"Democracy," it has been
said in modern times, "is like the grave: it takes,
but it does not give." The same is true of
"discussion." Once effectually submit a
subject to that ordeal and you can never withdraw it
again; you can never again clothe it with mystery, or
fence it by consecration; it remains for ever open to
free choice, and exposed to profane deliberation. [Bagehot
1948 (1869), 167]
To me, the most compelling argument for
openness is the positive Madisonian one: meaningful
participation in democratic processes requires informed
participants. Secrecy reduces the information available to
the citizenry, hobbling their ability to participate meaningfully.
Any of us who has participated in a board of directors
knows that the power of a board to exercise direction and
discipline is limited by the information at its disposal.
Management knows this, and often attempts to control the
flow of information.15 We
often speak of government being accountable, accountable
to the people. But if effective democratic oversight is to
be achieved, then the voters have to be informed: they
have to know what alternative actions were available, and
what the results might have been. Those in government
typically have far more information relevant to the
decisions being made than do those outside government,
just as management of a firm typically has far more
information about the firm's markets, prospects, and
technology than do shareholders, let alone other
outsiders. Indeed, managers are paid to gather this
information.
The question is, given that the public
has paid for the gathering of government information, who owns
the information? Is it the private province of the
government official, or does it belong to the public at
large? I would argue that information gathered by public
officials at public expense is owned by the public - just
as the chairs and buildings and other physical assets used
by government belong to the public. We have come to
emphasize the importance of intellectual property. The
information produced, gathered, and processed by public
officials is intellectual property, no less than a
patentable innovation would be. To use that intellectual
property for private is just as serious an offense against
the public as any other appropriation of public property
for private purposes. There are, to be sure, circumstances
in which fully sharing that information may not be
appropriate - the important "exceptions" to the
presumption for openness that I will discuss later in this
talk.
One might argue that, in a society with
a free press and free institutions, little is lost by
having secrecy in government; after all, there are other
sources of relevant information. Indeed, modern democratic
societies, recognizing the importance of information for
effective governance, try to protect the freedom and
independence of the press and endeavor to promote
independent think-tanks and universities–all to provide
an effective check on government in many areas. The
problem is that often, government officials represent the
only or major timely source of relevant and timely information.
If officials are subjected to a gag order, then the public
has no real effective substitute.
To reiterate, openness is an essential
part of public governance. Albert Hirschman16
described exit and voice as instruments for discipline in
organizations. For public organizations, exit is typically
not an option, and therefore greater reliance is placed on
voice. In the private marketplace, how a firm organizes
itself - whether it keeps secrets or not - makes little
difference. Customers care about the products and prices;
and regardless of how the firm organizes production, if it
produces good products at low prices it will succeed.
There are transparency issues, of course: firms often lack
the incentive to disclose fully the attributes of their
products, and government, accordingly, enforces a variety
of disclosure requirements,17
including truth in advertising, disclosure requirements on
loans, disclosure requirements on firms seeking to raise
capital publicly and fraud laws. But by and large, market
mechanisms (including reputation) provide essential
governance to firms.
But public organizations are not
subjected to the same kind of discipline. It is only
through voice - through informed discussion of the
policies being pursued - that effective governance can be
exercised. Because in many of the areas in which public
agencies operate, they have an effective monopoly, exit is
not an option. Consider the difference between a doctor in
a community in which there are many physicians and a
doctor who is the only source of advice in the community.
The doctor might be tempted to blame the patient when his
prescription fails to work: the patient did not do exactly
what was asked. But if there is competition if the
prescriptions of the doctor do not work - possibly because
no patient can follow them precisely - the doctor will
eventually lose his practice, his reputation will be
tarnished, and his patients will exercise
"exit." If there is monopoly however– if there
were a single doctor dispensing treatment – the
doctor might well try to control information: He might
well argue that doing so is necessary to maintain
confidence in his cures (and, because of the placebo
effect, there may even be a grain of truth in the
argument); and he knows that competitive pressure will not
force him to disclose information and that exit is not an
effective option.
In all organizations, imperfections of
information give rise to what economists call agency
problems. As a result, there may be important disparities
between, say, the actions of managers and the interests of
shareholders. Similarly, in the public sector agency
problems may give rise to a disparity between, say, the
actions of those governing and those that they are
supposed to serve. In modern parlance, the lack of an exit
option may exacerbate the consequences of these agency
problems. Quite obviously, improvements in information -
decreases in secrecy - can reduce the magnitude and
consequences of these agency problems.
The Incentives
for Secrecy
The arguments presented in the preceding
section provide, I think, a compelling case for openness.
Yet even seemingly public-spirited public servants often
engage in secrecy. In some cases, it is because they worry
about demagoguery, fearing that openness allows demagogues
to enter the fray and to sway innocent voters. Anyone who
has ever lost a public debate is convinced of the
importance of demagoguery, especially as used by
special-interest groups to advance their own interests.
Yet this is the fundamental quandary of democracy:
although we recognize its pitfalls, there is no real
alternative to public debate.18
In the end, we are committed to having voters make
decisions at least about the decision-makers. Shouldn't we
prefer that they be better informed - that is, in a better
position to evaluate the quality of decision-making?
