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What is the argument against full transparency in business?

In a recent talk Charmian Gooch discusses how anonymity allows, if not incourages, criminals to hide behind layers of companies to commit and get away with crimes, labor abuses, and environmental destruction.

http://www.ted.com/talks/charmian_gooch_my_wish_to_launch_a_new_era_of_openness_in_business

There are more and more calls for transparency in business and government these days. More transparency is usually equated with more accountability and more responsible actions taken by corporations and governments. Are there any downsides associated with transparency? What are the pros and the cons?

http://blog.experts-exchange.com/ee-tech-news/transparency-in-business-why-it-matters/http://

www.forbes.com/sites/victorlipman/2013/12/11/new-study-shows-transparency-isnt-just-good-ethics-its-good-business/

http://www.investopedia.com/articles/fundamental/03/121703.asp

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    Apr 7 2014: well, a lot of business is the business of security, such as police and military. I doubt they can be fully transparent?
    • Apr 7 2014: No sir I can see that the military would put soldiers in danger with too much transparency, but I think the police could safely function with some measure of transparency, and I think they already do, but my knowledge of how the police operate is admittedly limited.
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        Apr 8 2014: well, everyone operates with some transparency. It would seem that not everyone can operate with full transparency because there could be danger involved? For example, a business owner might not want to post the names of everyone who has ever shoplifted from him on the wall, because maybe one of those shoplifters will come in and shoot him?
        • Apr 8 2014: I can see how fear of retribution could make some timid. You'll have to check out the talk I linked if you get a chance to see the opposite end of the spectrum from transparency.
  • Apr 4 2014: A higher level of transparency would also decrease the frequency of large finiacial crises and the lack of transparency had a part to play in some of the worst crises in recent history, ones that affected the global economy, I put a few words below in caps for emphasis.

    http://en.m.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308

    The U.S. Senate's Levin–Coburn Reportconcluded that the crisis was the result of "high risk, complex financial products; UNDISCLOSED CONFLICTS OF INTEREST; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."[14] The Financial Crisis Inquiry Commission concluded that the financial crisis was avoidable and was caused by "widespread failures infinancial regulation and supervision," "dramatic failures of corporate governance and risk management at many systemically important financial institutions," "a combination of excessive borrowing, risky investments, and LACK OF TRANSPARENCY" by financial institutions, ill preparation and inconsistent action by government that "added to the uncertainty and panic," a "SYSTEMIC BREAKDOWN IN ACCOUNTABILITY and ethics,"
    • Apr 4 2014: Jacob,

      In what you mentioned above you omitted to mention the systematic incentives in the system to do certain stuff…in a way it seemed to me that you focuses on 'failures to do' rather than include 'incentives to do'!

      I state that there is a cost for doing what is right and a higher cost for doing what is wrong…
      ... thing is that …
      … choosing to do what is right involves one-self paying the bill oneself …
      … choosing to do what is wrong involves someone else paying the bill for us…
      … so will one choose to do what is right or choose the higher cost alternative …
      … what if one knows that someone else has chosen the higher cost alternative…
      … will one choose the same way to do what is right or choose the higher cost alternative …
      … what if one knows that that one will have to pay the bill for someone else…
      … will one still choose the same way to do what is right (and pay for one's bill and the other's bill) or choose to give someone else a taste of getting to pay the higher bill…
      … what if one knows that that one who will pay the bill for us be the one who made us pay their bill…
      … will one still choose the same way to do what is right (and pay for one's bill and the other's bill) or choose to return the favor and a taste of getting to pay the higher bill…by pick the higher cost alternative and sending the higher cost to someone else.

