Inside the Glass Box: Privacy and Transparency

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THE STUDENT JOURNAL OF POLITICS, ECONOMICS AND PHILOSOPHY

Published termly by the Club of PEP at the University of York

Inside the Glass Box: Privacy and Transparency

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VOX | The Student Journal of Politics, Economics and Philosophy

Editorial In the famous 1921 dystopia We of Y. Zamyatin, the main protagonist D-503 lives in One State, an authoritarian city-state made of glass to allow the secret police, the Bureau of Guardians, to constantly watch every individual. Today, the advances in communication technology and the mounting fear of terrorism have enabled governments to place their citizens into such a metaphorical glass box, even using the same pretence - protection.

Surveillance as a tool of oppression and social control has re-entered public discourse. Some invoke Jeremy Bentham’s Panopticon to describe the world with CCTV cameras filling up public spaces. The ‘talking’ cameras used in various places across the UK to prevent crime have been likened to Orwell’s telescreens. The information leaked by Edward Snowden revealed the enormous extent of the US government surveillance of their citizens. On the other side of the barricade, the recent attacks on the Charlie Hebdo magazine provided support for those who argue that government surveillance is not extensive enough to guarantee our safety. This VOX issue discusses various topics related to the concepts of privacy and transparency.

In the first piece, PPE undergraduates Tozer and Kabrt discuss whether the accountability of politicians requires their private lives being transparent as much as their public lives. The essay of R. Macquaire then invokes Orwell’s 1984 to discuss the permissibility of government surveillance of their citizens. In opposition to mulish insistence on absolutes, Macquaire calls for a debate on democratic synthesis between the recognition of rights and liberties on the one hand, and genuine concern for safety on the other. He concludes suggesting that a tamed Orwellian Big Brother with mechanisms of democratic oversight may be a good candidate to emerge from the debate. In the second essay, Jacobsen explains why the idea of government transparency enjoys a widespread social support and considers some limitations to the concept. He rejects “the banal view of transparency”, arguing that it needs a more nuanced understanding and that “specific forms of transparency may be more suitable in certain social environments than in others”. The final essay looks at privacy and transparency from a microeconomic point of view. Forte discusses the differences between traditional and e-markets in terms of how they cope with information asymmetry. He finds that while the online markets have reduced buyer search costs and the barriers to entry for sellers, they have in fact worsened the information asymmetry problem. Referring to the famous lemon market problem, Forte compares consumer-to-consumer internet markets to “automobile markets with faceless sellers and hardly identifiable cars”.

We hope you will find this issue entertaining and informative. Feedback and ideas are more then welcome. As are essay submissions for our next issue (see the back cover of this issue).

Editorial Team Editors-In-Chief: Phillip Jung Martin Kabrt Raphael Reuben 2

Content Editors: Hannah Bennet Jack Reeves Katherine Tyler Thomas Tozer Thomas McAuliffe

Martin Kabrt and Phillip Jung Editors-In -Chief Proofreaders: Nadia Setiabudi Ida Sjöberg Journal Secretary: Shuangying Han

Layout Editors: Rosie Shields Raphael Reuben Web Officer: Jack Turner Front Cover - Baroan Technologies

VOX

voxjournal.co.uk

THE STUDENT JOURNAL OF POLITICS, ECONOMICS AND PHILOSOPHY

ISSUE XXV - SPRING 2015

contents DEBATE Should the private lives of politicans be as transparent as their public lives?

Martin Kabrt and Thomas Tozer

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ESSAYS Watching Big Brother Robert Macquarie

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Is ‘Sunshine the Best Disinfectant’?

Henrik Jacobsen

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Do E-Markets Dream of Cyber Lemons?

Giuseppe Forte

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VOX is an academic journal run by students that provides a platform for the exchange of ideas and offers insight into debates relating to Politics, Economics and Philosophy (PEP).

VOX is published triannually by the Club of PEP at the University of York and distributed on York’s campus as well as other universities world-wide.

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VOX | The Student Journal of Politics, Economics and Philosophy

Should the private lives of politicans be as transparent as their public lives?

Martin Kabrt and Thomas Tozer Thomas Tozer and Martin Kabrt, University of York PPE undergraduates, discuss the extent to which the private lives of politicians should be open to the public eye.

Thomas: The role of a politician is to be accountable to the people whom that politician represents.

For the politician to be truly accountable, his character in private must represent his character in public; if there is a discrepancy between these two then there will be underlying motivations that will ultimately point the politician’s decisions in the wrong direction.

Furthermore, there is a moral reason why politicians must be accountable in their private life as well as the public life: if politicians adopt different personalities in the private and public lives, then their public character is deceptive.

Since politicians are, in theory at least, intended to stand for the welfare of the public, then the public is being deceived if a politician’s private motivations do not match up to the public exclamations of what he wants. That is not right.

Therefore, in order that a politician actually acts in the best interests of the public, and in order that the public are not being deceived, it is essential that the private lives of politicians are made accountable, and therefore open to the public eye, as much as their public life.

Martin: My reply follows in three steps, moving from the weakest to the strongest rejection of your argument. Firstly, I am arguing that there is no acceptable way to implement what you’re proposing in practice. Secondly, I think the politician’s accountability does not require what you’re proposing. Lastly, I believe what you’re proposing

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is unconstitutional and as such unacceptable.

The first reason to reject your suggestion is its impossibility to be put into practice in any acceptable way. How do you inspect whether the politician’s ‘private motivations’ match up with the ‘public exclamations’? If you’re suggesting some form of surveillance, does it really prevent the politician from having ulterior motives? Or does your solution involve a telescreen in every room of her apartment? To succeed in turning ideas or motives public, you would need the full apparatus of the Thought police. Surely, your intention is not to make the politician’s thoughts public, is it? Unless you can do that, however, surveillance of the politician’s private and family life will not deliver what you expect it to.

Secondly, the politician’s role is to represent the interests of her constituents. She is accountable to them in virtue of the public’s oversight of her political actions, not her thoughts, spiritual views or private correspondence. I would argue that aspects of the politician’s life should be open to public scrutiny insofar as they are related to her job. This can include her daily work schedule, policies and political aims, records of her voting in the Parliament - anything that is directly relevant to the politician’s task of representing the interests of her constituents. The politician’s medical problems, sexual preferences or religious views are not relevant to the politician’s performance in her job.

Lastly, not only is the insight into the politician’s

Issue XXV - Spring 2015 private life not necessary for her to be accountable, the very practice violates the politician’s fundamental rights, namely the right to privacy.

A politician is still just a job and regardless of its specificities, it does not deprive a person of their law-guaranteed civil liberties. The politician “has the right to respect for his private and family life, his home and his correspondence”1 just like anyone else. If we are to be all equal before the law, the politician should have the same right to privacy as anyone else.

Thomas: Let me respond to each of your points in turn.

