Summary: To fight corruption, she is proposing even more draconian control of free trade, targeted at companies instead of government... and she just won the TED Prize for it.
I saw the blurb about this TED talk on "openness" in business by Charmian Gooch, and I avoided it until I was in the right frame of mind for something political and inflammatory... and I finally watched it this morning and my fear was confirmed. She claims it's much too easy to set up a company right now, so people can do it at-will and then hide behind layers of companies when doing nefarious things; the solution is a global (!) requirement that requires that we know exactly who is the responsible party behind each and every corporation created.
It looks like Charmian has done some impressive work on tough problems happening in some of the most unstable and poor places in the world, and furthermore she has founded an organization Global Witness which now has 80 people who are investigating these situations and all the surrounding corruption. Magnificent! I've just added their RSS to my watchdog list.
But let's look at why her plan is wrong-headed. She's right that people can use these structures to hide; however, how can anyone believe that someone using it for this purpose is not going to find another way? If this were ever implemented, I have a simple solution for anyone wanting to avoid responsibility: find someone you can pay to be the responsible party. There are always people willing to do this kind of work... heck, TaskRabbit has created a business where you can hire people do do things for you like stand in line for the new iPhone... and even in the halls of Congress you'll find people who are paid by lobbyists to stand in line on their behalf.
So, let's talk about all the additional rules and regulations that need to be added (and enforced) to ensure that this scheme accomplishes her goal of stamping out corruption...
No way. It makes me tired just thinking about it.
So let's skip ahead to the evils if we were ever to just take the first step she proposes.
- It leaves the fundamental corruption in place: without the support of people in state institutions (eg. lawmakers, police, bureaucrats) these kinds of abuses would be much fewer, much less heinous, and much harder to instigate. This fundamental oversight makes her message sound like the RootStrikers initiative, which is focused all on a single issue of campaign finance while ignoring all the other spheres of power operating in government; at least they recognize the origin of the problem in the state institutions, but neither Charmian's talk nor the Global Witness issues say anything about that problem, so they're not even touching the core of the problem.
- Her proposal restricts trade and personal liberty. Hong Kong has had phenomenal growth in prosperity primarily due to to the economic freedom there, where it's even easier to create a company that in the US. Again, crooks will always game the system; however, it hurts society much more when more restrictions are thrown onto small-time operators who are trying to create prosperity. As a small business owner, I can tell you how onerous it is to try and run a legitimate business while trying to understand the requirements, much less try to comply and force others to comply; I can also tell you the uses of creating multiple companies, so more requirements would definitely compound the burden. Add to that the ways that incorrect filings and incompetence can affect you (with no repercussions to the responsible bureaucrats), and you've got a high bar to clear before you can prove that the costs outweigh the benefits.
- As I've pointed out, it'd be easy for criminals to get around this... meaning that the next step will be yet more regulations and barriers added. Maybe everyone has to go into an office and talk face-to-face with a screener before getting approved to start any organization dealing with money; many already know where I'm going with this: it's a real burden to be forced to report in to a bureaucracy. And of course this opens the door to even more interlocking requirements with agencies like the Treasury or the DMV where you cannot accept electronic money for work or your company car will be impounded if any of the responsible parties owes something to another bureaucratic arm.
- Even in "free" countries, state workers have proven their tendency to pursue individuals (eg. Catherine Engelbrecht) and whole industries (eg. payday lenders) that the governing party or leader just doesn't like. I'm sure they would like nothing better than even easier access to every one of our business relationships.
- That last point shows how evil it would to give the state institutions even more access to our relationships; now let's point to some good reasons for anonymity. The easy answer is as a counter the authority of a rogue state apparatus who can crack down on all individuals they deem as competition. Come to think of it, most of the cases I can imagine are to avoid malicious state activity... and I personally distrust most states in the world today! But another valid case is a truly democratic advocacy organization (eg. a DAC) where the individuals don't want everyone to know their membership for any number of reasons. (I happen to believe the future belongs to more democratic and decentralized organizations.)
I believe we can get to a world where most of this information is open because it truly fosters trust and humanity, and I am an optimist. However, when we entrust the state to enforce this kind of behavior, it's misplaced trust... and very dangerous.
How about this: let's make every single state relationship and transaction 100% transparent. Once we have that, we'll great progress with the issues she described... and then we can talk about businesses. Once we get rid of the politics-based influence and make all businesses more accountable to us the people, most of the large-scale evil simply cannot be supported; take a look and see how many of these abuses are obviously supported the state, and then ask me sometime about examples where those companies leverage their state influence more insidiously and secretly.
And now we get to why I'm so sad: she was awarded the TED Prize this year... and she got a standing ovation. People really have so much faith in government that they applaud this power-grab. Is that really the opinion in the world today?
Our kids are in trouble.