The Grand Illusion
They oppose openness in financial transactions, whether consciously or subconsciously, because such openness is the only way to stop financial cheating and the shenanigans that so drastically boosted their income… and still do. A recent article in New Scientist by Mark Buchanan [March 19, 2011] cites several studies on the matter, including one from the Quarterly Journal of Economics that makes the point that every possible regulatory “fix” can be gamed or evaded so long as the details of transactions are kept secret. In short, the key factor that enabled investment banks to extort over a trillion dollars from the American people and the government and to pay and keep paying multi-million dollar bonuses to thousands of employees was not primarily inadequate regulation but secrecy.
In short, secrecy enables criminality. We all know this, I suspect, in our heart of hearts, because, except for psychopaths, we all behave far better when we’re under observation… or know that we could be. It’s amazing how traffic slows to the speed limit when a highway patrol cruiser is sighted.
So why do we continue to insist on the details of our lives, particularly the financial details, being kept secret? How long would discriminatory hiring and salary practices exist if everyone’s salary in a company happened to be public? Is it any wonder that less wage discrimination tends to occur in the federal government, where salaries are pegged to known scales that are public?
And could all of those strange and discriminatory loans that fueled the last boom and bust have been made to the same extent and degree if the details would have had to have been made public? I have my doubts.
Yet, for all this, I have no doubts that most people would cringe, if not do worse, if more openness were required by law – at least openness for them. I recently mentioned the action of the Utah state legislature to effectively gut the Utah open records law, and I can now report, for those who have not followed this, that the public outcry was so great that the legislature repealed the very law they had passed the month before, a law which would have, in practical terms, exempted all electronic communications from the provisions of the open records law, among other things. So it was very clear that the public believes that legislators should be publicly accountable. Yet if such provisions were suggested for individuals, or for corporations, the howling would deafen everyone.
Currently, the U.S. Supreme Court is hearing a wage-discrimination case filed against WalMart, as a class action suit on behalf of female employees. The suit alleges that WalMart systematically paid women less than men in exactly the same jobs with the same duties. In their questions at the hearing, a number of justices raised the question about how difficult implementing any decision would be, suggesting that even the Supreme Court doesn’t want to get involved in making such records public, let alone making a ruling that could indeed lead to more openness for all corporations.
So often we talk about not wanting everyone to know our business, our income, etc., but the problem with this is that while our neighbors and our friends may not know… the government already knows, as do most corporations.
Perhaps it’s time that we know the same about them.
In the (international management consultancy) company I joined in 1985, it was (really!) a sacking offence to reveal your salary or to ask anyone else about theirs. When a new CEO took over in the 90s (he’s still there as Executive Chairman), he revised the rewards scheme for everyone in the company – and made the key details available to all. At a meeting to explain the new scheme, he was asked about the old secrecy rule, and said “if we’ve got this right, the only question you should ask if someone else is earning more than you is ‘what is he/she doing better than me’, if we’ve got it wrong, if everyone can see what’s wrong, we can change it.”
Where someone either has great wealth of their own, or controls considerable resources as part of their duties, they should be as accountable as possible without giving information that provides a competitive advantage to their adversaries (save that nothing should be hidden out of strictly domestic political motives).
In particular, those who exercise control over the wealth of others should be accountable to those whose wealth they control.
But transparency regarding those who neither have nor control great wealth is problematic. Most people should be able to be as nearly anonymous as they might wish, at least until their actions invite closer scrutiny. Someone who has or controls great wealth is likelier to know how to balance opposing concerns (transparency vs not setting themselves up for exploitation or espionage) than your average Joe six-pack, who is probably quite exploitable by any well-informed con-man that comes along.
(Now, whether or not fools should be protected by privacy is something else altogether; I’m of two minds about that, since I’ve got no problem with fools getting hurt, but wouldn’t want to see predators encouraged. Besides, even those capable of some common sense probably have better things to do than look over their shoulders all the time.)
As long as abortion is legal because of the right to privacy, this will never change. Republicans won’t go after big $$$ interests and Democrats will continue checking with NOW to make certain it’s ok every time they need to sneeze and wipe their noses.
Norway requires everyone’s salary to be known. This has resulted in less inequality. I would also expect it to result in more scrutiny of those with more power. Those that don’t like this policy tend to emigrate to the UK or the US.
Privacy of salary seems to me quite different from privacy of belief or of behavior. Public knowledge of our thoughts is dangerous when societies close down — which they do periodically.
Yet as technology matures, corporations and the rich are gaining greater insights into how we tick (what we buy (credit cards), what we think (internet cookies, etc), what we are interested in (idem), where we go (cell phones), and our heath), while we are not gaining any more information about them. This information asymmetry, which is key to warfare, is the backbone of today’s creeping neo-feudalism.
So in a sense we’re damned if we do make it all public, and we’re damned if we don’t. The only way out is to become Amish!
PS: AFAICS abortion and privacy have nothing to do with each other, unless Christoph is advocating illegal revenge against those that choose abortions.
http://news.wustl.edu/news/Pages/22124.aspx
Brain implant allows person’s subvocalized thoughts to be heard… privacy?
Not advocating anything, just observing. Maybe you should read Roe v. Wade instead of engaging in half-baked pseudo-intellectual derision, Joe.