First, you argue that it is not practical to survey politicians’ private lives - a pursuit towards this end will lead to the ‘Thought Police’ and, perhaps, ‘a telescreen in every room of her apartment’. This, I am afraid, is nothing more than an incredible, and utterly implausible, slippery slope fallacy. That politicians should be held publicly accountable for the things that they say in their private lives does not require any of the bizarre surveillance that you propose. With surveillance as it currently is, often comprising nothing more than a few journalists in disguise or a faulty ‘on/off’ switch on a microphone, there are many examples of relevant things that politicians say, or do, in private that later become public. Take ‘Bigotgate’ for example, when Gordon Brown, at the time of the last election, was caught on tape referring to Gillian Duffy, a lifelong Labour voter, as a ‘bigoted woman’ simply for challenging him on immigration when he was visiting Rochdale in Lancashire. Picking up this faux pas did not require any special surveillance, and there are many other examples of when politicians have said things in private which have later become public, despite no attempt at creating a ‘Thought Police’ or putting telescreens in politicians’ apartments. All I argue is that, based on the system that is already adept at picking up things which politicians say or do in private, politicians should be held accountable for such things. We do not need a new and absurd system of surveillance.

Second, you say that ‘The politician’s medical problems [and] sexual preferences … are not relevant to the politician’s performance in her job’.

I consider this to be a remarkable straw man, for I never suggested that the medical problems or sexual preferences of a politician should be known publicly. I am arguing only that politicians should be held more accountable in their private lives, but such accountability would very rarely require knowledge about such things as their medical problems - how well they represent people in politics bears, in the vast majority of cases, no relation to their health. The same is true of their sexual preferences, although it is not so uncommon that the public would benefit from a knowledge of these. Consider the recent example of a senior German MP who purchased images of child ‘soft porn’2 ; he was later seen fulminating against a journalist who questioned the morality of the pictures, saying that his sexuality was as private to him as the journalist’s was to himself. Yet this is clearly untrue: if an MP has sexually inappropriate leanings then of course the public should know about it, in order that voters are able to make an informed choice about who they want to represent them - for the public to know nothing about this would be careless at best and, at worst, could have serious implications if the MP was able to abuse his position. Apart from cases such as these, however, it is clear that greater accountability in private does not require a gross infringement of privacy. On the contrary, all I am arguing is that politicians should be held publicly accountable for what they say and do in private, but, unless what they are saying or doing has some bearing on their political life, their speech and actions are irrelevant to the pursuit of greater political accountability.

Third, you argue that politicians have a right to privacy just as anyone else does, quoting the Human Rights Act in support of your case. In response to this, I would direct you to the points I made in my preceding paragraph about what greater accountability in private actually requires.

With respect to aspects of politicians’ private lives that have no bearing on their political account-

Human Rights Act, article 8 Ed. Pictures of naked children were found in Sebastian Edathy‘s work laptop in February 2014. ‘Wrong but legal’, he commented. Edathy is charged with possession of child pornography and will face a trial due to begin February 2015.

Acquittal is expected.

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VOX | The Student Journal of Politics, Economics and Philosophy ability, such as their favourite sexual position or what they had for breakfast (both of which are very unlikely to have any relevance to their political leadership), of course politicians have a right to privacy just as everyone else does. But, when their words and actions are of political relevance, I do not believe that politicians should be treated the same way as everyone else. In general, if someone tells you that they believe a certain lady is a ‘bigoted woman’, then there is little reason to tell that lady, or anyone else, that someone said that. But if someone is a politician then saying such things is politically significant, for it shows first that the politician does not really respect the woman, which may have implications for his policy decisions, and second it shows that in keeping up a friendly demeanour towards people such as this woman the politician is deceiving the electorate. Thus privacy is important for everyone, of course, and that includes politicians; but when what is being said or done by a politician in their private life has a direct bearing on their political leadership, there are good reasons why they should be held publicly accountable, even though this would not normally be true of someone who is not a politician saying such things.

That politicians should be held publicly accountable for what they say and do in public does not require a gross infringement upon their privacy: it will not bring about a slippery slope that requires telescreens in every room of a politician’s apartment; it does not require that arbitrary personal information about the politician is made public; only such information that is of relevance to politicians’ political accountability should be made public, and apart from these such situations the politician has a right to privacy as much as everyone else. But if a politician says or does things in private that are relevant to their role as a politician then, for the reasons given in my opening case, the public has a right to know these things and the politician should be held publicly accountable for them.

Martin: It appears to me that we have misunderstood each other and our claims in fact do not differ as much as it might seem. Of course politicians are held accountable for their private actions if these become public due to a mistake or for any other reason.

Note that I never said they should not – it would

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indeed be a silly demand, expecting people to ignore some publicly known information simply because it had originally been uttered in private.

I fully agree that ‘based on the system that is already adept at picking up things which politicians say or do in private, politicians should be held accountable for such things’. If that is indeed all you argue, then we may have merely been talking past one another. I was under the impression that you are the one proposing a change, saying that ‘it is essential that the private lives of politicians are made … open to the public eye, as much as their public life’. Surely, in the present state of affairs, politician’s private conversations, correspondence, family life, spiritual life, medical condition etc., which I all consider belonging to the politician’s private life, are not open to the public eye, unless they are ‘leaked’ – illegally or due to a mistake or lack of caution. My point towards practicality was merely to point out that it seems impossible to device any acceptable new mechanism to make all politicians’ ‘private motivations’ public (something you claim accountability requires). Slippery slope is only fallacious if I deduce from your claims something they do not entail. However, making the politician’s private life as open as their public life seems to me indeed would require surveillance not dissimilar to that described by Orwell.

Second, you indeed did not suggest explicitly that medical problems or sexual preferences should be known publicly. Nevertheless, I repeat that you did suggest that ‘it is essential that the private lives of politicians are made … open to the public eye, as much as their public life’. I think it’s fairly reasonable to consider medical problems or sexual preferences part of the politician’s private life. Now, if the politician’s private life is to be ‘made’ public, what mistake did I make in reading your argument? If I argue against something your claims entail, I do not think I am slaying a mere straw man.

Let me now consider the case of the German MP, who was found possessing pictures of naked children. I would still insist that a politician’s sexually ‘inappropriate leanings’ alone have little bearing on her political ability to represent the interests of her constituents. Suppose someone has paedophilia, a psychiatric disorder the individual did not choose, so can hardly be held morally responsible for. Unless such a person actually abuses a

Issue XXV - Spring 2015 child (or even downloads child pornography), for which they can and should be held morally and first and foremost legally responsible, I do not think their condition should be made public, even if the person in question is a politician. I do not see how any sexual preferences alone – even those considered pathological – affect the politician’s role in representing the interests of her constituents. You might object that any knowledge that might reveal something of the politician’s character or personality can benefit the public, but I would reply that the constitutionally guaranteed right to privacy overrides such absolute demand.

