Sunday, May 15, 2011

The War Against Disclosure

Frank Pasquale

Three remarkable recent lobbying campaigns go beyond the normal bounds of partisan sniping over "markets vs. regulation." They threaten our capacity to understand how society is ordered: whom it serves, for what purposes, and at what costs. Consider these attacks on basic disclosure norms in politics and business:

1) Campaign Finance Disclosures: Regardless of ideology, almost everyone used to agree that campaign funding sources and amounts should be disclosed. 92% of Americans had that position in 2010. Justice Scalia has eloquently insisted that such disclosure laws violate no one's rights. But thought leaders in the Republican party are now vigorously resisting disclosure, as Norm Ornstein observes:

The 2010 mid-term elections showed clearly how legal loopholes involving non-profit groups called 501(c)4s, and the failure to adopt clear regulations surrounding campaigns, can result in hundreds of millions of dollars of spending to influence campaigns that masked the identity of huge donors. In response to these realities, the Federal Communications Commission is considering requiring robust disclosure by TV stations of the major donors of political ads; the Securities and Exchange Commission is considering requiring public corporations to disclose to stockholders their spending on politics, and the White House has drafted an executive order to require companies applying for federal contracts to disclose their spending on political campaigns. . . .

Last month, Mitch McConnell [said] he views disclosure as “a cynical effort to muzzle critics of this administration and its allies in Congress." . . . The Wall Street Journal’s full-throated support for transparency has disappeared as well; it blasted the FCC recently for considering requiring TV stations to put donors of campaign spots on the Internet . . .

John Yoo has also joined the debate, arguing that presidential power stops just short of the prerogative to require federal contractors to disclose their political donations.

2) Conflict Mineral and Extractive Industry Disclosures: One of the surprising victories for decency in the Dodd-Frank Act last year was a provision requiring certain disclosures from mining and resource extraction companies, and companies using “conflict minerals” from in or around the Congo. If you're a consumer with preferences for certain industrial processes (say, those that don't create incentives for rape, murder, and starvation), you want to be able to see which companies are fueling conflict and corruption and which are not. But intense corporate pressure is now delaying the rulemaking process needed to implement the disclosure provisions. According to Gerry Fay, "it is estimated that going 'conflict free' would cost companies just one penny per product." But apparently that is too high a price to end corporate complicity in one of Africa's bloodiest wars.

3) CEO Pay Ratio: The Dodd-Frank Act also promises to shed some sunlight on ever-rising CEO pay levels. As Sam Pizzigatti explains, "corporations must now also report their overall wage 'median' and the ratio between this median and their top pay." Seizing on some laughable comments on how "unduly burdensome" the law is, "the House Financial Services Committee’s Capital Markets Subcommittee [recently] approved, by a vote of 20 to 12 . . . legislation (H.R. 1062) to repeal the Dodd-Frank pay ratio mandate." As one commenter put it on the Facebook page of the legislation's sponsor, Nan Hayworth, "What is wrong with forcing [companies] to tell us how the executives are being compensated? It's hardly a 'burden.'"

It would be easy to give many more examples of recent efforts to gut funding for research and disclosure. This most minimal tool of regulation---a speck of hope at the bottom of a Pandora's Box of laissez-faire---is under assault. What's the rationale?

Benkler on the Distinction between Privacy and Nondisclosure

Perpetrators of injustice always want to hide it. Videophones may "offer[] a modicum of equity and justice to the ordinary man who can now hold his phone aloft to capture police brutality and send it to Youtube." But structural violence is often done more secretly, and can be hidden for surprisingly long periods of time. For example, a large employer might forbid employees from even talking to each other about their salaries, so women can't find out if they've been discriminated against. It can also delay public criticism of meager wages if it can avoid publishing its median compensation levels.

Manufactured doubt delays political action. Whole industries specialize in the cultural production of ignorance. Endless disputes about the nature of our social order tend to aid those in power. I have previously critiqued Wikileaks, but I found this item of social theory from Julian Assange clarifying:

There [is] not enough information available in our common intellectual record to explain how the world really works. . . . There are three types of history. Type one is knowledge. Its creation is subsidized, and its maintenance is subsidized by an industry or lobby: things like how to build a pump that pumps water, how to create steel and build other forms of alloys, how to cook, how to remove poisons from food, etc. But because this knowledge is part of everyday industrial processes, there is an economy that keeps such information around and makes use of it. So the work of preserving it is already done. . .

[A] second type of information no longer has an economy behind it. It has already found its way into the historical record through a state of affairs which no longer exists. So it’s just sitting there. It can be slowly rotting away, slowly vanishing. Books go out of print, and the number of copies available decreases. But it is a slow process, because no one is actively trying to destroy this type of information.

And then there is the type-three information that is the focus of my attention now. This is the information that people are actively working to prevent from entering into the record. Type-three information is suppressed before publication or after publication. If type-three information is spread around, there are active attempts to take it out of circulation. Because the[] first two pillars of our intellectual record either have an economy behind them, or there are no active attempts to destroy them, they do not call to me as loudly. But, this third pillar of information has been denied to all of us throughout the history of the world. So, if you understand that civilized life is built around understanding the world, understanding each other, understanding human institutions and so forth, then our understanding has a great hole in it, which is type-three history.

Of course, anyone who's worked as an attorney knows that it's important to respect rights to privacy, and so does Assange: Wikileaks itself operates according to a strict NDA. A growing movement urging a "right to be forgotten" is to be commended for expanding those rights in some contexts. These developments may confound those who insist on absolutely open or closed systems as hallmarks of consistency. But Assange's sophisticated defenders, like Yochai Benkler, are working toward a balance of interests in the information environment:

[P]rivacy is at risk when there are powerful observers and vulnerable subjects. Transparency, by contrast, involves disclosure of information about powerful parties that weaker parties can use to check that power or its abuse. When we say that an act of information disclosure "threatens privacy" or "promises transparency," we are making a judgment about who has power and who is susceptible to it and how that power ought to be limited. The demise of privacy is already built into the structure of the commercially owned and operated Net. We have already made that "choice," at least in the sense of being socially and politically passive at crucial moments in the 1990s and early 2000s when key decisions were made. The technologies and practices epitomized by WikiLeaks serve as a compensating overlay on that privacy-denying platform.

Enormously powerful computing systems now aid corporations and law enforcement agencies in their quests for prediction and control. They could also accomplish the disclosure functions mentioned above. The question now is whether we, as a society, are as committed to the transparency project ("disclosure of information about powerful parties that weaker parties can use to check that power or its abuse") as "we" have been to the privacy-destroying aspects of internet intermediaries that endlessly track and profile their users. It's not surprising that resource extraction companies, big campaign donors, and CEOs are vigorously fighting disclosure. Occasionally inequality and abuse become so grotesque that they can't be defended; they can only be hidden.

X-Posted: Concurring Opinions.

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