Rethinking the value of “transparency”
Michael Kinsley makes a very valid point on yesterday’s Washington Post Op-Ed page:
“The cure for everything these days, especially in the business world and also in the government, is thought to be “transparency”: no secrets. Let people know everything, and abuses will self-correct. But transparency requires more than just supplying the information. What good is putting it all out three if it’s too complicated to understand?”
This worthwhile yet seldom articulated argument runs counter to everything our politicians and business leaders tell us. Perhaps transparency shouldn’t even be considered a component of regulatory reform—never mind a cure-all—since the vast majority of the public (myself included) will never adequately grasp the “exotic” concepts of credit default swaps, as the media labels them.
If you subscribe to this belief, you’re left with basically two choices: expand the regulatory apparatus or allow the markets to pick the winners and losers.
If you believe that regulation should be increased, you have to reconcile the “moral hazard” argument. If you believe that that government should bend to the will of the marketplace, you have to reconcile the possibility of future AIG’s.
This is one of the crucial decisions of our generation, and I’m fearful that we don’t know how to address the problem because we don’t even know what we’re dealing with.