But compelling as these public interest
arguments for openness may be, they run up against
powerful private incentives, the private incentives of
government bureaucrats, elected officials, and the special
interest groups which try to influence them. Public Choice
theory has emphasized the importance of these incentives.19
In this section, I shall take a closer look at these
private incentives.
Two such incentives have received
extensive attention. The first is that secrecy provides
some insulation against being accused of making a mistake.
If a policy fails to produce desired results, government
officials can always claim that matters would have been
even worse but for the government policy. While we all
recognize human fallibility, government officials seem
particularly loath to own up to it, and for good reason:
the public judges mistakes harshly. But there is a vicious
circle: given that so little information is disclosed, the
public must rely on results in judging government
officials. The officials receive credit for good results,
whether they deserve the credit or not; and they are
condemned for bad results, whether they are the result of
government action or inaction. With more information, the
public might be able to discern more accurately the value
added of public action.
Conversely, secrecy breeds more of
itself.20 Given that so
little information is disclosed, any disclosure of a
policy failure is taken as a far more important piece of
news. There are thus even greater pressures not to
disclose. If more information were disclosed, then the
adverse consequences of disclosing a failure would be
smaller, and the adverse consequences of not disclosing
(of hiding) a failure might be far greater. Given that
secrecy is the norm, however, the public does not attach
great opprobrium to those who engage in the practice. It
is what they have come to expect of public officials, who,
after all, they suspect of not really serving in the
public interest.
While those engaged in making the policy
may well have an incentive to suppress such a discussion,
the question is, from the framework of the architecture of
public policy, shouldn't there be a presumption in favor
of, and an insistence on, openness?
The second incentive that public
officials have for pursuing secrecy is that secrecy
provides the opportunity for special interests to have
greater sway. In some societies, this takes the naked form
of corruption and bribery. But even in societies where
this is viewed as unacceptable, politicians need campaign
funds to get elected and re-elected. The special interest
groups who provide the funds do not do so for the greater
public good, but because they believe that by doing so
they can influence policy in ways that enhance their
profits and profitability. But if these actions in support
of special interest groups are subject to public scrutiny,
the scope for favoritism is greatly circumscribed. It is
in the midnight meetings of the tax committees that the
special provisions benefiting one firm or another are
introduced. In the words of Justice Brandeis,
"sunlight is the most powerful of all
disinfectants." Secrecy is the bedrock of this
persistent form of corruption, which undermines confidence
in democratic governments in so much of the world.
These, as I have said, are the
traditional arguments for openness. There are three others
that I want to discuss today. The first is that lack of
information, like any form of artificially created
scarcity, gives rise to rents. The adverse consequences of
rent seeking have long been of concern. There is an
unhealthy dynamic: the public official has an incentive to
create secrets, which earns him rents. The existence of
secrets give rise to a press determined to ferret out the
secrets. One of the ways in which public officials reap
the rents is to disclose "secrets" to those
members of the press that treat them well. Thus, not only
is the public deprived of timely information - which I
have argued is theirs by right - but government officials
use their control of information to distort information in
their favor. It is not just the puff pieces of which
public officials are so fond. Rather, it is the very
characterization of events and circumstances. Woe be to
the reporter who breaks the implicit contract! Ostracism -
being cut off from the source of news - is the
consequence; and even a liberal minded editor has no
choice but to reassign the reporter. One reporter from a
reputable newspaper, having offended the powers that be
that he depended upon for his stories, went from covering
prominent national issues out of Washington to reporting
from and on Detroit. This symbiotic relationship between
the press and officialdom undermines confidence in both,
and interferes with the ability of a free press to carry
on its essential functions. Can a reporter be an effective
critic, if his access to the information he requires to be
informed can be curtailed upon the submission of an
excessively critical article?
There is another, even more corrosive
effect of secrecy and an incentive for secrecy by public
officials. I referred earlier to management's attempt to
control information in limiting the ability of
shareholders and their elected directors to exercise
discipline. Elsewhere, I have also shown how by
creating information asymmetries, managers can create
barriers to the entry of outside managers, to takeovers,
and by doing so, they can increase their managerial rents
(at the expense of shareholders.)21
The same is true of public managers - elected officials.
If outsiders have less information, voters may feel less
confident that they will be able to takeover management
effectively. Indeed, the lack of information of outsiders
does increase the costs of transition, and make it more
expensive (for society) to change management teams. The
fact that the alternative management teams have less
information means that there is a higher probability of
any proposals that they put forward will be ill-suited to
the situation. By increasing the mean cost of transition
and increasing the subjective variance, secrecy puts
incumbents at a distinct advantage over rivals.22
By the same token, secrecy undermines
participation in democratic processes even by voters.
Voters are more likely to exercise independent judgments -
both to vote, and to vote independently of party - if they
feel confident about their views. And this in turn
requires that they be informed. There is a cost to
becoming informed. While most voters are not perfectly
selfish - if they were, it would be hard to rationalize
participation in the political process at all (after all,
the public good is a public good) - they have a threshold,
a limit to the amount of their time and energy they are
willing to invest in the pursuit of the public interest.
