Transparency

Transparency is important and becoming increasingly so. I am a big champion of transparency, but then I work for an NGO, so I would be!

I was wondering, in the context of the previous post about the 'invisible line', about how transparent a business could be. Nothing is simple. I looked before at why businesses are not responsible, since no-one seems to focus on this as much! Likewise, why is the 'publish what you pay' coalition (seemingly) such a failure? Why are companies not telling everyone how much taxes they are paying? Why in their Annual Report do they not geographically break down their payments? I think there are some unforeseen consequences. These could be positive but they could be (almost) revolutionary (sounds so dramatic). Let me introduce some scenarios:

-Shell says how much it pays the Nigerian government in taxes; the local people try to find out where it is getting spent and then civil unrest starts. This forces Shell to stop producing and to leave the country -for how long? Alternatively say Chevron pays less taxes and everyone tries to work out if this is justified or not (maybe from less income) -since tax regimes are so complicated that unfair comparisons are likely to be made and little achieved.

-If Wal-mart declared part of internal financial statements then competitors can work out their margins. Suppliers will realise the actually costs or sales of their products and renogotiate. Maybe this is stupid: but this is transaprency. Imagine that the current trend of supply-chain management develops so that customers demand more. Not just wanting to know if the company supports illegal forests, but wants to know if they use any of this or that chemical, they want to know how many products are bought locally (to support the local economy) and they want to know which ones. This could be fantastic: a concerted drive to source locally since customers might pay more for locally sourced goods it if keeps their neighbours in business, and so Walmart buys more locally... One way or another Wal-mart is forced, or voluntarily, reveals all this kind of information.

-If the terms of a contract were made public, how would this impact future competitiors wishing to bid for the contract? Granted if this was unusual, there would be (presumably) inequality in bargaining power, in knowledge disclosure and so on.

What I am really getting at, is that transaprency could work. But if it is to work, it needs a totally new paradigm: a new society with a new perspective on transparency with consequences that would (if transparency were the 'norm' -ie. legally enforced, and so everyone had the same access to the same knowledge) completely revolutionise how business is done. Would business be able to survive in this environment? I wonder if anyone has thought about any modelling of how it might, or how business could compete with total transaprency?

If we presume, that this would not be possible, then we have to work out where the line is between no transparency to total transaprency. Then we need to establish the motivations behind increasing transparency: legal or just self-interest? Transparency will increase when organisations think it is in their own benefit. Otherwise it would not be sustainable. No wonder 'publish what you pay' is destined to fail. NGOs might wield power of a sort, but its influence is limited when its demands unreasonable and when the impact of its activities (even if successful) may be limited: the unintended consequences could be graver. I'm a believer that someone will do something if they think its right. Telling them its right is not as effective as showing them.

Back onto the topic, what if transparency was not total: but more complicated (even those complexity usually makes things worse, in my opinion). What if different disclosures were made to different groups at different times (or when asked) and what those groups did with information did not affect the company's competitiveness or comparative advantage? Well, lets see if this will work. It seems this is the way the World is going... I can imagine in the near future that Transparency International will get certain information, create a report and say 'trust me' without revealing all the details. But what makes this interesting, is that companies are now refusing to trust governments with their details (ID cards in UK, google in the US), so why should we trust NGOs, or any other organisation for that matter?

I'm looking forward to how the current experiment in transparency works out and would be much more interested to look further into a concept of a world with total transparency: what would the ramifications be for salaries, costs, negotiations....?Why, we might end up in a world totally different -would it be a world that works better than the current one? Maybe, but will it be better for those who control the world now -no. So how likely is it to happen? So, going backwards somewhat (to reality), how likely is transparency as a concept to develop anyway? It is a concept that SEEMS to only have negative effects to those benefitting from an untransparent World. What is the future of transparency?