      Note that in what I just described there is always an incentive to do what is wrong rather than do what is right… the incentive is actually the seams throughout the description, though it may seem to be otherwise! Notice that throughout the whole description one's choice involved choosing between doing what is right or doing something wrong that had a higher cost. Notice that doing what was right always results in the least costly alternative. Notice how the incentive tempt to move to the worst case scenario. Any relationship to reality is purely coincidental … or maybe this just reflects what be going on right now in many places
      • Apr 4 2014: I was a little confused by your scenarios and will have to chew on thi a bit before I respond specifically to them. As to the systematic incentives. As far as I can tell, the incentive for conducting business in an unethical way is short term profits for a relatively small group of people (usually high level corporate employees and/or stock holders) that has a cost for someone else, be it another company, the environment, employees, or end user (consumer). Sometimes there are global consequences as in the case of the 2007-2008 financial crisis that has negatively affected economies around the planet.

        The incentives for being ethical in business transactions ( which transparency in most cases encourages) would of course be a lower likelyhood of financial crises, healthier employees, consumers, and ecosystems.
        • Apr 4 2014: Jacob,

          What caused the financial crisis was influenced by the commission incentive produced at closing the deal.

          To exemplify in a slightly different situation. I have a friend who hired sale reps under a commission scheme:
          for every product the rep sold,
          the rep got a commission,
          and got payed.

          Unfortunately some sales reps decided to work the system to their advantage and get friends to buy the products so the rep could get the commission. The friends knew they would reject the product and the bill upon arrival. Evidently this scenario could not happen if the sales rep got their commission after payment of product was received by the company rather then when the order was placed or shipped.

          My friend had to change that incentive and way of doing business :-)

          You probably know of other practices that exploit how the system works… I could mention a few more.

          The incentives for being ethical in business transactions may imply less transactions! Some individuals would not get into certain situations if they knew the total costs up front… Even presenting them the full information in a certain way may influence the decisions individuals make.
      • Apr 5 2014: These examples you gave seem to speak to the short term financial profit of the relatively few (the sales reps) at the cost of others (your friend that hired them and ultimately everyone else that works at that company). This seems to be a common theme for a lot of companies (admittedly not every company though, there are surely a lot of responsible companies even without transparency).

        Did you get a chance to look through that link arguing against transparency? Your last sentence speaks directly to one of the things discussed in the article, how the information is presented to customers.
        • Apr 5 2014: Jacob,

          Present survival at the expense of future survival
          is the same as
          future survival at the expense of present survival
          both yield death

          To survive one needs to ensure both present and future survival and consider a couple of other thing!

          In other words
          it's not about the means vs the ends
          it is about the means and the ends and a bit more...

          I did go to the link and started reading and decided to forgo the full experience
          My last sentence stems from musings with cognitive illusions material and what I consider pertinent to share.
  • Apr 3 2014: I was thinking more of where a company had factories and how were the employees treated. Is this manufacturing going on in a country with lower environmental regulations or less workers' rights? Does a company have business ties with governments or regimes that have human rights violations?

    The goal, besides added accountability for corporations and/or at the very least social pressure towards fair treatment of employees (where ever they may be in the world), would be a trend towards empowerment of consumers to support companies that they feel are worthy of said support.
    • Apr 4 2014: Jacob,

      The thing is that when consumers pass their responsibility to the regulators they shroud behind the belief that if the authority say so it must be so. Ideally each consumer should decide for themselves which 'product' to buy, looking into what stands behind the product.

      In a blunt hypothetical example, Some individuals don't care where the merchandise comes from or where it is made … they just care to get it as cheap as possible. Where I live a while back there was a problem with car mirrors being stolen with the exception of Mercedes cars. Here Mercedes took the bold initiative to instal for free a replacement for any stolen mirror. Result no market for stolen Mercedes mirrors hence no incentive for thieves to get such mirrors. When a customer buys merchandize they are giving their support to the product and everything thats behind it. When you buy stuff thats made in the USA you are making a statement… Of course when similar product costs 1/10th elsewhere and the quality is better and one knows that the high prices here are dew to unionize monopolistic market practices well it leads to getting it elsewhere … There was a time that one could have money and still was unable to buy stuff because businesses would carefully pick who they did business with and with whom they where associated. The same with customers… Now if you got the dow the show plays for you...
      • Apr 4 2014: Re:The thing is that when consumers pass their responsibility to the regulators.