Secrecy raises the price of information - in effect, it
induces more voters who do not have special interests not
to participate actively, leaving the field more to those
with special interests. Thus, it is not only that special
interests exercise their nefarious activities under the
cloak of secrecy, but that the secrecy itself discourages
others from providing an effective check on the special
interests through informed voting. This highlights the
importance of "public information institutions"
designed to ferret out information for the benefit of the
public: a free and if-need-be adversarial press (as
opposed to a captive or lapdog press), the legitimate
opposition always playing a probing and possibly devil's
advocate role (buttressed by practices like the
Opposition's questioning of Government in Parliament), and
a myriad of public interest organizations (such as Amnesty
International) to blow the whistle on the cloaked
activities of the special interest groups.
In addition, secrecy may discourage
potential competitors, not only because their prospects of
success in the voting process are (rationally) reduced,
but because it increases their own subjective uncertainty
about whether they can improve matters. How often have
officials become elected on a platform, only to discover
that the budgetary situation is far worse than had been
envisioned, forcing them to abandon all their previously
designed plans and engage in a budget balancing act (for
which they may have neither a comparative advantage nor a
passion)?
The Adverse
Effects of Secrecy
In the previous section, I set forth
some of the reasons that public officials so ardently
pursue secrecy, even when openness is so apparently an
essential part of democratic processes. One of the reasons
for devoting so much time to understanding the incentives
for secrecy is that unless we understand the drive for it,
we cannot succeed in uprooting it. But another reason is
that it provides deeper insights into the adverse effects
of secret.
I have already called attention to
several of these adverse effects: Secrecy provides the
fertile ground on which special interests work; secrecy
serves to entrench incumbents, discourage public
participation in democratic processes, and undermines the
ability of the press to provide an effective check against
the abuses of government.
But the adverse effects are more
pervasive. To maintain secrecy, often the circle of those
involved in decision making is greatly circumscribed;
those who are able to provide valuable insights are cut
out of the discussion. The quality of decision making is
thereby weakened. There is, again, a vicious circle. With
more mistakes, public officials become more defensive; to
protect themselves, they seek even more secrecy, narrowing
in the circle still further, eroding still further the
quality of decision-making.
Public programs may be designed not on
the basis of the impact that they have, but on (government
officials' beliefs about) the perceptions of those
impacts. Those perceptions will be affected by the
information that is publicly available; program design may
be as sensitive to those perceptions (and the extent to
which they can be controlled) as to their real impact.
There is still one more, related effect:
as the space of informed discourse about a host of
important issues gets circumscribed, attention gets
focused more and more on value issues. It takes an
enormous amount of information to make judgments
concerning complex economic issues. It takes far less (or
a far different kind of) information to come to a view
concerning abortion or family values. Thus, secrecy has
distorted the arena of politics. The adverse effects of
secrecy are multiple: not only are important areas of
public policy not dealt with effectively, but also debate
focuses disproportionately on issues which are often far
more divisive.
Adverse Economic Effects
While most of this paper is concerned
with the adverse effects of secrecy on the political
process, I should also note the adverse economic
effects. The most obvious concern the economic consequences
of political decisions: A large fraction of the
decisions taken in the political arena have economic
consequences - not only for aggregate output, but also for
its distribution. Openness affects the decisions that get
made - including who bears the costs of the risks
inevitably associated with the uncertainties of public
policy making.
It is now generally recognized that
better, and more timely, information results in better,
more efficient, resource allocations. The increasingly
large fraction of the workforce involved in gathering,
processing, and disseminating information bears testimony
to its importance. Ironically, many of these are engaged
in ferreting out information from the public sector -
information which, one might argue, of right out to be
public. While businesses have legitimate reasons for
maintaining secrecy in some of their activities (after
all, the fact that information is valuable means that
disclosing information is giving away something of value
to their rivals), the same reason leads to the conclusion
information that is paid for by the public should be
publicly disclosed. Does it make sense, if better
information leads to better resource allocations, for the
government to deliberately not disclose information -
letting the market itself decide what is or is not
relevant?23
But the most adverse economic
consequences are associated with the corruption that so
often follows from excessive secrecy. It is not an
accident that the leading international non-government
organization fighting corruption is called Transparency
International. Research at the World Bank, reported in the
1997 World Development Report, has shown that
corruption has strong adverse effects on investment and
economic growth.
Public officials do have strong
incentives for secrecy. But if we are to avoid the myriad
adverse political and economic consequences of secrecy, in
the design of the architecture of public institutions, we
need to take this into account: we need to force more
openness than public officials might willingly offer.
The
Implementation of Secrecy
Given the strong interests of public
officials in secrecy, it is not surprising that so many
governments have engaged in such extensive secrecy, going
well beyond the requirements of national security. But
while it may be in the interests of the government as a
whole to maintain secrecy, it may not be in the interests
of particular individuals. Indeed, that is what gives rise
to the whole problem of leaks. As in the case of other
forms of collusive behavior, there are incentives for
individuals to deviate. If a secret is shared among a
number of individuals, any one of the individuals can reap
the scarcity rents for himself by disclosing the
information to the press.
Here again reputation mechanisms become
important: the press must be relied upon not to disclose
the source of their leak. If they do, their source dries
up. Indeed, if the source of the leak becomes public
knowledge, others within the government are likely to
"sanction" the individual, denying him access to
the information or ostracizing him in some other way.
