Forbes: Pulling Down State Credit Ratings 24_state_credit_ratings

By Amity Shlaes, Contributor
This story appears in the November 2, 2015 issue of Forbes.
BACK IN THE 1980s a man who sat on the Los Angeles County Regional Planning Commission told a story about a Christmas ham he’d received from a local cemetery, Forest Lawn.
"My first Christmas as commissioner–when I received the ham–I tried to return it at once, though for the record, I did not, since no one at Forest Lawn seemed authorized to accept hams." A year later another ham from Forest Lawn arrived, and this time the commissioner gave the ham to a worthy charity.
The third year the officer gave the ham to some worthy friends, who were hosting a party. The fourth year the commissioner held his own worthy party and served the ham. The commissioner recalled what happened next: "In the fifth year, about the tenth of December, I began wondering, where is my ham?"
We all look for our hams. The only remarkable part of this story is that the official, whose name is George Lefcoe, actually decided to speak publicly about the subtle, gentle, gradual process of corruption. The rest of us may at times consult our inner commissioner, but we don’t talk to others about what we take. After all, such work, especially in a state, county or city office, long took place in the shadows. In the 1970s, when Lefcoe began his work as a commissioner, the 64KB Apple II computer was state of the art, and there was no Internet chatter. There was no Internet.
Yet the decisions to take the ham add up. In the end bureaucrats make decisions that benefit the ham-givers, not the voters. Ham becomes hams, hams become pork, and a low credit rating, such as California’s, results.
You can only wonder how many servings of prosciutto on melon it took for the Los Angeles City Council to approve the city’s bid to host the 2024 Olympics, as it did in September. That event is certain to go over budget. A contingency fund of $400 million is already in the plans.
All the more welcome, then, are projects like, a new drive that uses big data to make the work of city, state and federal government transparent. Open the Books was founded in Illinois (one of the porkiest states in the union) by Adam Andrzejewski, a big-data talent. Andrzejewski and his team have amassed the computing power to capture a great share of the federal checkbook’s vendor spending in the U.S., as well as more than 48 states’ checkbook payments to vendors.
Open the Books can also trace public salaries, pensions and campaign donations. Donors and subsidy recipients often turn out to be the same. Open the Books created an app that shows it all: the beauty school that receives more than 100 times in grants and student loans what it charges in tuition, or the $1.67 million in federally guaranteed loans and hundreds of thousands in subsidies and direct payments received by the brother of a former Illinois director of agriculture.
Open the Books is not alone. Computing power has made such work cheap and possible for any graduate student to tackle. Another team, the Environmental Working Group, has done particularly gratifying work on the tens of billions of dollars in farm subsidies that were handed out between 1995 and 2012. It turns out that in California between 1995 and 2003 the average payment was 29 times the size of that to farmers in other states. The Washington Post offered up a list of components in a recent agriculture bill, noting that the bill authorized funds for the growth of "industrial hemp"–Cannabis sativa L.–for research purposes by colleges and universities.
A spotlight makes officials squirm. The very existence of data-heavy watchdogs deters.
But one aspect of the new "expose ‘em" culture warrants caution. Watchdog groups tend to leap into litigation, and not just for the purpose of prying information out of reluctant agencies via the Freedom of Information Act. Litigation itself is every bit as arbitrary as the decision to favor one ham-giver over another. Justice by litigation can be as corrupt as the subjects it targets.
Minds as thoughtful as George Lefcoe’s will be leery of joining a government in which the scrutiny will be unrelenting. Only lesser brains and automatons will be willing to take a job in a place where metrics and watchdogs rule. The waste of subpar decisions by these mediocrities will cost the people plenty, too.
Still, twinned with reform laws, watchdogs are welcome. Cleaner government is something for which the public has great appetite.
Back to news
Sign the Petition