        This is not about passing responsibility to anyone. Just the opposite. As I said above, its about the empowerment of the consumers themselves. You are absolutely right that some people don't care how or where something is made, whether a company acts responsibly towards its employees, the environment, or even to the consumers themselves, they just want it cheap. While that is true for some people, there are also a lot (seems like more and more) of people that don't want to buy products from a company that uses "sweat shops", or uses child labor, or has blatent environmental offenses, or negative impacts on other societies. Take for example the "blood diamonds", while a lot of folks couldn't care less that these diamonds supported brutal and cruel regimes and fueled a war, there was a enormous outcry of people that didn't want to buy them precisely because of these reasons.

        I think we can speak louder ti our governments and the major corporations with our purchases than with any election or protest, $ is the language they speak and often enough their main concern, so we as citizens should speak to them in the language of $. We can tell them what kind of company we want and what kind of foreign policy we want by choosing more responsibly, as individual consumers, who we do business with, but only if there is more info available to us through a higher level of transparency.
    • Apr 4 2014: Jacob,

      In the case you presented you agree with the point I made and even provided excellent notion related to the question you asked, WHILE using a from where you claim to be in disagreement. So let me put it this way. Consumers can speak louder with their purchases than with any election or protest or regulatory hurtle, $ is the language they speak and often enough their main concern, so we as citizens should speak to them in the language of $! Of course it's rather hard to do that when there are limited options, and many subtle workarounds.

      BTW I have not seen you comment on the claim that "it's ones business" provides a key argument against full transparency in business.
      • Apr 4 2014: Re: Ideally each consumer should decide for themselves which 'product' to buy, looking into what stands behind the product. Yes sir ideally they should, but it is almost impossible to get information about the manufacturing process or treatment of workers (especially if it is in another country) unless the company volunteers this information.

         Im not saying there should be some kind of legislation(or regulators) requiring transparency, I'm saying we as a society should demand this information. As ti "one's business", thats fine, companies can keep "their busines" to themselves if they wish, but as the Forbes article says, if you are doing business in an ethical way it is in your interest to have at least some transparency. If you have time maybe take a look through the links and watch the talk. Ill post a link opposing full (or naked transparency as the author calls it) transparency.
        • Apr 4 2014: Jacob,

          In another ted conversation ( http://www.ted.com/conversations/23531/how_do_individuals_decide_what.html?c=839568 )
          I mentioned how I can take this and that stand and make the case for whichever case I take the stand for. Here in this conversation you asked about 'what is the argument against full transparency in business'?

          In your response above you seem to me to be making the case for a particular position, 'explaining' and justifying to me why more transparency be 'required'. I could take the stand for either position and make the case for such a particular position if need be. The thing is that from where I stand right now the focus here involves finding the arguments agains full transparent rather than getting into an argument about the arguments themselves. To sort of use the context of the other ted conversation… here its about which arguments can be made rather than an argument about the arguments being made. In about six days (when this conversation allotted time reaches it's deadline) ideally you should have a list of arguments agains full transparency. I suggest that every effort and word should be directed towards that end and appropriately understanding the suggested positions that individuals could employ.

          I just thought of an additional arguments against full transparency in business:
          - If customers knew what the business was doing they wouldn't choose to do businesses there.
          - Business do what others are doing and recognizing and exposing it would be detrimental (especially if the others don't do the same)
          - If you expose the hunting grounds other hunters will go there and there isn't enough for everyone
          - Showing what you got may lead others to want it and take it away
          - Others may consider it unfair to pay the asking price based on what they see you do, though they may consider it fair to pay more than the asking price based on what the value they get from what you do.