The press and the officials thus have an
incentive to engage in symbiotic activity. But as in any
reputation model, there is always a danger of unraveling
in any finite game. From the point of view of the
government official, what matters is the reputation of the
reporter: can he be discreet in keeping his sources
confidential? Since new government officials will quickly
become apprised of each reporter's reputation, he has a
strong incentive to maintain this confidentiality.
Still, the nature of the bilateral
relationship is such as to give an advantage to some
public officials over others: it pays to develop a good
relationship with someone who leaks more regularly and
more exclusively (excessive leaking diminishes the value
of the information being leaked), and who is likely to be
a source for a long time. (If a reporter has a limited
supply of puff pieces to give out, it is better to use
them on those for whom the present discounted value of the
information disclosed is high.)
Secrecy serves another sociological
function. Many clubs, not to mention secret societies,24
have secret rituals. Secrets serve to set apart those
"with" the secret from those that do not have
the secret. It provides a form of bonding. I described
earlier the "sanctions" which make each hostage
to the bond, but the sanctions are only part of the story.
Ethical values, subscribing to group norms, affect most
members of the group. If the group norm is to keep a
secret, they feel an individual responsibility to conform
to that norm.
In recent years, however, there has been
weakening of these norms. This is partly because of the
increasing recognition of the undemocratic and corrosive
effects of secrecy. While many directly involved with
government condemned the leaking of the Pentagon Papers,
many outside thought this an act of moral courage.25
But there is another reason. As norms more generally have
broken down, there are more instances of individuals who
do not feel or at least react to the "peer
pressure," who put their own interests above that of
the group, who recognize the nature of the secrecy game,
recognize that even if it comes to be widely believed that
they are a source of leaks, it is sufficiently hard to
prove that they may be immune from sanctions. Worse still,
their special relationship with the press gives them a
kind of immunity: they can use this special relationship
to fend off any attacks. (Individuals who establish this
special relationship may, in an almost hypocritical way,
be the strongest advocates of secrecy; for their rents
depend on their controlling the flow of
information; their position is undermined if there are
independent sources of information.) It would thus appear
that the "complete" secrecy equilibrium may be
somewhat fragile. But the partial secrecy equilibrium is
just as distortive of democratic processes. Indeed,
because not all government officials are equal players in
the "leaking game" the information flow may be
particularly distorted.
The Exceptions
In their quest to maintain secrecy, public
officials do not, of course, appeal to the effects that I
have just described. They do not argue that secrecy is
important because it gives incumbents an advantage over
outsiders. They point to a number of problems that excessive
openness gives rise to. (In today's world, no one argues
against openness, only against excessive openness.)
In this section, I try to provide taxonomy of the
arguments against secrecy that I have heard. I conclude
that while there are indeed limits to openness,
governments today, even the most open governments in the
West, are far too secretive. Many, if not most of the
arguments are simply self-serving rationalizations.
The Privacy Exception
The most important and convincing exception concerns
privacy matters affecting individuals (and organizations.)
The government, in the exercise of its duties, gathers
enormous amounts of information concerning individuals
(such as income and health statistics). But few if any of
the issues with which I am concerned here fall within the
privacy exception.
Confidentiality Exception
A closely related exception concerns certain information
the receipt of which would be impaired by the knowledge
that it would be subsequently disclosed. For instance, the
World Bank is sometimes asked by a country to help it
restructure its banking system. In the process of doing
so, certain weaknesses in the banking system might be
uncovered. If it were known that the World Bank would
disclose those weaknesses - at least, before they are
repaired - the countries would have a strong incentive not
to come to us for advice. There has been a worry that more
extensive disclosure of letters of recommendation may have
resulted in less informative letters. The importance of
confidential of doctor patient and lawyer-client
relationships has long been recognized; there are a
limited number of interactions within the public sector
that should fall within the confidentiality exception.
The National Security Exception
The importance of secrecy in times of war has long been
recognized. When a nation's survival is at stake, it must
do everything in its power to increase its chance of
winning. The success of a military attack may well depend
on surprise - on the enemy not being able to take the
necessary precautions.
The problem is that the national
security exception has been extended to issues where
clearly national security is not what is at issue. What is
often at issue is covering up mistakes. This was brought
home forcefully by the Pentagon Papers that looked
not at how the country was currently engaged in the
Vietnam War, but how it got into the war in the first
place.
There will remain hard choices; one of
the hardest questions the U.S. faced in the late 1960s and
early 1970s was whether to continue the war in Vietnam.
Critical to that decision was information about how the
war was faring. Yet that information itself might have
been of value to the perceived enemy.
The worry is that much of government
secrecy extends well beyond issues of national defense
Crying "Fire" in a Crowded
Theatre.
Occasionally, the disclosure of information can have
life-threatening effects. Typically, the issue is not whether
to disclose the information, but how. Justice
Holmes' famous exception to the right of free speech was
based on causing a panic by crying "Fire"
in a crowded theatre.
