As much as we advocate for transparency, the American population seems to not to pay much attention when it is provided. In 2002, President Bush signed the Sarbanes-Oxley Act giving the Securities and Exchange Commission (SEC) more power and establish rules to make financial statements more transparent.
The Act increased transparency by requiring
"... "Real-time" disclosure.
... The reconciliation of pro forma reporting with Generally Accepted Accounting Practices (GAAP).
... Full financial disclosure of all off-balance sheet and related parties transactions.
... Expanded disclosure in connection with internal controls -- financial as well as non-financial"
(http://www.businessforum.com/SEC01.html)
Now, financial statements have about 50 pages of disclosures for investors to read through and get a "transparent" look at the company. Still, those statements are hardly even glanced at, because investors are too distracted by the bottom-line, otherwise known as net income.
To me, that sums up most of the transparency issue with the general public. Everyone wants transparency, but once they have it, they don't care to look inside. One thought might be to consolidate that information and make it easier to navigate. The problem with this arises when the information is condensed too much, bias gets added or there is no context and so people are misled.
It leaves us in a Catch-22. Everyone wants more information, but when they get it they don't want to read it. The real question I have boils down to does America really believe in transparency, or do they believe in the idea of transparency?
The information / application disconnect is alive and well in modern American culture. I'm reminded of the Nutrition Facts labeling on our food. Studies show that since the labeling has begun, that consumers are much more familiar with what's going into their food. The shame is - they don't eat any better. In fact, in a sense they just know they're eating worse - and continue to do so. People are very short-term thinkers and excellent at rationalizing what is important to them in the now.
ReplyDeleteExactly; that is a great comparison. It doesn't make sense when people keep on wanting information, but they don't care to act on it or even read it. I can't see a way to cause people to care either, but I guess that is where the advocates who fought for the legislation now have to fight for the public to care.
ReplyDeleteYour closing question is really poignant. At this point in the Think Tank, I'm pro-institutional transparency, but I really don't think it would change the level of involvement of citizens in most circumstances. Citizens should at least have the option to find the information easily if they wanted to--but most people probably wouldn't go through the trouble of finding it.
ReplyDeleteWe are too easily comforted by the disclosures. We assume people are complying with the rules when the disclosures are drafted, and we assume there is a good regulatory and enforcement mechanism. But unfortunately...
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