          Hope this response help and enriches your convesartion.
      • Apr 4 2014: Well I appreciate your input. Didn't mean to come off as argumentative, was just trying to clarify my statement. As it happens I am in favor of more transparency and was trying to speak to points in favor of it, though the link above gives valid arguments against full (naked) transparency. As always, I take part in these conversations to clarify my own thoughts on these subjects not to change peoples minds about anything. Again thanks for your input and feel free to come back and debate any position you feel would be worth examining.
        • Apr 4 2014: Jacob,

          accepting your invitation to come back and explore something I feel would be worth examining. I have a question to you in regards to what you said which is a bit to the sidelines and has more to do with a topic that interest me rather than the focal point of this conversation. I do consider that this may help with this and other conversations. How do we focus on the topic rather than what individuals think is the topic? In a way how do individuals jointly determine what is the topic and help each other focus on it?

          You said "was just trying to clarify my statement. As it happens I am in favor of more transparency".
          Two things:
          - what where you seeking to clarify?
          - should one be focused on clarifying the position one think to be … or be focused on clarifying to understand the positions that individuals hold?

          I claim to understand that you are pro transparency (its clear to me from what you have stated). In a way I too am pro clarity and transparency and conscious freely picking the better option; though to me this conversation seemed to focus into exploring certain 'kind of arguments'; rather than choosing to take a side on the arguments.

          In a rhetorical sense: was your clarification in line with the topic or was it an attempt to support a stand in favor of more transparency? One can see from the statements what actually happens to be the case. The point I am seeking to make here revolves around observing how sometimes we say we are doing one thing while actually doings something else. It seem to be better and more transparent to ensure congruence between what we say and what we do.

          BTW I too like you take part in these conversations to clarify my own thoughts on these (and other ) subjects …
          Though my intent isn't to change peoples minds about this or that… I do expect individuals to change their minds as a result of what individuals learn in the interchanges and to followthrough with what ought to be done by doing it as it ought to be done.
      • Apr 5 2014: - "what where you seeking to clarify?" Something i said made you think i was in favor of consumers passing their responsibilty to someone else, re: your response "The thing is that when consumers pass their responsibility to the regulators they shroud behind the belief that if the authority say so it must be so" i was trying to clarify that this is the opposite of what i think the effect of transparency in business would be. I wanted to make sure I was making clear my thought that with greater access to information about the actions and decisions of companies, consumers could more responsibly choose who they want to support with their money.

        " - should one be focused on clarifying the position one think to be … or be focused on clarifying to understand the positions that individuals hold?" I'm not sure I fully understand what you're asking here, but I hope I can answer the question. I think that if there is going to be constructive discourse, we need to make sure we are expressing our thoughts as clearly as possible so we can discuss what each other means to say instead of discussing misunderstandings. This also requires each person to do their best to make sure they are understanding exactly what the other person is trying to express so they can rethink the discussion in the light of another person's viewpoint, not a misperceived version of their viewpoint. I value the input I get here at TED and want to make sure I understand everyone's thoughts and beliefs.

        "Was your clarification in line with the topic or was it an attempt to support a stand in favor of more transparency?" -I think it was both. As your understanding of my original statement seemed to be that I was for consumers passing responsibilty on, I wanted to make sure you understood that this would be the opposite effect of transparency (the topic) amd that more transparency would indeed empower consumers to be More responsible (which seems beneficial and does support the side of more transparency).
        • Apr 5 2014: Jacob,

          Thanks for responding. The gist of my response: I basically agree with what you just said the thing is I observe that you are not seeing clearly the point I sought to make. Hopefully the following will clarify the issue.

          I realized that what I said was the opposite of what you thought the effect of transparency in business would be … in a way that's why I said it!

          I wanted you to consider something you seemed not to be considering (and still seem not to be considering). Some claims could open the door to find additional 'arguments'. Ideally my statements would lead to a joint exploration of the alternatives; in practice it seems to lead to a defensive polarized confrontation where individuals 'accuse the other' of holding an untenable point. I should say that in a different form -- in practice it can lead to individuals 'misperceiving' the other as holding a point for expressing a point and 'accuse the other' of holding such view.