In matters economic, this particular
exception takes on a special form; open discussion of
certain issues (such as monetary policy) might roil the
market, leading to instability. Curiously, those who take
this position are typically those who are strong advocates
of markets: while they have a great deal of confidence in
the market, they evidently believe that market allocations
are affected by irrelevant "noise." If, of
course, the information being discussed or disclosed is of
relevance, that is, it affects economic fundamentals, then
disclosing the information as soon as possible allows the
more efficient allocation of resources.
A particular variant of this focuses on
monetary policy. There has been extensive discussion of
the extent to which central banks should act in secret;
should they disclose their proceedings, and if so, with
what lag and with what fullness of detail? Again, there is
a certain irony in these discussions: while market
advocates praise the price "discovery" function
of markets, much of the price discovery function in the
bond market is directed at figuring out what the central
bankers believe and are likely to do. Rather than having
this indirect "dance", would it not make far
more sense to have the Central Bank directly disclose the
information? If the market believes that that information
is of value - as evidenced by the huge number of
individuals who watch the actions of central banks
throughout the world - then shouldn't government make that
information available? And in a timely way? Evidently,
central banks (and their governments ) are less than
committed to transparency when it comes to their own
operations!
Neither theory nor evidence provides
much support for the hypothesis that fuller and more
timely disclosure and discussion would have adverse
effects. Indeed, since information eventually comes out,
the current procedures, which attempt to bottle up
information, result in periodic disclosures of large
amounts of information. Just as the economy is likely to
be more stable with frequent small adjustments in exchange
rates than few, large ones, so too is the economy more
likely to be stable with a steady flow of information.
With a flow of information, less attention would be paid
to any single piece; and there would be smaller revisions
in posterior distributions.
Similarly, there seems to be no evidence
of increased instability following the U.K. decision to
have greater transparency on the part of its central bank.
Secrecy in matters economic may not only
contribute to overall instability, but in many countries
can be a major source of corruption, undermining
confidence in government more generally.
At best, however, the argument that
fuller disclosure and discussion might roil markets is
only an argument concerning the timing and manner of
disclosure; it is not an argument for an indefinite
postponement of public discussion. To return to the
metaphor of "crying fire in a crowded theatre":
No one would argue that, if one knew that there was a fire
in the theatre, that the patrons should not be informed in
a way that allows an orderly evacuation. No one would
argue, I think, that after the fire is over, there
oughtn't be a thorough investigation of the fire, to
determine what caused the fire, and if there were deaths
or severe injury, to see what might be done (both in the
construction of the theatre and in the design of the
response) to avoid similar disasters in the future. And no
one would argue that, because it might "roil"
theatre goers, one shouldn't have lighted exit signs, to
indicate how to evacuate the theatre in case of fire -
since we know that no matter how well theatres are
constructed, there is still a danger of fire.
In the case of information that, it is
feared, might disturb markets, there is another point:
Shouldn't we have enough confidence in democratic
processes and in the market to believe that the market can
see through the cacophony of voices, assess the
fundamental arguments, and weigh the evidence?
I am not convinced that there is any
real trade-off between the pursuit of democratic
transparency on one hand and the stability and growth of
the economy on the other. But in the event there is a
conflict, I put my voice solidly behind the importance of
democratic processes of openness.
To be sure, democratic societies must
find and have found ways of engaging expertise in
complicated and technical decision-making in a manner that
reflects both shared values and expertise. But the
decisions cannot reflect just the interests of the
industry groups which are likely to have a
disproportionate share of expertise and should be forged
in ways that leave open both the decisions and the
framework within which those decisions should be made to
democratic processes. Indeed, to the extent that there has
been greater delegation of responsibilities, e.g., to
independent agencies, to engage greater expertise and to
isolate the decision-making from the vicissitudes of the
political process, there appears an even greater need for
openness and transparency.
Open covenants not openly arrived at.26
A part of the American credo that every school child
learns is Woodrow Wilson's dictum in the aftermath of
World War I: Open covenants openly arrived at. Eighty
years ago, transparency was at the top of the
international public agenda. It was widely perceived that
secret treaties secretly arrived at were a major problem
prior to and during the First World War. But both before
and after, there has been little enthusiasm for excessively
open deliberations. The worry is that open discussions
will inhibit free expression of ideas, and special
interests will take advantage of the situation to weigh
in, before the delicate compromises and complex coalitions
which are at the heart of successful democratic processes
have a chance to work themselves out. Secrecy is needed
for the successful completion of delicate negotiations.
There is, I think, some validity to this
argument. The question is, how much weight should we give
it? After all, the proposals will have to be put forward
to public debate eventually. Special interests will still
have time to undermine any coalitions that have been
formed. And indeed, if there were more public disclosure
of the debate as it proceeded, the news that a particular
idea was being explored would carry far less weight than
today, when the very fact that an idea becomes public
leads to the belief that it is being very seriously
considered, bringing down the full force of close
scrutiny.
The thrust of this exception is again
one of timing: there may be a period of secrecy, while
deliberations proceed, but eventually positions - and the
arguments that went into them - should be fully disclosed.
As a practical matter, I have observed
two dangers however with this position. First, the time is
never ripe for public discussion. One "delicate"
moment is followed by another. And secondly, the public is
all too often treated disparagingly: it is entitled to
know the arguments for the proposal, but not the pros and
cons that went into it - like a child who should not
witness disagreements between the parents. But the public
knows that few matters are black and white. Issues of
public policy involve judgments, often about matters
concerning which there is considerable complexity and
uncertainty.