You keep insisting that ‘politicians should be held publicly accountable for what they say and do in private’, but I disagree that securing such a state of affairs does not require ‘gross infringement of privacy’. What politicians say or do in private is not made public – as you admit – unless there are ‘few journalists in disguise or a faulty ‘on/off’ switch on a microphone’. You think that holding politicians accountable ‘does not require that arbitrary personal information about the politician is made public; only such information that is of relevance to politicians’ political accountability’. However, this seems to presume that private information is collected and then selectively publicised. But who collects it and how? If all you claim is that politicians should be held publicly accountable for something they said or did in private but was made public by mistake or by a disguised journalist, then I think your claim is trivial and amounts to no more than ‘politicians should be held publicly accountable for what is publically known’. Well, of course they already are and it is hard to conceive how they could not be, unless media are to be censored.

If, however, you think that such form of transparency is not sufficient and that indeed ‘it is essential that the private lives of politicians are made … open to the public eye, as much as their public life’, then I am still waiting for your account of how that should be achieved in any acceptable way that does not constitute a gross infringement upon their privacy. Given that presently the politicians’ private lives are not open to the public eye as much as their public life, how and by whom should they be ‘made’ public?

Thomas: I am delighted by your response. It is built up almost entirely upon your quoting me as having said that ‘it is essential that the private lives of politicians are made … open to the public eye, as much as their public life’, but in every instance that you use this quote - three times in total - you keep the ‘...’ in the same place. What is it that you’re hiding beneath the ‘...’? It is this: ‘accountable, and therefore’. Why is it, I ask, that you insist on removing just three words every time that you wish to quote me? Allow me to conjecture: it is because, once again, you are misconstruing my argument; these three words are essential to my meaning, and it is only without them that my arguments become vulnerable to your criticisms. Thus, to be clear, the whole quote reads like this: ‘it is essential that the private lives of politicians are made accountable, and therefore open to the public eye, as much as their public life’.

Thus, when I said ‘and therefore open to the public eye’, this part of my sentence was between commas and therefore functioned parenthetically.

Hence, ‘as much as their public life’ referred not to the degree to which I proposed that the private lives of politicians should be open to the public eye, but to the degree that the private lives of politicians should be accountable. For clarity, let me now give my sentence once again, in its original form: ‘... it is essential that the private lives of politicians are made accountable, and therefore open to the public eye, as much as their public life.’

Therefore your defence of your slippery slope and straw man that they followed reasonably from my original statement is fallacious: they are based on a misconstrual of what I said. As I made clear in my previous section, I believe that the private lives of politicians should be made public only to the extent that is required by political accountability.

The idea that this requires absurd surveillance and information about a politician’s health problems or sexual preferences might, perhaps, follow from the claim that the private lives of politicians should be as public as their public lives, but that is simply not what I claimed, and therefore these consequences do not follow from my argument. You may still be waiting for my account of how the private lives of politicians can be made as public as their public lives without a gross infringement upon their privacy, but you will have to wait a long time for

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VOX | The Student Journal of Politics, Economics and Philosophy I have no argument to support this proposition.

Nevertheless, I agree that there is more overlap between our respective arguments than it may at first appear. Let me wrap up my side of this debate by outlining the point that I think we agree upon, and the area where we disagree.

It seems that we both agree that, when private statements made by a politician which have some relevance to politics are made public, then this is okay. Indeed, you say: ‘... of course they [politicians] already are [held publicly accountable for what it is publically known that they said in private] and it is hard to conceive how they could not be, unless media are to be censored.’ Fair enough. I thought that, from your point of view, such statements should not be revealed by the media, and should be kept private.

So, I believe, we both agree that it is legitimate for the media to publicly reveal things (of political relevance) that the politician said in private.

Where it seems we disagree, then, is whether politicians should be able to maintain their privacy with respect to the things that they do in private. The German MP who possessed pictures of naked children is a case in point: you do not believe that ‘a politician’s sexually ‘inappropriate leanings’ alone have little bearing on her political ability to represent the interests of her constituents’; indeed, you say that ‘Unless such a person actually abuses a child (or even downloads child pornography), for which they can and should be held morally and first and foremost legally responsible, I do not think their condition should be made public, even if the person in question is a politician’. This is where we disagree, quite profoundly. There are many possible jobs out there in the world, and for a paedophile (ie someone with very sexually inappropriate leanings) to be a politician is both wrong and dangerous: as I said in my previous case, this would be unfair on the electorate who would like to know who is representing them, and it could be dangerous if the MP became able to abuse his position in some way. It does not matter whether the MP has actually committed a crime of some form yet - the public deserve to know who they are voting for.

Yet we agree that politicians should be held ac-

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countable for the things they say in private. I have argued that politicians should also be held accountable for their private actions and inclinations, where these might have some relevance to their role as a politician. This does not require a gross infringement of privacy: rather, it requires simply that the public are aware of who they are voting for, and so things that are of relevance to the public’s political choices should be made publically known; for this not to be the case would mean that the public is being deceived, and that the politician may have intentions that are politically unhealthy. Therefore: politicians should be held as politically accountable for their private lives as for their public lives. Any transparency that currently exists is good, and should be encouraged; but the private lives of politicians only need to be transparent where this is of political relevance.

Martin: I largely agree with your summary of the debate.

The case of the paedophile I think clearly illustrates our point of disagreement. That is, (i) what falls into the domain of ‘political relevance’ and (ii) whether in some cases, the respect for the individual’s privacy overrides the demand for public awareness.

Nevertheless, I insist that my use of your quotation did not distort its meaning. Admittedly, I did not shorten it to save space, but rather to show more clearly what it entails. Once again, the sentence read: ‘[I]t is essential that the private lives of politicians are made accountable, and therefore open to the public eye, as much as their public life.’

Let’s disentangle the claim step by step. It is essential that the private lives of politicians are made accountable. The sentence connector ‘therefore’ marks an inference; it introduces a consequence of (or, equivalently in terms of truth-functionality, the necessary condition for) accountability, namely openness to the public eye. If it is true that the private lives of politicians are accountable and, simultaneously, it is true that openness to the public eye is the (logical) consequence of accountability, then it is also true that the private lives of politicians are open to the public eye.

‘Making’ the private lives of politicians accountable entails making them open to the public eye.

You offer a rephrase of the claim: ‘the private lives of politicians should be made public only to the

Issue XXV - Spring 2015 extent that is required by political accountability’, but you offer no explanation of such accountability other than postulating its necessary condition that ‘[the politician’s] character in private must represent his character in public’, which, again, I do not know how is to be achieved. (I hope you see that answering this by reference to the ‘openness to the public eye’ is circular reasoning).

Finally, let me sum up my position: I have argued that any aspect of the politician’s private life that is not directly tied to her ability to represent the interests of her constituents should stay private, in line with the constitutionally guaranteed right to privacy, which applies to all citizens, including politicians.

