I am a numbers guy.
Numbers, I love numbers.
To some people,
numbers are confusing and crazy
and not helpful.
Just sort of a mess.
Maybe even in the worst case in school,
numbers were something that you memorized
for some purpose,
some teacher told you you had to memorize them.
For me,
numbers are a tool to tell a story,
to bring things together in ways that are more precise,
has more context, has more clarity
than you’ll find any other way.
Numbers add to the discussion.
They take a collage of mess
and turn it into something
that helps you see the playing field
of a complex problem.
Since we’re right here post-Superbowl,
let’s take the case of old Tom Brady.
Guy’s pretty impressive:
all this stuff going on.
You’ve got to see exactly where your receivers are,
where they are in context of everything else that’s going on.
You’ve got to be comprehensive.
You’ve got to know where you are in the game,
and still,
you’ve got to slow your brain down
and get sort of a sense
of comprehension and understanding,
where we are and what we’re going to do.
Now, I don’t think old Tom Brady uses the same kind of tool I use,
which are numbers.
But it’s a reminder
that if you’re going to attack any problem,
you’ve got to see the playing field overall.
When I ran Microsoft,
you couldn’t use numbers, precisely, to do innovation,
but if you wanted to understand across the world where were products
selling better or selling worse.
if you wanted to understand, really,
the sources and drivers of profitability,
one clean, simple spreadsheet –
I always hated two;
I didn’t like them crowded –
would help tell the story.
I now own
the Los Angeles Clippers basketball team.
Much is made of sports analytics;
there are so many numbers.
But if you really want to know
how to defend, pick and roll, with LeBron James and Kyrie Irving,
I guarantee you: the numbers are what tell you a story.
Now, a few years back,
right after I left Microsoft, so 2014,
my wife Connie said something very important to me.
She said, “Okay, you’ve left Microsoft.”
She’d been very busy with our philanthropic stuff
over the last seven or eight years,
and she said, “Why don’t you come join me and help?”
And I said,
“Well, you know, I’m just kind of kicking back, blah blah blah blah blah.
Besides, the government’s the best philanthropy;
it’s the biggest philanthropy in the world.
It takes money in and distributes it
to the poor, to the elderly to the sick, to the disadvantaged.
All we have to do, really, is pay our taxes, don’t we?”
She gave me one of the dirtiest looks I’ve ever received from her, and said,
“No, we can do better than that.”
But it triggered me to actually go ask the question:
what really does government do
by the numbers?
What does it look like?
Where does the money come in from,
in a holistic way?
Who does it come from?
Where does it get spent?
And, perhaps, most importantly,
by the numbers, what kind of outcomes do we see?
So, I go to my favorite search engine,
Bing, and I start looking around.
(Laughter)
And the truth of the matter is it’s kind of a mess.
You just type in
“government expenses by category,”
and you’re going to find a blog, top link,
you’re going to find a blog that’s done by a guy who I’ve met,
who’s fantastic, Christopher Chantrill,
but he does it, one man, retired, out of his home in Seattle,
as it turns out.
I was hoping I could find something like a 10-K document
that the Securities and Exchange Commission makes public companies create.
What would that look like?
Well, a year after we started on the journey, we actually found
a 10-K document,
but only for the federal government,
and state and local is equally important,
and it only had financial information.
It didn’t really have information about outcomes or population,
everything else.
So, I got kind of genned up on this
and said:
“What would a 10-K for government look like in the United States?”
And I said, “It’s got to be all of government,
because most people can’t tell what the state does,
what the federal government does.”
I ask people:
“Who built the road in front of your house?”
“Oh, I don’t know.”
“Who pays for Medicaid?”
very complicated question,
one much being discussed.
So the question is how do you bring this together in a holistic way?
I’m going to give you just one or two kind of questions
just to get you in the spirit of this thing.
One interesting question might be:
How many employees work for government
in the United States?
Now, a lot of people say,
“Oh, it’s a bunch of bureaucrats, blah blah blah.”
But, it’s interesting.
How many people, and what do they do?
What do you think?
Five million?
Ten million?
50 million?
The actual answer is just over 23 million,
according to the Census Bureau and the Department of Defense.
All those bureaucrats people talk about,
most people – just here on the slide,
I don’t give you full context but I give you context
for the largest sets of government employees
that make up about two thirds of the base:
It’s teachers, professors,educators:
almost 11 million.
It’s active duty military.
It’s hospitals.
The government owns and runs a bunch of hospitals.
It’s police.
It’s corrections officers.
It’s civilian military,
which we don’t even show on here.
Interesting.
I had no perspective,
and yet, this is one of the major cost drivers
of employment in government in the United States.
Let me pick another question for you.
Infrastructure expenditure is much in the public eye,
actually with pretty good bipartisan support.
What does the Department of Transportation
say about what percentage of bridges in the U.S. are structurally deficient?
What would you guess?
50%?
80%, somebody said.
Let’s look at the history,
and I believe government fact sources,
government databases.
The number actually in 1990 was 24.1%,
and today it’s 9.6%.
It has improved over the last 27 years.
Well, there’s historical context,
but I’m not showing you all the other numbers:
what’s going on with the interstate system;
what’s going on with other roads; what’s going on with airports.
But this one number in historical context
I think would surprise most people,
let’s just put it that way.
