Information is gold:
By Melvin J. Howard
Knowledge is Power". But power, has negative and positive sides to it. Information exhibits the same duality: properly provided, it is a positive power of unequalled strength. Improperly disseminated and presented, it is nothing short of destructive. You can witness this yourself if somebody spread a rumour at work that was not true. But by the time it got around to you it became the truth even though it was false. I have always believed in seeking knowledge not just what I was taught in school. Nor the latest gossip going around. But information from one end of the globe to the other that effects all of us one way or the other. I have always felt constraint in relationships that did not allow me to seek new information. Or a person wanted me to side with the status quo or go with flow so to speak and don’t question why a person, group or society does certain things. Remember in the movie Wall Street in a scene Gordon Gecko played by Michael Douglas says to Bud Fox played by Charlie Sheen. Information is the most valuable commodity I know wouldn’t you agree? That is more true today then ever before especially in the financial world. In the financial world, there are important aspects of information dissemination:
1. From Government to the Market – the Market, the mechanism which allocates resources in adherence to market signals (for instance, in accordance with prices). The Government intervenes to correct market failures, or to influence the allocation of resources in favour or against the interests of a defined group of people. The more transparent and accountable the actions of the Government, the less distortion in the allocation of resources and the less resulting inefficiency. The Government should declare its intentions and actions in advance whenever possible, then it should act through public, open tenders, report often to regulatory and legislative bodies and to the public and so on. The more information provided by this major economic player (the most dominant in most countries) – the more smoothly and efficaciously the Market will operate. The converse, unfortunately, is also true. The less open the government, the more latent its intents, the more shadowy its operations – the more cumbersome the bureaucracy, the less functioning the market.
- From Government to the Firms – The same principles that apply to the desirable interaction between Government and Market, apply here. The Government should disseminate information to firms in its territory (and out of it) accurately, equitably and speedily. Any delay or distortion in the information, or preference of one recipient over another – will thwart the efficient allocation of economic resources.
- From Government to the World – The "World" here being multilateral institutions, foreign governments, foreign investors, foreign competitors and the economic players in general providing that they are outside the territory of the information disseminating Government. Again, any delay, or abstention in the dissemination of information as well as its distortion (disinformation and misinformation) will result in economic outcomes worse that could have been achieved by a free, prompt, precise and equitable (=equally available) dissemination of said information. This is true even where commercial secrets are involved! It has been proven time and again that when commercial information is kept secret – the firm (or Government) that keeps it hidden is HARMED. The most famous examples are Apple (which kept its operating system a well-guarded secret) and IBM (which did not), Microsoft (which kept its operating system open to developers of software) and other software companies (which did not). Synergy based on openness seemed to have won over old habits. A free, unhampered, unbiased flow of information is a major point of attraction to foreign investors and a brawny point with the IMF and the World Bank. The former, for instance, lends money more easily to countries, which maintain a reasonably reliable outflow of national statistics.
- From Firms to the World – The virtues of corporate transparency and of the application of the properly revealing International Accounting Standards (IAS, GAAP, or others) need no evidencing. Today, it is virtually impossible to raise money, to export, to import, to form joint ventures, to obtain credits, or to otherwise collaborate internationally without the existence of full, unmitigated disclosure. The modern firm (if it wishes to interact globally) must open itself up completely and provide timely, full and accurate information to all. This is a legal must for public and listed firms the world over (though standards vary). Transparent accounting practices, clear ownership structure, available track record and historical performance records – are important in today's financing world.
- From Firms to Firms – This is really a subset of the previous axis of dissemination. Here, the desirability of full disclosure is even stronger. A firm that fails to provide information about itself to firms on its turf, will likely fall prey to vicious rumours and informative manipulations by its competitors. Positive information is characterized these qualities:
1. Transparency – Knowing the sources of the information, the methods by which it was obtained, the confirmation that none of it was unnecessarily suppressed (some would argue that there is no "necessary suppression") – constitutes the main edifice of transparency. The data or information can be true, but if it is not perceived to be transparent – it will not be considered reliable. Think about an anonymous (=non-transparent) letter versus a signed letter – the latter will be more readily relied upon (subject to the reliability of the author, of course).
- Reliability – is the direct result of transparency. Acquaintance with the source of information (including its history) and with the methods of its provision and dissemination will determine the level of reliability that we will attach to it. How balanced is it? Is the source prejudiced or in any way an interested, biased, party? Was the information "force-fed" by the Government, was the media coerced to publish it by a major advertiser, was the journalist arrested after the publication? The circumstances surrounding the data are as important as its content. The context of a piece of information is of no less consequence that the information contained in it. Above all, to be judged reliable, the information must "reflect" reality. "This sounds true" and the word "sounds" should be emphasized.
- Comprehensiveness – Information will not be considered transparent, nor will it be judged reliable if it is partial. It must incorporate all the aspects of the world to which it relates, or else state explicitly what has been omitted and why (which is tantamount to including it, in the first place). A missing part implies ignorance of interactions which might crucially alter the interpretation of the information. Partiality renders information valueless. Needless to say, that I am talking about RELEVANT parts of the information.
- Organization – This, arguably, is the most important aspect of information. It is what makes information comprehensible. A worldview is provided, a theory into which the information fits. There is no difference in the application of these rules to information and to interpretation (which is really information that relates to other information instead of relating to the World). Both categories can be formal and informal. Formal information is information that designates itself as such (carries a sign: "I am information"). It includes official publications by various bodies (accountants, corporations, The Bureau of Statistics, news bulletins, all the media, the Internet, various databases, whether in digitized format or in hard copy).
The modern world is stuffed by information, formal and informal, partial and comprehensive, out of context and with interpretation. There are no mental, or philosophically rigorous distinctions today between information and what it denotes or stands for. Actors are often mistaken for their roles, wars are fought on television, fictitious TV celebrities become real. That which has no information presence might as well have no real life existence. An entity – person, group of people, a nation – which does not engage in structuring content, providing and disseminating it – actively engages in its own destruction.