Photographer: Wordstream

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Watching Big Brother:

State power, surveillance and the internet Robert Macquarie

“He knew in advance what O’Brien would say. That the Party did not seek power for its own ends, but only for the good of the majority... it sought power because men in the mass were frail, cowardly creatures who could not endure liberty or face the truth” George Orwell, 1984, 1949

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In the 2013 Alternative Christmas Message on Britain’s Channel 4, Edward Snowden invoked the terrifying world created by Orwell. 1984 saw microphones and remote cameras enforcing constant surveillance upon a submissive population.

No action, conversation, or even private thought could go unnoticed by the state.

Snowden’s purpose was clear – to point to supposedly similar measures that we in the West live under. We don’t quite have our own Thought Police, but the state collects and stores data, and meta-data, about our private lives on a massive scale.

tion demands highly advanced storage and analysis methods, and often assists with the operation and finances of governmental departments as opposed to pure surveillance.

Nevertheless, there remains the potential for states to deploy pre-emptive coercive force against citizens, based on some criteria developed and apparently fulfilled, using this information, behind closed doors.

Awareness of this uncomfortable situation has slowly reached society at large through the work of dissenters like Snowden, as well as journalists like Heather Brooke, author of The Silent State (2010).

The development of the Internet - as well as huge advances in mobile communications technology - has dramatically altered the political landscape, shifting the balance of power between the individual and the state. ‘Big data’ provides states with a new, highly malleable form of knowledge about the lives of billions of people across the world. The use of this informa-

The critical voices in the ensuing debate often protest, as Snowden has (2014), that: “when [private citizens’ details] are collected by any arm of government without an individualised, particularised suspicion of wrongdoing… that is a violation not just of rights on a national level, but of human rights, that are not given to us by govern-

Issue XXV - Spring 2015

ment, but are inherent in our nature.”

Claims on absolute rights are the mainstay of such a position, since a relative comparison of values induces a trade-off between privacy and so-called ‘national security’ – the proposition that a little loss of liberty is worth it to guarantee greater protection by the state, the infamous justification of totalitarian control taken to its abhorrent conclusion in 1984. Moreover, following the introductory quote, Winston is proven incorrect, instead being told that “the Party seeks power entirely for its own sake. We are not interested in the good of others; we are interested solely in power.” This is the outcome we all fear so acutely.

But the modern changes we are living through constitute more than just a zerosum transfer of power into the hands of the state and away from the citizen. Power is multiplied by technology; private channels of access, organisation and the dissemination of material are now infinite; the web creates anonymity that incentivises private and ‘public’ abuse of the sort seen on social media. To insist on absolutes – human rights, freedom of speech – in our new world is to ignore the fundamentally different reality we face today. Witness the intense harassment by Twitter users of women who come under public scrutiny, and suffer because of the anonymity that website grants its users – Caroline CriadoPerez and Stella Creasy for example.

Yet a state’s legitimacy can only come from the claim to be the sole guarantor of per-

sonal safety, including both life and property. Thomas Hobbes (1651:376) held this to be true quite simply because, for the individual, the “calamity of warre [sic] with every other man” is “the greatest evill [sic] that can happen in this life.” Conflict between individuals is the destruction we aim to avoid through the construction of states; Hobbes felt the exchanges of his day – of some natural liberties for a system of law and a monarch or parliament with an army at their disposal – were worth making. In the same vein, our task is to constantly reassess which transgressions we find indefensibly objectionable and which ought to be allowed, even in the more complex world of the modern nation-state. One must look more closely and neutrally at why the state now cares so much about the individual – and more specifically about non-state groupings of individuals.

A sceptic will reply that power has always corrupted, and that those in control of our public institutions will always be swayed by its trappings. The hellish results theorised by Orwell supposedly follow. Public servants will use their power for one sole aim: to maintain their grasp on it. Brooke (2010:35) is acrimonious in her assessment: “what you find throughout any bureaucracy protected by secrecy is a cesspit of illogic and waste… most of the work being done for the purpose of keeping other bureaucrats in power.” Inefficiency aside, the worry about data collection is at the centre of Brooke’s critique. The civil liberties argument focuses on the surveillance itself, arguing that the monitoring alone is 11

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citizens, even before surveillance is considered.

Artist: Global Voices Online (Edited)

sufficient for injustice to be done, and can only serve to germinate treacherous conditions. At bottom, many believe that preemptive data collection is one step too far, because it puts us all within Leviathan’s coercive grasp, innocents included. Since all are innocent before the crime, that makes mass surveillance intolerably pernicious to liberty.

It is not the case, however, that simply weakening our institutions will reclaim power for the individual in a zero-sum transfer. The individual is already more potent as an actor, including over fellow 12

On 4 November 2014, Robert Hannigan, the director of GCHQ, wrote in the Financial Times that “the web is a terrorist’s command-and-control network of choice.” He referenced the spread of “techniques for encrypting messages”, as well as the use of social media by terrorist group The Islamic State of Iraq and al-Sham (ISIS) to spread their terrorist propaganda. Galvanised by such current threats to the sanctity of society, Hannigan made his case for “a new deal between democratic governments and the technology companies in the area of protecting our citizens.” Unfortunately, he matched the paradigm of ‘securitisation’ admirably – wherein domestic actors proclaim some risk to ‘security’ to advance a political agenda – and thus lost the attention of any serious sceptic worth the label. But the article identified a gain of power by transnational groups and private individuals which is not zerosum.

There is patently such a thing as national security. Loosely defined, we might see it as the sanctity of the bodies and property of all those individuals who hold legal status as citizens of a particular nation-state. This goal is rightly held as one value of many worth pursuit. It is not the reserve of security institutions alone to decide upon the nature of a risk to security. Yet currently, there is a clear potential for threat. Terrorism is likely to rise, specifically manifested

Issue XXV - Spring 2015

in the form of attacks on the West by returning extremists, due in large part to the current prolongation of a story of intervention and conflict. The discussion the public sphere should be having is one which focuses more keenly on when pre-emption becomes too targeted, or the types of data within its scope become too broad.

One must still temper these concerns with reminders of the perils of the state. A dramatic sphere to watch is the sense of persistence and universality of state surveillance.

Certainly, the use of power through today’s technology is oblique and multi-faceted.

James Boyle (1997:186-7) has ingeniously applied the writings of Michael Foucault to digital jurisprudence. The crux is a notion of ‘discipline’, as in “the multitudinous private methods of regulation of individual behaviour ranging from workplace timeand-motion efficiency directives to psychiatric evaluation”. With modern technology, power is exercised “through multitudinous non-state sources, often dependent on material or technological means of enforcement”. Using its ever-increasing possession of our private information, the state can lean on frighteningly personal levers to induce the behaviour it desires. One might imagine a state with access to medical records that prevents you from accessing a particular medicine. Surely such a type of data collection would be unwelcome.

