Tuesday, January 13, 2009

An Innovative Use of Prizes

The Christian Science Monitor ran an amazing story on Monday about the Mexican government's efforts to identify the most egregious regulatory burdens (CSM):

Montserrat Contreras Castañeda had her eyes set on a job opening in Mexico's state attorney general's office, but first needed proof of residence for a competition that ended the next day.

A simple undertaking, she thought. But after an hour and a half in line, she found out that her identification alone would not suffice. She either needed three years worth of bank statements or could head to her local representative's office to seek another document to expedite the process. After more lines, wrong directions, and bureaucrats on lunch break, she made it back to the original line with the right paperwork under her arms. But it still was not enough: the process would not be over until someone visited her home within four days to verify that the mass of documentation was indeed valid. Needless to say, she didn't get the job. She couldn't even apply.

Welcome to the red tape that seems to wrap the whole of Mexico, turning the most mundane tasks – changing a sign outside a small business, obtaining a birth certificate, or reporting a stolen license plate – into megamissions.

Now Mexican President Felipe Calderón is trying to change all that. Ms. Contreras was recently awarded $7,500 for her troubles, as a winner in a government-sponsored contest to identify "the most useless procedure." It's an effort to turn Mexico's famously inefficient officialdom into a well-oiled machine – both for the sake of a saner citizenry and for a state hindered by processes that make it more prone to corruption and far less productive.

Mexico's per capita GNI is just over 8,000 USD, so a prize of $7,500 is a huge incentive. Mexico fairs okay on the World Bank's Doing Business Survey (56) but has slipped from its 2008 level (42). On some indicators, like the registration requirements for starting a business, it does very poorly (115), so it is amazing to see such self-awareness on the government's part. If there were a prize for the most innovative government program this would probably take top honors.

Perhaps when Cass Sunstein takes over OIRA he can implement a similar policy, albeit with larger prizes. This would serve two purposes. First, it would identify the worst regulatory burdens by tapping into the distributed intelligence of our society rather than having a few members of the administration scouring lines of code. And second, the prizes would serve as a useful, if small, stimulus.

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