The Public Value of Monetary Integration

Recently there have been rumblings again about whether the introduction of the Euro was a good thing (Paul Krugman mentioned it in his column last Monday in the New York Times).

Several years ago, when I was living in Germany, I attended a conference where I found myself talking to a professor and his wife about the recent fall of the Berlin Wall. The recently united Germany was in the middle of a crisis of second thoughts. The former West Germany, in particular, was greatly irritated at the "Ossies" wanting a free ride all the time ("Do you know what they do? They come up to the cashier in a supermarket and refuse to pay, saying 'I suffered all these years, now I deserve this!'"). But the professor and his wife were adamant: reunification was absolutely the right thing to do.

"It will do something priceless: it will keep them from ever going to war. That's worth the entire cost of reunification."

They have a saying in Italian, Conosco i miei polli - I know my chickens. That's the way many people feel about European history: again and again, European countries have gone to war with each other. They could do it again - I know my chickens. Monetary integration is one more step toward making that harder to do in the future.

Put another way: the Public Value of monetary union is huge. Sure, the financial cost may turn out to be enormous, maybe even a net loss. But the political value is enormous, and makes it all worth it.

Public Value

There’s a lot of help out there for those of us in private enterprise who are wondering about how to measure the value of our IT operations. But what about those in public or non-profit organizations?

You might want to consider the concept of Public Value first articulated by Moore at Harvard in 1995, and then further elaborated by international entities such as the World Bank; European entities such as the IDABC, and private organisations, the Gartner Group in particular. A number of frameworks for measuring the Public Value of IT have been proposed, all of which tend to share three conceptual elements:

• Financial and organizational value – this element is closest to the classic techniques of value determination already known in the private sector, such as measures of financial Return on Investment, as well as more qualitatively valued improvements in architecture and organisation.
• Political value – this element assesses the value of achieving policy-related goals, such as the degree of implementation of laws and directives related to IT-readiness;
• Constituent value – this element captures the value of the improved end user experience, in terms of decreased administrative burden, more inclusive public services, and so forth. This of the Standard Cost Model for reduction of administrative burden and similar initiatives.

From my point of view, the best thing about the concept of Public Value is that it makes a correct separation of the different dimensions of value into something you can work with. I’ll get back to this later.