So GCHQ might be viewed as coveting two forms of power – one is the power to know, and combat, the operations and promulgation of ideas by genuine pub-

lic threats; the latter is a general desire to possess information on all civilians, with which to conduct dangerous before-thefact security operations. Only when this is understood can the defence of civil liberties truly take form. Some measures might be worth a trade-off, and some certainly will not. Oblique, difficult-to-measure power forms like some of the many databases Brooke references (2010:8-11; 16-18) likely fall under the latter category.

The law is poorly equipped to handle current technological realities, whether we view the individual or the state as the inherent problem. There is undeniably a trade-off to be made here in values. A mulish defence of liberty, refusing to yield to any other value, is as much a mistake as is allowing the unchecked operation of secretive surveillance. I do not support the prevailing status quo, or many proposals made by those like Hannigan. By absolutely no means can we trust GCHQ and its counterparts indefinitely without oversight.

But if the leaders of these institutions are calling for a democratic synthesis between the recognition of rights and liberties, and genuine concern for the safety of all, then one should surely embrace the opportunity for open debate. This debate must include, among other things, a study of what really constitutes a public threat. It should also give significant space to voices from technology firms themselves: they sell and trade our information, and so can not only account for what is given to the state but also bear moral responsibility for that decision.

Profit alone is a dangerous motive – justi13

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fications and explanations must be given.

If reasons can be found for the beneficent use of large-scale surveillance, and improvements in the management of societal challenges, then all the better. The incommodious truth is that a little bit of Big Brother can be our friend, especially when our enemies are, as now, particularly well equipped to injure our interests. We just want to know how and why he is watching us.

Robert Macquarie is currently a Philosophy, Politics and Economics student at the University of Oxford

References Boyle, J. (1997). Foucault in Cyberspace: Surveillance, Sovereignty, and Hardwired Censors. University of Cincinnatti Law Review. [Online] Vol. 66. p.177-206. Available from: http://bit.ly/1u8aMEw. [Accessed 06/11/2014] Brooke, H. (2010) The Silent State: Secrets, Surveillance and the Myth of British Democracy. Great Britain: Random House.

Cohen, E. D., (2010) Mass Surveillance and State Control: The Total Information Awareness Project. [Online] New York: Palgrave Macmillan. Available from - http:// www.palgraveconnect.com/pc/doifinder/10.1057/9780230113954. [Accessed: 06/11/2014] Gill, P., (1994) Policing Politics: Security, Intelligence and the Liberal Democratic 14

State. [Online] Abingdon: Frank Cass & Co. Ltd. Available from - http://bit. ly/1xg0DrC. [Accessed: 08/11/2014] Hobbes, T. (1651; 1968, Macpherson, C. B., ed.), Leviathan. England: Penguin Books.

Orwell, G. (1949) 1984. [Online] London: Secker and Warburg. Available from https://ebooks.adelaide.edu.au/o/orwell/ george/o79n/chapter3.3.html. [Accessed: 08/11/2014] Read, J. H., ‘Thomas Hobbes: Power in the State of Nature, Power in Civil Society’, Polity. (1991) Vol. 23, No. 4.

Senellart, M. (ed.), (2004) Michel Foucault: Security, Territory, Population. Lectures at the Collège de France, 1977-1978.

Chippenham and Eastbourne: Palgrave Macmillan.

Alternative Christmas Message. Alternative Christmas Message 2013. (2013) Channel 4. Wed 25 December. 12:00.

The Moment of Truth. (2014) The Moment of Truth [Online video]. 15 September.

Available from - http://new.livestream.com/ accounts/1473236/events/3389825/player?w idth=640&height=360&autoPlay=true&m ute=false. [Accessed: 08/11/2014]

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Is ‘Sunshine the best disinfectant’1?

Transparency in government between sunlight and sunburns Henrik Jacobsen I. Introduction Recently we could observe the ‘rise and rise’ of transparency. Indeed, few would deny that transparency has become an influential idea for improving government: freedom of information laws have seen a worldwide explosion (Lamble 2002, Birkinshaw 2006) and audit trails and performance information have become hallmarks of public management (Pollitt 2013, Deumes, Schelleman et al. 2012).

Therefore, in Hood’s (2006: 3) words, “transparency is a term that has attained quasi-religious significance in debate over governance and institutional design”. Why is transparency such a compelling idea? And, more importantly, does it have any limits?

This essay, firstly, offers six reasons why the idea of transparency enjoys widespread social support and, secondly, presents five potential limits to it. Arguing that academic research ap-

pears to be at an intellectual impasse, the conclusion suggests a way forward in conceptual research on transparency.

II. Six sources of sunlight This section delineates six reasons why transparency may appear to be a very appealing idea. While such checklistformat may seem unattractive at first, any ranking would necessarily depend on specific social contexts, thus going beyond the conceptual focus taken here.

To begin with, many people see transparency as a democratic value in itself, as “meaningful participation in democratic processes requires informed participants” (Stiglitz 2003: 125), affecting issues as important as vote choice.

Second, transparency is an essential instrument for holding government accountable as it provides voters with sufficient information to control government (Holmström 1979).

“People see transparency as a democratic value in itself, as “meaningful participation in democratic processes requires informed participants” affecting issues as important as choice vote” 15

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Photographer - cmfgu

Thirdly, transparency is said to reduce government corruption by increasing the probability that external actors detect forms of malpractice. As already Bentham (2001: 277) proposed, “the more strictly we are watched, the better we behave” (2001: 277).

A fourth alleged benefit of transparency is that it increases citizens’ trust in government since “those who are required to provide others with evidence for judging their performance face strong incentives to earn others’ trust” (O’Neill 2006: 76).

Fifthly, transparency can enforce external discipline on government – “if procedures and methods are open to scrutiny, then the organisation is open to critique” (Strathern 2000: 313).

Consequently, government is less likely to provide a skewed picture of its ac1

16

Louis Brandeis cited in Freund (1972).

tivities, allowing citizens to engage in a more equal dialogue (cf. Moon 2002).

There is, finally, the argument that transparency increases government’s efficiency and effectiveness. This derives from the idea that policies that are transparent are better informed, thus more rational (Black 1997). Further, since transparency increases external knowledge of internal processes, outsiders can more meaningfully contribute to organizational improvement.

These six reasons underlying today’s (overly) positive view of transparency may appear very convincing at first sight, which is why many people assume that the more transparent government is, the better. However, there are five potential limits to this inference.

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III. Five sources of sunburn Similar to Paracelsus’ long-standing insight that the right dose differentiates a poison from a remedy, this section argues that there are five reasons to be careful about the simplistic idea that more transparency is always better.

