Regulation versus real transparency

Published on Friday, 17 January 2014 22:44 - Written by

The most fundamental question in American politics is about power — where it should be centered, who should hold it. Many on the left see the very real injustices that occur in a decentralized democracy and call for greater power for the state, through regulations.

Many on the right disagree. They realize the state is just as prone to be unjust, unfair or simply incompetent — and that decentralized power is the best way to prevent anyone from getting too much of it.

That’s the question at the heart of a piece in The Atlantic last week, which declared “Transparency Is Overrated: In a representative democracy, data only goes so far — and knowledge is no substitute for real regulation.”

The author, George Washington University professor Amit Etzioni, is wrong. Transparency puts more power in the hands of the public, where it belongs. Informed citizens are able to make decisions — good decisions — for themselves.

“Transparency is the Vitamin C of politics,” Etzioni claims. “It does some good under some limited conditions, but can cause harm if used as an alternative medicine when real treatments are needed. Though always popular, transparency has been much in the news recently as the solution to that which ails us. The real treatment is more regulation.”

He says transparency fails because people aren’t engaged enough.

“The problem with this theory is that most people are busy making a living, maintaining a family and a social life, watching TV, and nursing their six-packs, and thus have limited time and energy to devote to following public affairs,” Etzioni says. “And, as recent studies reviewed in Nobel Laureate Daniel Kahneman’s bestselling book ‘Thinking Fast and Slow’ show definitively, people do not have the training necessary to parse and evaluate the mountains of data.”

See where he’s going here? He’s setting up a case for letting the experts tell us what’s best.

“In most cases the only effective way we can hope to get a handle on that which plagues our public life is if our representatives choose to either ban the problematic behavior (e.g., smoking in public) or regulate it (e.g., ensuring Wall Street will not again take risks that will lead to taxpayer bailouts) — which is to say that these problems cannot be solved by merely releasing information and leaving it to the public to take action,” he claims.

Here’s why he’s wrong. First, transparency, in fact, is an effective means of keeping government, corporations, our fellow citizens and even ourselves in check.

As Supreme Court Justice Louis Brandais famously said, “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”

Etzioni has it exactly backwards: regulation is no substitute for transparency. That’s because the regulators are human, too.

Decentralized power works because it can result in the best thinking of a whole lot of people. Consider eBay — an unregulated marketplace that works because of customer “ratings.”

Transparency, not regulation, keeps power where it belongs.