          Notice the difference in 'focus' between:
          -- 'I wanted to make sure I was making clear my thought that …'
          -- 'I wanted to make sure I was clearly understating the point …'

          Sometimes individuals begin to evaluate and judge the points being made rather than getting to clearly underhand each point and why it is being made. For the record I understand how transparency can 1- lead into and 2-lead away from 'empowering' consumers (and others). I could take the sand for this and that case and present the case for this and that case. In the question for this conversation you basically asked - What are the argument against full transparency in business- From that it seems to me this conversation ought to focus on discovering and understanding the different arguments rather than seek to present counter arguments.

          Hope that you now perceive that I asked the rhetorical question involving a focus to understand the points being made and why the are being made.
      • Apr 5 2014: Re:"How do we focus on the topic rather than what individuals think is the topic? In a way how do individuals jointly determine what is the topic and help each other focus on it?"

        I agree that these sidetracks can veer away from the main topic but I believe that sometimes this is healthy and maybe a consequence of the forum we are choosing to discuss these issues in. I am not much of a debater and sometimes it takes time for me to clearly understand folks' meanings and make my own understood. This also comes from the fact that there are people from all walks of life and from all over the world together in one place discussing these things. That varied accumulation of viewpoints more than makes up for the sometimes cumbersome act of clarification it brings with it, in my opinion. I also think that a lot of these topics are incredibly complex and there cant help but be some tangent discussions if we are to have a broad and deep understanding of what we are discussing.
        • Apr 5 2014: Jacob,

          I agree and am glad you see it that way too!

          over at (http://www.ted.com/conversations/23531/how_do_individuals_decide_what.html ) the main topic focuses on exploring how individuals decide what is right … I mention it here because this sidetrack here could be more of a main track there, and you may have something to contribute on the topic over-there though if you look at what's happening there you will likely observe the sometimes cumbersome act of clarification :-)

          Now back to the argument against full transparency in business…
          Considering that transparency does the opposite of what you original thought what would you say are the three key arguments against full transparency?
      • Apr 6 2014: The only arguments against full transparency seem to be a company's right to privacy, an information overload hindering decision making on the part of consumers, and a question of how to responsibly present all the information transparency would liberate to consumers in an accurate, unbiased, and usable way(the fear is that information can be "twisted" to fit someone's personal intetests as opposed to presenting a clear picture of "the truth").

        What are your thoughts about these things weighed against the potential benefits of full transparency?

        The link I posted is kind of long but the author presents better examples of strengths and weaknesses of transparency in business than I am. By the way I believe the author Lawrence Lessig also has a TEDtalk, I haven't watched it yet though. Have you had a chance to watch the Charmain Gooch talk I linked?
        • Apr 6 2014: Jacob,

          Reading the issues I thought you ought to add -- the added costs involved to create transparency!

          I see that there are additional matters that should be considered and it may help to find possibilities by using a language conducive to finding the possibilities. Say wonder about what additional matters could play a part in the dialogue about transparency. What considerations should individuals have and consider?

          Please note that the question you asked regarding my thoughts about --the options considered-- which involves how 'these' things play a part and the weight 'these' have contrasted with the benefits of full transparency seems to me to lead into an evaluation of the matters rather than an exploration of the matters. You may have noticed how my present interests reside more in how things be considered. Even this response is mostly focused on how things are done rather than the actual caring out of said practices. I provide an underlying notion which I consider better be included within the conversation of transparency as well as point to how to induce more contributions towards attaining the goal of exploring the matters.