To start with, the alleged triangular relationship between transparency, accountability, and trust may not be as straightforward as commonly assumed. Regarding trust, Roberts (2006) argues that positive impressions of government publishing information may be outweighed by the latter’s content. Moreover, while accountability necessarily implies ability to sanction, transparency can only increase access to information and (to some extent) answerability. Therefore, transparency may actually turn into an instrument of blame-avoidance: through tactics such as snowing (offering more information than recipients can reasonably understand) and providing information in an incomprehensible form, government may actually decrease its accountability (O’Neill 2006). Furthermore, an uncontrolled release of information may rather bring about confusion and disinformation as opposed to trust in government, which is why transparency may lead to centralized information management (Heald 2006).

Secondly, transparency may come into conflict with other widely held values. For instance, there may be

trade-offs between transparency and such values as privacy or confidentiality – particularly in an age of almost unlimited digital access to data (Otenyo, Lind 2006). Hood (2006) identifies three ‘counter-doctrines’ to transparency: (1) the notion of individual privacy; (2) the idea of commercial confidentiality linked to outsourcing and privatizing government services; and (3) the doctrine of state security.

A third limit to an overly optimistic view of transparency not only concerns the sheer amount of data published that is crucial, but also the audience and quality to which it is available (cf.

Heald 2003). This relates to two main concerns: First, relatively few people use the opportunity to get information directly from government, which allows mediators to convey original information in (an altered form/altered forms) (Finel, Lord 1999). Therefore, “increased transparency makes governments more vulnerable to unjustified criticism by citizens or sensation-seeking journalists” (Halachmi, Greiling 2013: 563), reinforcing a “conservative image of government as incompetent and corrupt” (Fung, Weil 2010: 106).

Second, data about government is inherently complex, which is why citizens may confront a problem of ‘cognitive overload’ when interpreting it (cf. Greiling, Spraul 2010). Therefore, governments may deliberately attempt to be as transparent as possible in order to ‘snow’ citizens with excessive 17

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“Relatively few people use the opportunity to get information directly from government, which allows mediators to convey original information. Therefore “increased transparency makes governments more vulnerable to unjustified criticism by citizens or sensation-seeking journalists’” amounts of information (Swartz 2010).

Fourthly, as already Moore (1949) pointed out, people will not behave naturally when living in a glasshouse.

Therefore, when public servants in an age of digital transparency have to “operate in a sort of electronic greenhouse, they are likely to act defensively and to game the system” (Bannister, Connolly 2011: 15). As Hood (2007) argues, transparency may produce three kinds of undesired effects: (1) instituting transparency may be without any consequences (‘nil-effects’) if transparency laws are not (sufficiently) enforced.

Additionally, organizations may adjust their activities by shifting venues or by changing their institutional status in such ways that transparency laws do not apply to them. (2) While effective in itself, transparency may come at the cost of other values (‘side-effects’). For instance, when civil servants have to increasingly fear ‘blame storms’, we may expect them to resolve to policymaking according to the book, thus reducing organizational flexibility. A certain degree of institutional ambiguity may, therefore, be paramount to long-term organizational stability 18

(Hood 2007, Moore, Tumin 1949).

(3) Institutions may become less transparent as a result of mandating more transparency (‘reverse-effects’) such as in Heald’s (2003) ‘transparency paradox’, in which too frequent changes of transparency rules can lead to problems of data comparability.

Finally, several authors suggest that there may be multiple forms of transparency. For instance, Heald (2006) distinguishes ‘four directions’ of transparency corresponding to different orientations within organizations: upwards only, downwards only, inwards only, outwards only. Further, Hood (2007) develops a fourfold typology of transparency according to ‘who transparency applies to’ (individuals at large vs. particular organizations/officeholders) and ‘how transparency works’ (observable by public at large vs. observable by experts) (see also Hood 2006, Stirton, Lodge 2001). Consequently, standard accounts of transparency may be too simplistic, and hence unrealistic, for they assume the same processes to occur everywhere and at all times. Interestingly, Hood (2006) speculates that it may be this very mul-

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tiplicity of meanings that contributes to transparency’s current popularity as it offers different groups distinct ways of identifying with transparency.

IV. Conclusion: Contextualizing transparency In summary, even though this account cannot be exhaustive and, most probably, raises more questions than it can answer, it lends additional qualification to Dror’s (2000: 62) claim that transparency “must not captivate thinking […] it is a gross error to think that the more transparency and openness the better”. More specifically, arguments in favour of transparency frequently neglect the limiting effects of institutional processes. Most importantly, it is necessary to move away from transparency as an “area of persuasive language” (Heald 2003: 739) towards a more nuanced conceptual understanding.

Recent critiques – however valuable – have brought academic literature to an impasse of conceptual ambivalence towards transparency. Is transparency, therefore, a concept we should dismiss simply because it is too complex and its consequences too multifaceted?

This essay argues that this would be a wrong conclusion. Indeed, the consideration that there are multiple forms of transparency may offer a way forward in conceptual research. Scholars should seriously entertain the idea that transparency’s effects on the govern-

ment are not uniform, but a function of the surrounding socio-political environment. Therefore, specific forms of transparency may be more suitable in certain social environments than in others. For instance, in Chinese cultural contexts Western forms of transparency such as freedom of information legislation may not be feasible (cf. Breton, Galeotti et al. 2007). Further, comparative political scientists may find it useful to compare the role of transparency across various political regimes. Moreover, while militant forms of transparency such as WikiLeaks transparency may be effective in opening up authoritarian regimes, they are likely to produce significant nil, side-, and reverse-effects (cf. Hood 2011) once applied to (comparatively open) democratic contexts. Therefore, contextualizing democracies may offer a promising way of moving “away from a banal view of transparency […] to a world of transparency with adjectives” (Hood 2007: 195).

Henrik Jacobsen is cuurently a student at the University of Oxford

References BANNISTER, F. and CONNOLLY, R., 2011. The trouble with transparency: A critical view of openness in e-government. Policy and Internet, 3(1), pp. 1-30.

BENTHAM, J., 2001. Farming 19

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defended. In: M. QUINN, ed, Writings on the Poor Laws. Oxford: Oxford University Press, pp. 276-290.

BIRKINSHAW, P., 2006. Freedom of information and openness: Fundamental human rights? Administrative Law Review, 58(1), pp. 177-218.

BLACK, J., 1997. Transparent policy measures. Oxford: Oxford University Press.

BRETON, A., GALEOTTI, G., SALMON, P. and WINTROBE, R., 2007. Introduction. Aldershot: Ashgate, pp. 1-8.

DEUMES, R., SCHELLEMAN, C., BAUWHEDE, H.V. and VANSTRAELEN, A., 2012. Audit firm governance: Do transparency reports reveal audit quality? Auditing, 31(4), pp. 193-214.

DROR, Y., 2000. Transparency and openness of quality democracy. Available through http://unpan1.un.org/ intradoc/groups/public/documents/ nispacee/unpan006507.pdf [Accessed 09 August 2013].

