The Business Case for Open Government, and the Governance for Open Business

by Charles “Kip” Purcell

            Thirty-odd years ago, a champion of government transparency was lectured by a legislator who insisted that no one really cared what the government did behind closed doors, other than a special-interest group known as the press.

            The New Mexico Foundation for Open Government was founded in the wake of that disconcerting episode.  We’ve come a long way since then.

            Today there’s widespread recognition – including among legislators – that government transparency isn’t just for newshounds.  Nor is its natural constituency confined to lawyers, gadflies, and other assorted troublemakers.  It turns out that conducting the public’s business in public has benefits not only for advocates, activists, and agitators, and not only for the public bodies whose operations are strengthened by public scrutiny. 

            It’s good for business, too.

            We live in an information age, and information is nearly as essential an ingredient of production as are labor, capital, and raw materials.  Business has a vital interest, for example, in learning what’s afoot in the legislature, and what the regulatory state has been up to lately.

            It’s no accident that the most open societies tend to be the most prosperous.  Transparency spurs private investment by breeding confidence in the stability of government and in the fairness of its processes.  An open government is a leading indicator of an environment in which business can flourish.

            But that’s not all.  Government not only makes decisions; it gathers and generates and synthesizes data, big and small.  Unleashing the power of that data by shaking it loose for public use – at no or minimal cost to the public that paid to compile it in the first place – is one of the most important projects of contemporary open-government initiatives. 

            The stakes are high, and not just for the individual entrepreneurs who seek to exploit government-harvested information for their own financial benefit.  Whole industries have been built on the basis of data that government has had the good sense to treat as a public commodity.

            Weather observations collected by the National Oceanic and Atmospheric Administration (NOAA) furnish a classic example.  The NOAA’s open-data ethos has been credited with supplying some $700 million of value added annually to private weather services.  Forecasts founded on NOAA real-time data provide the public with an estimated $31.5 billion worth of benefits each year.  The NOAA’s proactive approach to data has even given rise to a new financial instrument, the weather derivative, and the market for that hedging tool has ballooned to more than $10 billion annually.

            In New Mexico, of course, the economic impacts of transparency in state and local government are more modest, but the principles are the same:  an open government is a pro-business government.  And a rising tide of government data-sharing lifts all boats.

            These principles are increasingly well understood by government and business alike.  A less familiar proposition, but perhaps an equally important one, is that business itself can benefit from a dose of sunshine.  As anyone who has looked through a window can attest, transparency is a two-way street.

            Consider the private-sector analogs of the Inspection of Public Records Act – the New Mexico statutes that empower shareholders of for-profit corporations and members of nonprofit corporations to examine (in the words of the Nonprofit Corporation Act) “[a]ll books and records of [the] corporation … for any proper purpose at any reasonable time.”  These statutes aim to keep the enterprise’s owners informed and its board members honest.

            Or consider the growing awareness of the extent to which confidential salary schedules can mask disparate treatment of women and minorities in the workplace.  Or the growing backlash against nondisclosure agreements that protect executive-suite predators and facilitate the victimization of their vulnerable subordinates.

            Secrecy has the potential to corrupt any institution, public or private.  That’s why the law gives shareholders and members the right to inspect a corporation’s books and records.  And that’s why, even when the law doesn’t require it, businesses should consider whether openness is the better policy.

            To be sure, there are limits to transparency in business.  The duty of openness is owed to the entity’s owners, rather than the world at large.  And while government should keep few secrets from its constituents, businesses have good reasons for keeping their competitors in the dark. 

            But the fact remains that collaboration on the basis of shared information is an engine of economic development and a boon to sound decision-making.  Democracy – and the transparency that makes it possible – aren’t just for government anymore.

Charles “Kip” Purcell is a former president of the New Mexico Foundation for Open Government and a recipient of the William S. Dixon First Amendment Freedom Award.  He is a director of the Albuquerque-based Rodey Law Firm. A long -time First Amendment advocate, he has written or assisted in the drafting of numerous FOG amicus briefs that have shaped open government law in New Mexico. This essay is part of FOG’s Transparency is the Key to Democracy Project  focused on transparency and accountability as the basis for democracy. Accountability ensures that government is held responsible to the citizenry; transparency gives the public the right to access government information and requires that decisions and actions made by the government are open to public scrutiny and occur in the light.