So, let’s come back to this notion of seeing the playing field
of government by the numbers.
As I attacked this problem, we built a little team of people.
We call ourselves The USA Facts Initiative,
and we’re a small, little team of folks,
and we’re leveraging resources at the University of Pennsylvania.
I taught a course at Stanford with an economist there
to try to try out some of the ideas.
We’re a little band, but we get a lot of help in a lot of different ways.
And the two things that seemed most important
to get right from my perspective
if we’re going to make these things simple and easy to understand:
what is important to look at,
and how do we need to look at those things?
The number one thing is who are we serving?
Who’s paying the taxes and who’s getting the service?
What does our population look like?
What do things look like for less affluent people?
For more affluent people?
For people in the north? The east? The south?
What do the revenues to government look like?
State? Local? Property?
Federal income tax? Corporate income tax?
Fees? People pay fees to use hospitals and sewer and water.
Expenses? Where does the money go?
On people? On capital? On transfers?
And outcomes, perhaps most importantly,
like what percentages of bridges are structurally deficient?
That’s a question, by the numbers, you can answer that is an outcome.
Now, how do we look at these numbers?
First of all,
they really do have to be factual.
Tom Brady really better see where that receiver is on the playing field.
The data has to be comprehensive.
One of the things I hate most is when people will snatch a number
and then not tell you how it fits with all other numbers.
They’ll give you a subset; they won’t give you context.
So, if you want to see the playing field,
you’ve got to see context;
you’ve got to see things that are comprehensive:
state, federal, and local;
you’ve got to see things that are accurate.
In our own case, we said up front,
two things:
Number one, we’re only using numbers from government databases.
We don’t want this private shadow,
somebody will worry about the source being a “D” or an “R” or a blah-di-blah.
So, we only use official government numbers,
that’s very important to us,
and we try to use the most consistent,
up-to-date numbers that we possibly can:
factual, factual, factual, nonpartisan, factual.
So, that’s how you see the playing field,
but this last little bullet point:
“comprehensible.”
We started this project, I said, “Whoa!
We could never look at a business the way you might look at a government.”
How many different committees
in Congress are there
or departments of government?
And that’s just at the federal level.
I didn’t know when I started this: there’s over 90,000 independent
government jurisdictions in the United States.
That includes school districts, waters, towns, federal government, etc.
So how do you make it comprehensible?
And, I struggle with that.
What a business has to do in its 10-K report to the SEC,
it’s got to divide the business down into chunks called segments,
and then the segments have chunks underneath them, called reporting units.
Okay, how do you think about that for government?
And one of our team came up with this amazingly good idea:
Let’s look at the Constitution.
Actually, let’s look at the Preamble to the Constitution.
And the Preamble to the Constitution
sort of says there’s four segments of government in the U.S.:
Establish justice and ensure domestic tranquility;
Provide for the common defense;
Promote the general welfare;
Secure the blessings of liberty to ourselves and our posterity.
Four things.
That’s how we’re going to organize by the numbers our view.
So, the question is what government activities can we show by the numbers
that constitute these four segments?
So, we thought about it a little bit, and we could say for example.
Well, this is it.
This is everything we capture.
There are four key parts in establishing justice
and ensuring domestic tranquility:
crime and disaster;
disaster response – fire, etc;
consumer and employee safeguards is an important part of justice
and domestic tranquility;
safety.
Provide for the common defense.
Promote the general welfare:
the government promotes health, public health policy, health insurance policy;
the government promotes the economy by an investment in infrastructure.
How do we secure the blessings of liberty to ourselves and our posterity?
The government invests in human capital through education;
financial capital by promoting wealth and savings,
and managing itself reponsibly, so the government doesn’t take on
too much debt.
So, as we approach Tax Day,
April 18 this year,
we’re going to publish our stuff online,
usafacts.org
and in a sense what you want a citizen to be able to do is to go to look and say,
“What do my tax dollars go for?
How much taxes do people pay?
What is the money going to get used for?
And what kind of outcomes?”
We don’t do any forecasting.
No prediction, that’s not factual.
We’re just reporting on the history.
We’ll let people do their own forecasting and prediction.
We also don’t try to take a position on any issues.
We want the facts, the numbers,
so that when people go to take a position,
they’re taking a position well grounded
in the actual data.
So, I want to come back around to this discussion I had with my wife.
What about philanthropy and civic activism
as opposed to running a basketball team and paying taxes?
Not surprisingly,
not only did my wife win, so to speak, she convinced me.
She convinced me that there’s a real opportunity
to make a difference,
particularly in the lives of children who grow up in disadvantaged settings,
and probably at birth have a very low probability
of achieving the American dream.
She started looking at this problem ten years ago
through the lens of foster care.
So, for me, issues like: how many kids are in foster care?
What’s the median amount of time they spend in foster care?
What percentage of foster care kids are living with family members –
which I think is better, probably, I don’t know, I’m not an expert,
my wife is –
than living elsewhere?
And last but not least, in this case,
how much do we spend on foster care?
This is just an issue for us, and it’s in context.
But you’re going to have your own issues; you’re going to have your own issues.
We try to be comprehensive enough, so whatever your issue is,
we’ll give you the playing field,
we’ll give you the facts,
we’ll give you the numbers.
Thank you all very much.
(Applause)
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