Positions are asserted with a confidence
that the available evidence simply did not warrant. At the
very least, public agencies should be honest and more
transparent in describing the uncertainties. One of the
arguments for not doing so is that confidence in these
institutions would be undermined.
Undermining Authority, or Don't Air Your
Dirty Linen in Public.
The argument that public discussions - including
discussions of uncertainties and mistakes - will undermine
the authority of public institutions is one of the most
corrosive of democratic processes. It is akin to the kinds
of arguments that authoritarian regimes conventionally
use. I would argue, on the contrary, that were governments
to deal honestly with their citizenry, confidence in
government and public institutions would increase, not
decrease. We all know, in the immortal words of Alexander
Pope, that "to err is human." Human fallibility
is at the cornerstone of the design of our political
institutions. It is why we have systems of checks and
balances. We all know that there is imperfect information
and that these imperfections of information play out in
some of the most important decisions we have to make.
Thus, to pretend that any institution is
infallible, or that there is perfect confidence in the
actions being undertaken, is to fly in the face of
reality. Only those who want to be fooled will be.
Admission of fallibility and demonstration that one can
learn from one's mistakes should enhance public confidence
in an institution, at least by demonstrating that the
institution has enough confidence in itself and in
democratic processes to engage in open discussions.
Yet organizations cannot function
without a certain degree of loyalty and structure.27
Democratic processes cannot work without well-functioning
organizations within it. It is here that the most delicate
issues arise. Making the democratic system work in its
entirety may indeed necessitate working to increase the
credibility of the institutions within it (though to
repeat - this does not mean trying to persuade anyone
either of an infallibility or a degree of certitude which
is simply not there), and this may entail circumscribing
full disclosure.
Again, what is most at stake is the
question of timing. Once a decision has been made, any
government must convince others of the correctness of its
views. This may not be effectively accomplished if the
disagreements that existed prior to a decision being made
continue to be aired in public. More broadly, one can view
any government as a team. Before decisions are
made, there needs to be open discussions, at least within
the team, though within any government, there will be a
division of responsibility, with each agency taking
ultimate responsibility for the decisions which fall
within its purview - though often within the public sector
there are several agencies with significant interests at
stake. Without effective participation in the decision
making over which they have some jurisdiction, there will,
of course, not be "ownership" and
"buy-in" of the decision, and it will be
difficult for the team to work smoothly. After a decision
is made, the team must work together in the agreed upon
strategy. Part of that strategy for public agencies is a
strategy to convince others of the appropriateness of the
actions.
But to repeat what I said a minute ago,
the public might be more effectively convinced if there
were more openness both in the process of decision making
and concerning the nature of the disagreements. Openness
in process assures the public that the decision does not
reflect the exercise of special interests. And a summary
of the argument convinces the public that all of the
important arguments were considered, all sides were looked
at: a judgment was made that the weight of evidence came
down in favor of the course of action being undertaken.
After all, governments are elected in part to make these
difficult judgment calls. What the public wants to know is
that there has been real deliberation.
But government needs to be committed to
openness after the fact: there must eventually be
honest and open evaluations of the actions. Otherwise,
there will be no basis for learning from experience.
Like the preceding argument, while
worries about "undermining credibility" and
"being a member of the team" have considerable
validity, they are often exaggerated and taken too far.
The incentives for secrecy of incumbents that I described
earlier make leaders of these organizations particularly
prone to invoke this argument.
Each of us in public life must weigh
what we say in public and in private, mindful of the
abuses to which excessive secrecy is prone. In the end, my
confidence in the democratic processes leads me to the
conviction that there is far more scope for open
disclosure, far less risk of "undermining" the
authority of institutions, than those who invoke this
argument claim. My predecessor as chairman of the Council
of Economic Advisers under Ronald Reagan, Martin Feldstein,
engaged in an honest discussion of the consequences of the
huge deficits that were then mounting. Though he did not
succeed in changing the policies, he played an important
role in the formation of the consensus that eventually led
to the deficit reductions of the 1990s. The fact that
there could be such an open discussion I think actually
enhanced confidence in democratic processes and
institutions.
The
Implementation of Openness
I have tried to make a case for greater
openness in government. How can such greater openness be
implemented? At the same time, I have tried to describe
the strong incentives on the part of those in the
government for secrecy. While the incentives for secrecy
are great, so too are the opportunities for evading the
intent of any disclosure regulations. If formal meetings
have to be open, then all decisions can be made in
informal meetings. If written material is subject to
disclosure, there will be an incentive to insure that
little is written down, and what is written down will be
for the public record. Because of these limitations of
legalistic approaches, emphasis must be place on creating
a culture of openness, where the presumption
is that the public should know about, and participate in all
collective decisions. We must create a mindset of
openness, a belief that information that public officials
possess is "owned" by the public, and to use it
for private purposes - if only an exchange of favors with
a reporter - is as much a theft of public property as
stealing any other form of property.
There is a narrow set of exceptions that
I have laid out in the preceding section. But these
exceptions need to be highly circumscribed. The objective
should be to make them as small as narrowly defined as
possible. And there should be public discussion about the
extent of those exceptions.