FINEL, B.I. and LORD, K.M., 1999.

The surprising logic of transparency.

International Studies Quarterly, 43(2), pp. 315.

FREUND, P. A. 1972. The supreme court of the United States: Its business, 20

purposes, and performance. Gloucester, MA: Peter Smith.

FUNG, A. and WEIL, D., 2010. Open government and open society. In: D. LATHRAP and L. RUMA, eds, Open Government: Transparency, collaboration, and participation in practice.

Cambridge, MA: O’Reilly, pp. 105114.

GREILING, D. and SPRAUL, K., 2010. Accountability and the challenges of information disclosure. Public Administration Quarterly, 34(3), pp.

338-377.

HALACHMI, A. and GREILING, D., 2013. Transparency, e-government, and accountability. Public Performance & Management Review, 36(4), pp.

572-584.

HEALD, D., 2006. Transparency as an instrumental value. In: C. HOOD and D. HEALD, eds, Transparency: The key to better governance? London: Oxford University Press, pp. 59-73.

HEALD, D., 2006. Varieties of Transparency. In: C. HOOD and D. HEALD, eds, Transparency: The key to better governance? London: Oxford University Press, pp. 25-43.

HEALD, D., 2003. Fiscal transparency: Concepts, measurements and UK practice. Public Administration, 81(4), pp. 723-759.

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HOLMSTRÖM, B., 1979. Moral hazard and observability. The Bell Journal of Economics, 10(1), pp. 74-91.

HOOD, C., 2011. From FOI world to WikiLeaks world: A new chapter in the transparency story?

Governance, 24(4), pp. 635-638.

HOOD, C., 2007. What happens when transparency meets blame-avoidance? Public Management Review, 9(2), pp. 191-210.

HOOD, C., 2006. Transparency in historical perspective. In: C. HOOD and D. HEALD, eds, London: Oxford University Press, pp. 3-24.

OTENYO, E.E. and LIND, N.S., 2006. Faces and phases of transparency reform in local government.

International Journal of Public Administration, 27(5), pp. 287-307 .

POLLITT, C., 2013. The logic of performance measurement.

Evaluation, 19(4), pp. 346-363.

ROBERTS, A., 2006. Dashed expectations: Governmental adaptation to transparency rules. In: C. HOOD, ed, Transparency: The key to better governance? London: Oxford University Press, pp. 107-126.

LAMBLE, S., 2002. Freedom of information, a Finnish clergyman’s gift to democracy. Freedom of Information Review, 97, pp. 2-8.

STIGLITZ, J.E., 2003. On liberty, the right to know, and public discourse: The role of transparency in public life. In: M.J. GIBNEY, ed, Global right: The Oxford Amnesty Lectures 1999. New York: Oxford University Press, pp. 115-156.

MOON, M.J., 2002. The evolution of e-government among municipalities: Rhetoric or reality? Public administration review, 62(4), pp. pp. 424-433.

STIRTON, L. and LODGE, M., 2001.

Transparency mechanisms: Building publicness into public services. Journal of Law & Society, 28(4), pp. 471.

MOORE, W.E. and TUMIN, M.M., 1949. Some social functions of ignorance. American Sociological Review, 14(6), pp. 787-795.

STRATHERN, M., 2000. The tyranny of transparency. British Educational Research Journal, 26(3), pp. 309-321.

O’NEILL, O., 2006. Transparency and the ethics of communication. In: C. HOOD and D. HEALD, eds, Transparency: The key to better governance? London: Oxford University Press, pp. 75-90.

SWARTZ, A., 2010. When is transparency useful? In: D. LATHROP and L. RUMA, eds, Open government: Collaboration, transparency, and participation in practice. Cambridge, MA: O’Reilly, pp. 267-272.

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Do E-Markets Dream of Cyber Lemons?

From Akerlof to C2C

Photographer - A Beautiful Day

Guiseppe Forte

[…] a problem as old as the markets themselves. It concerns how horse traders respond to the natural question: “if he wants to sell a horse, do I really want to buy it?” […]

George Akerlof 2003 In his seminal and, at the time, largely undervalued 1970 work The Market for “Lemons”: Quality Uncertainty and the Market Mechanism, George Akerlof proposed that markets were in large part affected by what he called asymmetric information, i.e. sellers have full information about the 22

goods they are selling, whereas such a level of information is costly and often unreachable for buyers. He illustrated this mechanism through the used automobiles market: a “lemon” is a car which becomes faulty only after some use, but is identical at first sight to a “plum”, a perfectly functional

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car. Akerlof comes to the conclusion that such a market, having only the disposable information of the average and particular price of cars and their look, would have to collapse. This is of course an extreme result, but it put asymmetric information at the centre of the economic debate as one of the most potent causes of market failures.

Sellers would in fact have an incentive in offering lemons (which sell at the same price of plums) and buyers, having to account for the risk of lemons, would only be willing to pay a price lower than that of plums. Plums sellers would be driven out of the market and no car would be sold anymore.

With the onset and progress of the Digital Age, the volume of information on the Internet exponentially increased along with the number of issues regarding asymmetric information (and consequently economists’ interest in it, e.g. Huston and Spencer (2002)).

Such asymmetry became an everyday aspect of life for most users: as the accessible markets multiply, so does the quantity of data transmitted and not transmitted. Is the good I am buying of the specified nature? Does the worker I am inviting for an interview have the experience that he claims to have?

Is the person I am chatting to really a woman, and is she as she describes herself? All of these concerns are rather recent, and they could have been considered unnecessary in the past decades, but each of them implies in-

formation being unevenly distributed among parties. This essay will consider the positive and negative differences among traditional and cyber markets and conclude that the latter do reduce the impact of some market inefficiencies but, at the status quo, do not solve the “lemons issue” and instead create conditions that worsen asymmetries.

One of the main positive aspects of internet markets is that they have, for most goods, annihilated buyer search costs, one of the main inefficiencies: in traditional markets it is actually costly (in terms of time and, often, intermediaries) for buyers to find the object they are looking for. Moreover, e-markets have significantly reduced the barriers to entry to the supply side, another market inefficiency that implies incorrect pricing of the goods: many firms could now be called such only pro forma, as they share very little with the traditional ones. Overall, ceteris paribus with respect to properties of goods, the Internet has reduced the power of sellers, who have traditionally had the upper hand in markets, and increased the weight of buyers (Bakos 1997). The weak point of this reasoning is that in the same way that not all cars in Akerlof ’s market are plums, the assumption of homogeneity in quality among goods we buy in person and those we buy on the Internet is, at best, wishful thinking. This essay does not intend to give cyber markets the image of a city of thieves, but these 23

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marketplaces tend to lack some basic reassurances of established trade, which implies higher risks for the acquirer.

