“Sunlight is the best disinfectant”

The quote is from Louis Brandeis, Justice of the Supreme Court.

Exposing the murky corners of business will always be difficult, but transparency remains the best tool to remove the dodgy deals, and the less honest executives will always go to extremes to conceal their activities. Enron was brought down by off-balance-sheet transactions: transactions deliberately designed to conceal from trustees, regulators and the market the extent of the risk to which shareholders were exposed. Their lawyers and accountants connived to make the deception as lawful as they could, but it remained a concealment. So regulation strives to shine a light into those awkward corners, but it is a cumbersome lamp and there is a large body of professionals dedicated to dimming its flame and to diverting its glare.

Yet we already have, in the connectivity of modern technology, a universal torch that we the people could use to expose wrongdoing. More importantly, we should recognise that the Enrons are not the majority. The majority of business executives are not venal or corrupt, but hard-working and honest, whose rewards match their contribution to our wealth, and whose integrity is beyond reproach. Their reputation and integrity is threatened by the high-profile failures of the few, and as the economy goes from boom to bust, and back and back to bust again, there will be more high-profile failures and more venal and incompetent executives will be exposed, damaging trust in commerce and in capitalism. This erosion of trust is bad for capitalism, bad for the economy and bad for us.

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