One basic framework for public access to
information is contained in the Freedom of Information Act
that the U.S. Congress passed in 1966. In principle, this
law enables any citizen to gain access to any information
in the public domain, with narrow exceptions for privacy.
But such legislation can only be partially successful,
unless there is a real commitment to openness. Government
officials may be careful in what they write down and what
remains a "mouth-to-ear" secret, precisely
because they do not want to disclose important information
to the public.
One of the strong incentives for secrecy
is to provide cover for special interests to do their
work. Requirements on disclosure of campaign contributions
have been valuable - they have at least sensitized the
electorate to the role, for instance, of tobacco money in
affecting legislative outcomes. But I must confess that
while the United States has strong disclosure requirements
(including those affecting lobbyists), special interests
still seem to have considerable scope. Presumably matters
might have been even worse without these requirements.
The press plays an essential role in the
battle for openness. But the press, as we have seen, is at
the same time a central part of the "conspiracy of
secrecy." The Press must commit itself to working for
openness. It is too much to expect them to disclose their
secret sources inside the government, or to seek out
exclusive sources of information. But there needs to be
more reporting on the reporting process itself, exposing
the nefarious system, if not the key players.
Non-government organizations, like
Amnesty, also have an important role to play in helping
create a culture of openness - and in checking the
proclivity of government officials for secrecy.
Concluding
Remarks
Amnesty International has long been
devoted to ensuring that all governments protect basic
human rights. It has been one of the most effective voices
for human dignity in the world. Openness - transparency -
is one of the most important instruments for achieving
this goal. It is behind the cloak of secrecy that the
rights of individuals are most frequently abrogated.
I have long been concerned with a
special aspect of human rights and dignity: in the words
of Franklin Delano Roosevelt, with the right to
"freedom from hunger." There can be no human
dignity, no basic rights, when an individual sees his
child die of starvation or his/her daughter sold into a
life of prostitution for mere survival. There is little
doubt that decisions by governments do have profound
implications for this basic human right. These decisions
should be made openly, and with the active and open
participation of those affected by them. I am convinced
that openness and participation will affect
the nature of the decisions being made.
Greater openness can be justified on instrumental
grounds, as means to ends - ends like reducing the
likelihood of the abuse of power. Greater openness is an
essential part of good governance. A powerful case has
been made that greater openness might have avoided the
extremes of the Cold War. I believe that better decisions
would have been made than emerged from the reliance on the
secret wisdom of the cognoscenti. The end of the Cold War
has laid both laid bare the failures of the culture of
secrecy and undermined the necessity of continuing it
further. Perhaps the greatest irony of the Cold War is
that in the attempt to preserve democracy and democratic
values, we adopted policies that undermined democratic
processes. The culture of secrecy was a like a virus,
spreading from one part of the government to another,
until it invaded areas where national security played no
role at all.
But I also believe that greater openness
has an intrinsic value. Citizens have a basic right to
know. I have tried to express this basic right in a number
of different ways: the public has paid for the
information; for a government official to appropriate the
information that comes to his or her disposal in his role
as a public official for private gain (if only for the
non-monetary return of good newspaper coverage) is as much
a theft of public property as the stealing of any other
public property. While we all recognize the necessity of
collective action, and the consequences of collective
actions for individual freedoms, we have a basic right to
know how the powers that have been surrendered to the
Collective are being used. This seems to me to be a basic
part of the implicit compact between the governed and
those that they have selected to temporarily govern them.
To be sure, there are exceptions, and I have dealt at
length with these exceptions; but I have tried to argue
that they are, or at least should be, limited in scope.
It also seems to me that the less directly
accountable a governmental agency is to the public, the
more important is it that its actions be open and
transparent. By the same token, the more independent, the
less directly politically accountable, a government
agency, the greater the presumption for openness. Openness
is one of the most important checks on the abuse of public
fiduciary responsibilities.
We are at an exciting time. The end of
the Cold War has provided us the opportunity - I would
say, has made it necessary for us - to re-examine the role
of secrecy and openness. At the same time, new
technologies have provided mechanisms through which
information can be more effectively shared between
government and those governed. We can now have a more
informed electorate than in any time in history. Further,
advances in education, of a kind unthinkable a century
ago, have put more and more citizens in a position to
evaluate and assess the information that can so readily be
made available.
We need but one step more: a commitment
by government to greater openness, to promote dialogue and
open discussion, to eschew secrecy in all of its myriad of
forms. While I have outlined concrete legislation to which
all governments might subscribe, I have recognized the
limitation of such legislation. The incentives of secrecy
are simply too great, and the scope for discretionary
actions is too wide. I have therefore stressed the
importance of creating a culture of openness–a task
where organizations like Amnesty International have an
essential role to play. Such openness may not guarantee
that wise decisions will always be made. But it would be a
major step forward in the on-going evolution of democratic
processes, a true empowerment of individuals to
participate meaningfully in the decisions concerning the
collective actions that have such profound effects on
their lives and livelihoods.
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Notes
1 Sen
(1981).
2 Moynihan
(1998).
