Many years ago, I was the staffer for a Senate subcommittee that had jurisdiction over government data collection. When I would visit the Chairman’s home state (which staffers do a lot), I would be called upon to explain to people, mostly farmers, why they needed to fill out all this government paperwork. Why did the government need to collect all this information? It was just a useless nuisance, they would complain.
Fast forward 25 years to this story in the New York Times – “Agriculture Department Cuts Reports on Crop Inventories”. As the story points out, farm groups are not happy with the cut backs in data collection:
Farmers say such data is crucial — and not just because it helps them decide how much to plant or how many animals to raise. Potato farmers use reports on potato stocks to decide when to sell. Hops farmers use the data to persuade bankers to lend them money for costly processing facilities. Restaurant chains watch catfish numbers to anticipate price changes. With the Texas drought forcing farmers to send their sheep herds to other states, wool and lamb buyers would normally use federal data to see where the animals went.
The story goes on to note that some agricultural groups are helping pay for some of the data collection.So farmers are now begging the federal government to collect information that they used to complain to me about. The fact that farmers have gone from complaining to valuing says a lot about our switch to the I-Cubed Economy and the rise in the importance of intangible assets. The farmers may not recognize the crop information as an intangible asset. They just know it is valuable. The same can be said for many others. Business people don’t necessarily realize what they have are “intangible assets.” They do know when something is valuable. This has huge implications for public policy. The market failure here is that many businesses don’t recognize their intangible assets and don’t know how to utilize them. As a result, the economy is less innovative and productive than it can be and economic growth suffers. For that reason, I have long advocated that government programs that provide technical advice to business be expanded to include intangible asset management (see our Policy Brief–Intellectual Capital and Revitalizing Manufacturing). Likewise, government needs to understand the role it plays in creating intangible assets that the private sector uses. We all understand that government funded R&D and education programs are government provided intangible assets. In fact, the White House Office of Management and Budget (OMB) puts out a special analysis of federal investments that includes investments in physical capital, R&D and education and training (see previous posting). However, spending on data collection and information creation is not seen as an investment. It should be. After all, as the farmers now recognize, there is value in them numbers.
Cross posted from The Intangible Economy.