problem (a broken skid, a pothole, a pile of rubish). A new feature is a reporting tool for excessive pricing in pharmacy. Such innovation is driven by latent demand. I experienced such excessive pricing myself. And seemingly other people did as well. The new innovative reporting tool responds to such latent demand. It makes life better a little bit. I feel better when I have the feeling that somebody takes note of daily-life problems. By doing so Our city increase my personal well-being.

Put generally, an innovation is an idea, a program or a policy, which is new to the organization adopting it, regardless of the number of prior adoptions in surrounding peer units. This is the seminal definition of Walker 1969 which has been replicated since then.

E-Government and e-services are typical examples of innovative behavior in public administration. Several municipalities and government agencies in the US have implemented such e-services. Submitting your tax declaration or booking an appointment online is getting common also in Germany. One-stop agencies (products and service innovation, Bhatti 2004) are another innovative practice. Municipalities in Denmark and England have introduced such citizen’s centers. Tewkesbury Borough Council established a one-stop agency, or customer service center (in Dec 2014). North Somerset has established a similar multi-agency citizens portal. East Riding of Yorkshire and Scarborough Borough Council has a ‚virtual customer service centre‘ since 2012. The London Borough of Croydon has a customer service center reported in Jan 2015 (‚Access Croydon‘). Customer service centers normally work like this: On arrival you will be met and shown where to go. You are able to book appointments in advance, online. All of this will reduce waiting time. The objective is twofold; to tailor public service delivery to citizen’s need; and realize efficiency savings. In England such innovative behavior is clearly driven by the deepest spending cuts in recent history. The Spending Review 2010 asks for severe budget cuts, particular in local council’s budgets. At the same time, central government restricts councils‘ autonomy to raise council taxes. For local councils that means “to seek out new and better ways of doing things”.

Another interesting example of innovative behavior from England is the YouChoose budget tool, a simulator to engage citizens in budget cuts; which was first applied by London Borough of Redbridge. It’s a web based simulation: Regular people, like you and I, adjust spending levels of a basket of functions, see the consequences for service delivery (example from demo: reduced frequency of street cleaning), but budget need to be balanced and council tax cannot be raised by more than 5\%- these are the rules of the simulation. If so you can submit your propositions to the local council.

However, budget cuts in England also drive innovative search activities, which have unintended side effects for local residents. This is called pay-as-you-go government. Public administrations (and elected governments) are charging higher fees for public services to fill budget gaps. By doing so they avoid raising taxes, which is associated with the political risks of losing public support and votes. In principal to charge people for a service avoids overconsumption and prevents free-riding. But in some cases the charge of a service now exceeds its costs; the charge becomes a tax (The Economist, Pay-as-you-go government, August 29th-September4th 2015). Public Administrators became too innovative.

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On Migration Policy: let them learn and let them earn

On migration policy: Let them learn and let them earn

Four bits of information on migration to Europe and Germany in particular called my attention last week: An article in the latest issue of the economist (“Let them in and let them learn”, August 29th-September 4th 2015); a news header in the Frankfurter Allgemeine Zeitung (FAZ), a German Newspaper; an interview with the head of the German national office for migration broadcasted at Deutschlandfunk, the German equivalent to the BBC, and a phone call with a relative in Potsdam, a mid-sized city nearby Berlin (most famous for Park Sanssouci, the German Versailles, and the Potsdam Conference in 1945).

The FAZ-newspaper article first: The secretary of education in the German state of Thueringen intends to stop letting children of refugees families to go school. So far, there is compulsory school attendance for every infant aged 7+ on German soil. This is a bad idea. To leave the most vulnerable in society behind, is foolish for their personal well-being, but also for an aging education based society.

This is also the reason why, as “The economist” points out in the aforementioned article, a “bigger welcome mat would be in Europe’s own interest”. The United States have benefited from the continuous inflow of migrants, both skilled (Silicon Valley) and unskilled ones (farming and service sector). Seemingly there are potential payoffs for Germany, as well, but this prospect subject to some condition. The first one: Migration policy in Germany needs a migration law. There is none in Germany, yet. Setting standards is helpful in any case. The second condition: The procedure for granting the right of asylum in German has to be (i) more firm and (ii) more rapidly. As the Economist puts it, “Syria is a hellhole; Albania is not”. To say no has to be potential outcome of the procedure for granting asylum. The procedure has to be more rapid, both for the sake of the refugees and German taxpayers. In Germany it takes 5 months to arrive at a conclusion in an asylum seeking procedure, on average. In Switzerland and Norway the number is 48 hours. German decision makers should book their tickets to Oslo, or more cheap, to Bern, and identify the reasons for performance gaps. Performance Benchmarking is a good idea.

The third condition: Refugees have to become integrated in real terms. Clustering them in refugee camps first and later in suburban boroughs is another foolish policy. The city of Potsdam seeks out a better way of doing things, as my phone call informed me. As new refugee arrives, he and his family will be accommodated in an apartment in state-owned housing blocks which are common in Eastern Germany and lack any notion of run-down second class accommodation. Regular German people live next door. And the other next door. This is quite different from stuffing a dozen of families into a former casern. And the refugee’s children will have their first day at school on next Monday, as kids from the other regular peoples’ family will do. Integration triumphs over clustering and its unintended negative side-effects. Best-practice.

So let them earn, let them learn and take a decentralized approach to accommodation.

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