          I did begin to read the link you posted don't remember if I listened to the talk it contained. I agree that it is long… and framed in a way that dissuades me from reading it fully… Let's just say I believe what you said that the author presents better examples of strengths and weaknesses without being interested in engaging into a debate over the examples. Maybe someone better methodically go through that material and succinctly lists the examples for and against being made there. Just a list how many mattes for? how many matters con ? how many matters in between?

          Something that does interest me a bit is: HOW -- information can be "twisted" to fit someone's personal intetests as opposed to presenting a clear picture of "the truth"? What can one (you me) do to ensure each and everyone embraces a clear picture of "the truth"?
  • Apr 3 2014: Jacob,

    in response to the question posed, the basic argument involves the notion: 'My business is non of your business'.
    more accountability to others does little to incentive more accountability of self to self for self by self. In other words individuals shift from doing stuff based on personal conviction*-A- to doing stuff to avoid a personal conviction*-B-. This shift from the individual to the collective has profound implications. Shifting from individual accountability and more responsible actions taken by the individual in favor of 'authoritarian paternalistic submission' where daddy corp-gov-poli decides for each one what to do hardly leads to actual responsible actions taken by each one (be that individual organization or government). I consider that the real degradation happened when an administrator assumed control of whats to happens in the estate and legitimate proprietors tacitly conceded giving over their entitlements over to the estate. Of course in reality there was little choice for to keep a conviction involved getting a conviction and doings so could get one harassed, sequestered and disappeared!


    * conviction :
    A-) a firmly held belief or opinion, the quality of showing that one is firmly convinced of what one believes or says.
    B-) a formal declaration of guilt for a criminal offense, made by the verdict of a jury or the decision of a judge in a court of law.

    Please note that the second definition -B- has the subtle peculiarity that it isn't based on what the individual does! -B- is based on the verdict of someone else! It says nothing about the actual culpability or innocence of the individual, nothing to do with what the individual does and everything to do with the verdict of someone someplace.
  • Apr 3 2014: Define what you mean by full transparency? do you mean no trade secrets?
    • Apr 3 2014: Here's reasonable definitiin of transparency from the link below- [U] a situation in which business andfinancial activities are done in an open way without secrets, so that people can trust that they are fair and honest

      http://dictionary.cambridge.org/us/dictionary/business-english/transparency.

      Id say anything not protected by things such as doctor/patient privilege or maybe things that are copyrighted. Of course transparency would not apply to the personal information (SS#, DL#, credit card #, anything that could be used for identity theft) of employees or clients of companies.
      • Apr 3 2014: I think you are asking for is financial transparency which is different than full business transparency. Many companies have trade secrets that can not be patented or copyrighted due to secrecy.

        1..What about bidding for a contract? If you want full transparency, then each bidder would know what the other had bid. Are you ok with it?

        2. Suppose you want buying a company, the moment the interest is known the stock of the company goes up 50%. Are you ok with that? You may be paying too much for the company.
      • Apr 4 2014: All the articles discuss a certain level of transparency but not full transparency.
        • Apr 5 2014: Thats true, sir. Below is a link that speaks directly to full (naked) transparency and actually argues against it. Part of what I'm trying to understand is where is the line between too little transparency and too much. The TEDtalk by Charmain Gooch I linked seems to speak to the danger of too little transparency. She discusses anonymity in business and some of the things this can lead to. It seems that most folks are in favor of Some transparency, but how much is too much and how do we responsibly apply the transparent approach to business?

          http://www.newrepublic.com/article/books-and-arts/against-transparency
      • Apr 6 2014: there is an old saying, "there are two things you do not want the public to see, sausage making and the passing of laws." The movie, "Lincoln" showed only a little of the dealings that was needed to pass the 13th amendment.

        I was a research assistant for a professor of labor relationships and access to his notes. Part of his notes were confidential minutes of Senate and House committee meetings on labor law. It was interesting to see the comments, deals made, and who said them.

        You are right there is a line where above there must be transparency and below that line there must be a decision whether transparency will help the public, both in politics and in business. What that line is, I think, can not be fixed.