Report: E-Gov Choking E-Commerce

Although well-intentioned, the U.S. government’s Internet initiatives are competing unfairly with the private e-commerce sector, according to a report released Thursday by the Computer & Communications Industry Association (CCIA).

The report, “The Role of Government in a Digital Age,” calls for a comprehensive review of government activities on the Net.

“The Government never meant to use information technology and the Internet to become a publicly funded market competitor,” said Ed Black, president and CEO of CCIA.

Black also said that some e-government initiatives have ventured beyond boosting efficiency and improving service quality.

“Instead,” Black said, “they are engaging in private-sector businesses. Some agencies seem to have discovered a back door to rebuilding Big Government — and that back door is the Internet.”

Unfair Competition

The report included a list of 12 principles that should be considered before government agencies embark on any new Internet initiatives. One central recommendation was that government entities should exercise “substantial caution” before entering markets where private-sector firms are active.

The CCIA report was authored by three prominent economists, including Joseph Stiglitz, a professor of Economics at Stanford University, who previously served as the World Bank’s Chief Economist. The other authors were Peter Orszag and Jonathan Orszag of Sebago Associates, Inc., who both have significant experience as advisors to top government officials in Washington, D.C.

Posting No Bills

Current government policy dictates that the government should not compete with its citizens. However, the CCIA report found that at least one government agency, the United States Postal Service (USPS), is competing directly with private industry.

A report by the General Accounting Office (GAO) predicted that the advent of online bill payment services stood to cost the USPS some $16 million (US$) each year. Accordingly, the USPS launched its eBillPay service in April.

Although the government contends the online bill payment market is big enough for the USPS and private companies, the authors of the CCIA report believe the USPS has more than enough power to dominate the sector.

The authors said that the entry of the USPS into the online bill pay market would create a tidal wave more than sufficient to swamp fledgling businesses, which do not have the resources and recognition of the USPS.

The Taxman Cometh

The CCIA report also looked at the online activities of the Internal Revenue Service (IRS). Although the IRS has not announced plans to offer fee-based online tax preparation services, some industry experts believe that the agency is planning to do so.

While it makes sense for the IRS to go into the online tax preparation business — because the agency already has the forms and information available at its Web site — the CIAA report questioned whether such a move will allow the government to compete unfairly with private online tax preparation services.

The study’s authors also questioned whether a conflict of interest would arise between the IRS’ role as tax preparer and its role as a tax enforcer if the IRS entered the online tax preparation business.

Whose Job is It?

The CIAA also looked into whether the Web-based activities of the Department of Labor constituted unfair competition with private industry.

The agency’s employment Web site, America’s Job Bank (ABJ), is the largest online job database, with nearly 1.5 million position listings and nearly 2.5 million registered job seekers. Although on the surface, AJB appears to be in direct competition with private job search sites, the report concluded that the Department of Labor “seems to have struck the appropriate balance among conflicting pressures.”

One of the primary reasons the AJB got the CCIA’s nod is that the site offers job listings for a broad spectrum of workers, in contrast to most private online job search engines that focus on high-end positions. The report stated, “since lower-skill workers are more likely to be unemployed than higher-skill workers, AJB provides a particularly valuable social service.”

In conclusion, the report commented that “the appropriate role of government in the economy is not a static concept: It must evolve as the economy and technology do.”

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