Maybe you should explain clearly what you mean rather than assuming others are ignorant? In what way is abortion legal because of the right to privacy?
Secrecy enables criminality. Three words that pretty much sum up human nature. But I suspect some of the clash here is between secrecy and privacy, which are not strictly synonymous. I’m not sure if I can explain my thoughts properly, but I’ll take a shot.
As I see it, everyone considers they have a certain right to privacy in their affairs – what someone does by themselves in their own room for example, but as they get more public, the right to privacy declines. As we move outside the room to the more communal rooms, the privacy becomes one of the family unit, not of the individuals within it. Each time the circle widens, we have an implicit desire for privacy within that unit – say between teachers vs students vs a board of education.
In every case, the perceived privacy is greater than the actual privacy – families overhear what happens in rooms, neighbors know what happens next door, the local council knows what is happening in a neighborhood and so on.
Secrecy is more of a formal attempt to make perceived privacy mesh up with actual privacy, by imposing penalties for disclosure, and by limiting the range of people with access. And there is nothing inherently wrong with secrecy per se, except that human nature means that people will naturally either try to get around the restrictions, or will attempt to widen the scope of the restrictions, and often at the same time. Many secrets are very important, but many more are simply classified because they can be, not because they need to be.
Part of the problem is society is very bad at defining scope, particularly for interesting people. For example, a celebrity and a housewife should have exactly the same expectations of privacy in the same home environment. Yet what the housewife protests when it comes from a gossipy neighbor, she demands when it comes from a tell-all magazine.
Another part would be the balance between individuals and authority, and how much that authority has a right to know about you. This is where most of our laws have been established, to balance out governmental authority (eg. inland revenue or social services) or corporate authority (eg. sexual orientation & HR) over individuals.
The last part is what OGH is talking about, and that is the authority having a right to privacy from us as the state. Here we have an interesting mixture around the world in regards to political entities, but almost nothing with regards to commercial entities.
Politically, you can go from a low of say North Korea, where the public have no rights to know why the state did something, all the way to the highs of say New Zealand, where pretty much everything is documented and published somewhere.
On the other hand, commercial entities are moving to a position where they go out of their way to restrict the dissemination of information, and indeed many multinationals will move their headquarters of record to actively prevent disclosure of information.
Here is where there probably should be laws in place to force disclosure for certain levels of data, but I foresee great difficulty in making that come to pass.
Mostly because I don’t think we will be able to get enough people to agree as to what exactly is the right information to share, let alone when vested interests start influencing the debate. On top of that will be the issue of enforcing the new rules upon multinational companies that consider themselves to be above national laws.
The issue of publishing salaries is an interesting one. I see much of it as a nice red herring debate to throw to the masses. The issue is not so much how much is a banker paid, but rather the more detailed commercial information – how much in total is paid out as salary compared with other expenditure – what are the more specific breakdowns in costs, generally lumped together into increasingly vague categories – what percentages of the wage pool go to what level of staff and so on.
This is something that almost every company considers to be highly secret commercial information, but in reality, is anything but.
At the end of the day, I guess the best we can hope for is to at least try to make things more open, at least when the information is out there, it is harder to hide the failures. On the other hand, we need to make sure we don’t jeopardise the privacy of individuals unjustly.
For example, it would be fair to expect that a company could publish salary bands for particular roles, say Junior/Manager/Senior/Executive/Director and so on. If the variation within a band is excessive, they could break it down further by department. It would not be fair however to force them to disclose that Joseph Bloggs, of 42 Random St earns £64,000 and leases a 2010 Porsche Boxter from the company renewable every 6 months at a cost of £8,000. Not because that information isn’t going to be available, but because it forces them to breach the implicit right to privacy of an individual.
Hmm. Halfway through this I think I lost track of my point but nevertheless…
Oh, and in my opinion, there is nothing particularly wrong with abortion in general, it is a medical procedure that has been practiced for a variety of reasons since neolithic times. Equally, so has euthanasia. At least nowadays we’ve moved past poisonous herbs and exposing people to the elements to minimising impact to the individuals involved.
Where the problems lie is when either procedure is done without the consent of the person involved, and that is something our laws should control. If a person consents to a procedure, and as far as the state knows they are sound of mind at the time of consent, then there should be no further state involvement beyond recording what happened for posterity. On the other hand, access to those records should then be restricted to those that have a need to know to preserve the privacy of the individual involved. Note restricted, not made secret – it should be easy to gain access once you prove your right to the information, but rather made … discreet.
Having such a distinction ensures that public administrators are not acting on an internal set of ethical principles without first questioning whether those principles would hold to public scrutiny. Along with this stewardship there is an expectation from the public that in conducting daily activities the officials will practice fairness and equality.
My original statement was an obviously too subtle reference to problems that are, in my opinion, inherent in the two-party system. I should have know that references to abortion and NOW would evoke strong emotions that would obscure my meaning.
As for the particulars, Roe v. Wade made abortion legal because to ban it would violate a woman’s right to privacy. I don’t have strong personal opinions in either direction on this issue.
Re the NOW reference, I seem to care more about women’s rights than most feminists or their organizations. Still puzzling that one out!