Whether a lemon or a plum, the buyer in the used cars market can rest assured that the automobile he sees and wants will eventually be the one he drives, once he has paid for it. This identity is lacking in many major consumerto-consumer (C2C) and businessto-consumer (B2C) markets online: in fact there is no guarantee that the advertised object matches the acquired object, as the seller can exploit the fact that the buyer {has no assurance of the identity of the good} cannot make sure the product he intends to buy is the one he will receive. Online marketplaces have tried to close this knowledge gap by giving the sellers the possibility of including an image of the sold good so that the buyer is able to visually judge it, but this does not solve the issue and instead can give a false sense of reassurance to the buyer.

As long as monetary acquisition and physical reception of the good are nonconsequent, the seller can exchange the pictured plum with a lemon or, simply, use an image that does not represent the item: the buyer has to face a “leap of faith”, trusting the seller over the consistency of the sold good and its description. Thus, the possibility of incurring in a lemon is higher than it would be in traditional marketplaces.

Another problem is that market regu24

lators have, with time, learnt to implement directives in order to remove from trade those sellers who abuse their counterpart’s lack of knowledge or more generally transgress the rules, mostly by banning them from engaging in trade activity. At the basis of this exclusion lies an ability that is trivial in physical markets, the capacity to discern among sellers, due to each one of them having a revealed identity. In other words, traditional market participants are known by name, whether they are a firm, a company or a human: they have a past and a reputation, they are distinguishable from other participants in the market, and they do not have the possibility to change their credentials to create a new identity.

This “constant” personality, basically granted in traditional markets, is not to be overlooked in cyber markets.

Most current platforms have no way of banning a seller who infringes upon

“An image does not represent the item: the buyer has to face a “leap of faith”, trusting the seller” the conditions of the market, as he will always have the possibility of entering the market using another virtual personality. Therefore the most traditional tool used to clear the market of lemons, i.e. ostracizing lemon sellers, becomes powerless in most instances.

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What is more, lack of exclusion power implies shortcomings for any feedback system, because negative feedback cannot impact a user who changes identity in cases of receiving negative ratings from buyers. The same problem applies to buyers, even though it is generally less relevant due to their mainly passive role and interest in the positive conclusion of the transaction: they have an incentive to appear trustworthy, and such aspect will mainly rely on a positive feedback history.

The outlined issues, dubious identity of item traded and traders, underline the increasing necessity of a role that many commentators have claimed would disappear with the rise of the Internet: the intermediary. Not a traditional third-party intermediary, whose role is to impersonate the customer in the search of a seller or buyer, since search costs are already low in online markets, but an intermediary who can guarantee the truthfulness of intentions and identity of both parties.

This is not a new idea (similar research was led by Bakos and Bailey (1997)) but such entities are still struggling to be employed by most sites, with a reluctance that can be easily explained by the high number of users already online as well as the high costs and problems of implementation. As of now, some sites give the possibility of becoming a ‘verified member’: the user can then show his commitment by paying the marketplace owner,

who will then guarantee his reliability to buyers, in a clearly inefficient

“E-commerce (in particular consumer-to-consumer trade) is greatly flawed, suffering from the great freedom of cyber-indentity and the failure to ostracise abusers (as would be done in a traditional market).” distribution of uncertainty costs. This solution in fact puts the weight of uncertainty (caused by lemon sellers) over rightful sellers’ shoulders, thus discouraging them to enter the market through an expense that in any case does not eliminate the lemons issue.

It has been shown that e-markets demonstrate a number of improvements on traditional markets, as they tend to eliminate the material costs of search and monopolistic pricing linked to barriers to entry and higher market power. They are, anyway, far from being better than their physical counterpart in absolute terms: e-commerce (in particular consumer-to-consumer trade) is greatly flawed, suffering from the great freedom of cyber-identity and the failure to ostracise abusers (as would be done in a traditional market). Referring back to the famous 25

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Akerlof example, many internet marketplaces are automobile markets with faceless sellers and hardly identifiable cars. Those who think that the general increase in information flow of the Digital Era will cause lemon markets to disappear are unable to distinguish, to quote the title of a recent book

by Nate Silver, ‘The Signal and the Noise’, and they should realise that any amount of truthful information will be associated with a great amount of incorrect (either casually or voluntarily, as in our case) information. Whether or not e-commerce can improve will largely depend on the efforts and resources put by cyber markets into the refinement of an intermediary system that allows the verification of the trade parties’ intentions: such instrument will hardly come at a low price, and it might take a long time before it is finalised. If such intermediary is created, perhaps market surpluses will shift back to where they should be: with the sellers, who at the moment, due the existence of lemon sellers, are only to claim lower market prices, and buyers, who currently reduce their willingness to spend as they take into account the possibility of a fraud seller.

This redistribution might happen, but the status quo electronic markets are not the hero that lemon markets need.

Guiseppe Forte is currently a student at the University of York

26

References Akerlof, G. (1970). The Market for “Lemons”: Quality Uncertainty and the Market Mechanism, The Quarterly Journal of Economics 84(3), pp. 488500 Akerlof, G. (2003). Writing “The Market for ‘Lemons’”: A Personal and Interpretive essay [Online] The Official Web Site of the Nobel Prize. Available at http://www.nobelprize.org/ nobel_prizes/economic-sciences/laureates/2001/akerlof-article.html [Accessed 21 October 2014] Bakos, Y. (1997). Reducing Buyer Search Costs: Implications for Electronic Marketplaces, Management Science, 43(12).

Bailey, J. and Bakos, Y. (1997). An Exploratory Study of the Emerging Role of Electronic Intermediaries, International Journal of Electronic Commerce, 1(3).

Huston J. and Spencer, R. (2002).

Quality, Uncertainty and the Internet: The Market for Cyber Lemons, The American Economist, 46(1).

Pan Y. (2007). Internet Consumer’s Behaviour Under the Cyber ‘Lemon’: The case from internet markets in China, Proceedings from the 51st annual meeting of the ISS. [Online]. Available at: http://journals.isss.org/index.php/proceedings51st/article/viewFile/689/266

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[Accessed 21 October 2014] Stigler, G. (1962). Information in the Labor Market, Journal of Political Economy, 70(5), pp.94-105

archives/papers/Yamagishi_ASQ1.pdf [Accessed 21 October 2014]

Stiglitz, J. (1989). Imperfect Information in the Product Market, Handbook of Industrial Organization, Volume I, pp. 771-807.

Yamagishi, T. and Matsuda, M. (2002). Improving the lemons market with a Reputation System: an experimental study of internet auctioning, [Online] Available at: http://joi.ito.com/

Thank you for reading. You can expect the next issue in the beginning of Term Three.

With a special thanks to our sponsors: Dan Iley-Williamson Haydn Cornish-Jenkins Jason Smith Raphael Reuben Lao K Matteo De Martino

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