3 A minister
to Louis XIV cunningly described taxation as follows:
"The art of taxation consists in so plucking a goose
as to obtain the largest amount of feathers with the least
possible amount of hissing". See Newsweek, (1984).
4 Atkinson
and Stiglitz (1976)
5 See
Chapter 2 "Well-Kept Secrets" in Greider (1992)
for the role of secrecy in the S & L crisis.
6 Stiglitz
(1992)
7 Banks have
an incentive to sell assets that have increased in market
value, thus increasing their "book" value, while
retaining assets that have decreased in value—so that
they will not have to recognize losses.
8 See Bok
(1982) for a comprehensive overview.
9 See
Emerson (1967) and (1970) for a survey.
10
"And though all the winds of doctrine were let loose
to play upon the earth, so Truth be in the field, we do
injuriously, by licensing and prohibiting, to misdoubt her
strength. Let her and Falsehood grapple; who ever knew
Truth put to the worse, in a free and open
encounter?" Milton's argument was later echoed by
Jefferson in his 1779 Virginia "Bill for Establishing
Religious Freedom" which argued in part that truth
"is the proper and sufficient antagonist to error,
and has nothing to fear from the conflict unless by human
interposition disarmed of her natural weapons, free
argument and debate; errors ceasing to be dangerous when
it is permitted freely to contradict them."
11 Letter
from James Madison to W. T. Barry, August 4, 1822 in
Padover 1953. Quoted in Carpenter 1995, 1.
12 "Without
publicity, all other checks are fruitless: in comparison
of publicity, all other checks are of small account. It is
to publicity, more than to everything else put together,
that the English system of procedure owes its being the
least bad system as yet extant, instead of being the
worst." [Bentham 1838-43, vol. iv. p. 317. Quoted in
Halévy 1972, 403]
13 Mill argues "(t)he
peculiar evil of silencing the expression of an opinion
is, that it is robbing the human race; posterity as well
as the existing generation; those who dissent from the
opinion, still more than those who hold it. If the opinion
is right, they are deprived of the opportunity of
exchanging error for truth: if wrong, they lose, what is
almost as great a benefit, the clearer perception and
livelier impression of truth, produced by its collision
with error." See Mill 1961 (1859).
14 "As between one
form of popular government and another, the advantage in
this respect lies with that which most widely diffuses the
exercise of public functions;...by opening to all classes
of private citizens, so far as is consistent with other
equally important objects, the widest participation in the
details of judicial and administrative business; as by
jury trial, admission to municipal offices, and above all
by the utmost possible publicity and liberty of
discussion, whereby not merely a few individuals in
succession, but the whole public, are made, to a certain
extent, participants in the government, and sharers in the
instruction and mental exercise derivable from it."
[Mill 1972 (1861), 262]
15 "Every bureaucracy
seeks to increase the superiority of the professionally
informed by keeping their knowledge and intentions
secret." [Weber 1958, 233] Weber gave the
authoritative treatment of the role of secrecy in a
bureaucracy.
16 Hirschman (1970).
17 For a discussion of
market incentives for disclosure, and the need for
government intervention, see, e.g. Stiglitz (1975a, 1975b,
and 1998a) and Grossman (1981).
18 A key issue, as society
increasingly faces complicated and technical issues, is
how to integrate expertise, democratic accountability, and
representativeness. See, e.g. Stiglitz (1998b)
19 See Mueller (1997).
20 In more technical
terms, the practice of secrecy leads to an inefficient
Nash equilibrium.
21 See Edlin and Stiglitz
(1995). See also Shleifer and Vishny (1989).
22 In arguing against the
Alien and Sedition Acts at the end of the 1700s, James
Madison noted how the incumbents "will be covered by
the 'sedition-act' from animadversions exposing them to
disrepute among the people" while the challengers
would have no such protection so he asked "will not
those in power derive an undue advantage for continuing
themselves in it; which by impairing the right of
election, endangers the blessings of the government
founded on it?" [Madison 1966 (1799), 225]
23 To be sure, some of the
value of information is associated with asymmetries:
obtaining information before one's rivals; some of
the returns to information are thus private returns, not
social returns. Still, it is hard, especially in
government bond markets, to argue for the value of the
market's "discovery" function, and at the same
time not argue for more public disclosure of the public
information that the market is expending so many resources
"discovering."
24 See Chapter IV
"Secret Societies" in Bok 1982.
25In
affirming the New York Times' right to publish the Pentagon
Papers, Supreme Court Justice Hugo Black wrote,
"In my view, far from deserving condemnation for
their courageous reporting the New York Times, The
Washington Post and other newspapers should be commended
for serving the purpose that the Founding Fathers saw so
clearly. In revealing the workings of the government that
led to the Vietnam war, the newspapers nobly did precisely
that which the founders hoped and trusted they would
do." See New York Times, (1971). Furthermore, a
public opinion poll conducted in the weeks after the
disclosure of the Pentagon Papers reflected that 58% of
the public felt the newspapers did the right thing
(whereas 29% felt they had been in the wrong) in
publishing the top-secret papers. See Roper (1989).
26 I am indebted to Alan
Blinder for this articulation.
27 On the delicate issues
of whistle-blowing, see Peters and Branch 1972 or Bok
1982.
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