It’s a big claim isn’t it?

That’s not least because the challenge that the market for secrecy creates is to the credibility of markets as a whole. The simple fact is that secrecy undermines every single component of market theory and practice and the suggestion that they can provide a powerful contribution to human well-being.

Strong words. However, a casual look at the world around us will show that this isn’t true. Those places which have been largely market based for a few decades or centuries are rich as sin these days. Those places which have not been largely market based for a few decades or centuries are still stuck in peasant destitution. Secrecy seems to have very little to do with it.

With secrecy there is an unlevel playing field, which makes fair competition impossible. With secrecy free riding will always happen. With secrecy abuse is inevitable. With secrecy trust will always be eroded. With secrecy cheating will be the norm. With secrecy no market will have the information it needs to allocate resources efficiently to ensure that well-being is maximised. In fact, secrecy is a bigger threat to markets than communism ever was because it has the power to destroy markets from within. To describe secrecy as the cancer of the free market is to understate its significance.

The UK is about to become worse than the Soviet Union because you don’t know how much tax David Cameron’s Dad paid.

Hmm.

46 thoughts on “It’s a big claim isn’t it?”

  1. secrecy is a bigger threat to markets than communism ever was

    Literally hysterical. Absurd even by his interstellar standards.

  2. City University = Chumps

    Seriously, secrecy undermines the market mechanism? On what planet is this moron on? Secrecy makes a perfectly competitive market impossible = yes (under certain assumptions), but that hardly undermines the market.

  3. So Much For Subtlety

    With secrecy cheating will be the norm.

    That is interesting. Any single one of us could cheat on our wives or whatever. I am going to assume none of us do. It does not follow that secrecy mandates cheating.

    The question is why we pay tax. We mostly do so because we believe in the system. We believe that our money is necessary. We believe it will be spent well. We believe that we get value for money.

    As these irrational beliefs come under pressure caused by real world experience, we become less willing to pay tax. Ultimately we cannot be forced to do so. If not these tax jurisdictions then some other. If not this way of avoiding payment, we will find some other. The solution is to restore public trust. Don’t take more than the minimum needed. Make sure it is spent well. Make sure it is used efficiently and without waste.

    The world’s governments do poorly on these measures. Avoiding tax is only sensible.

  4. ken

    yes there are people out there who either

    1. run an economics department, cannot see him for what he is

    or

    2. run an economics department, can see him for what it is, consider his celebrity value more important

    which is worse?

  5. The issue of secrecy is easily overcome by requiring disclosures of interests when it comes to making deals – so that if things are not disclosed when they were supposed to legal action can be taken, compensation acquired, deals rendered void, etc.

    There is no need to know *everything*, only what is necessary and appropriate. And the ones who get to decide what is necessary and appropriate are the ones doing the trading.

    From the quotes:

    With secrecy no market will have the information it needs to allocate resources efficiently to ensure that well-being is maximised.

    Markets do not allocate resources efficiently. All they do is allocate resources more efficiently than the alternatives. I wish these kinds of people would also stop seeing the economy as one big lump which requires state direction when it is merely an aggregate of many individual decisions.

  6. Does anyone intelligent actually care what someone’s father did?
    Pretty sure most fathers aren’t controlled by their children.

  7. The whole Panama caper is a crock of crap.

    No sympathy however for Mr Pig-Fuck, BluLabour’s Golden Boy. His puke of a father-in-law has done nothing illegal. Merely increase his wealth by cashing in on opportunities to plunder stolen money sent his way by middle-class Marxism and eco-freakery. And then putting the cash off-shore. I don’t blame him for the latter but the former marks him as a twat but not a “legal” crim.

    Glad however to see Camoron in more trouble. He and his gang have been happy to stand with the scum of the left and talk about paying fair shares. It is good to see his sanctimony hoist him with his own petard. He could have stood up and said “tax is theft/bad –let there be as little as possible” He didn’t and now his own state-sucking is turned on him.

    His brand is now so degraded that his continued support for the EU will be a liability to his tinpot tyrannical buddies in Belgium.

  8. Luis

    To be fair to City’s economists, his affiliation is political economy – and I once went to a “political economy” session in a politics conference and it was pretty pathetic. Otoh, even in that pathetic context, Ritchie qualifies as a grade A moron.

  9. From the comments on this thread by A Dickie

    ‘That being so, I would welcome a revolution in the UK, but a Czechoslovak style “velvet revolution” demonstrating to our corrupt Westminster bubble, by force of peaceful dissent, that their time is up, and that Cameron should go to the Palace, offer his resignation, and advise the Queen to summon a trusted MO to from a Constituent Assembly style Government, to shape REAL reforms to offer to the people.

    Were he still alive, I would have suggested Michael Meacher for the rokr. As he isn’t, I would propose Caroline Lucas.’

    Ritchie agrees of course – a true democrat.

  10. Wonderfully mendacious conflation of secrecy and privacy there.

    Secrecy is when you don’t want a third party to know what you are doing because you shouldn’t be doing it.

    Privacy is when it’s none of their business.

    The reason he confuses the two? Because he thinks everything is the business of the state. How very Stasi.

  11. Secrecy is when you don’t want a third party to know what you are doing because you shouldn’t be doing it.

    No, because the third party may react differently (and possibly to your disadvantage) if they know what you know.

    Consider getting a number of quotes to purchase a slack handful of widgets.

    You want to keep the quotes you have secret from the other potential suppliers, at least until their first quote is in.

    You aren’t doing anything wrong but it is not really privacy.

    And you might*, if you like a supplier for another reason (they’re a mate, they’re an existing supplier, they’re just down the road, their Ts&Cs are a bit more flexible – all potentially valid), relax some of the secrecy at that point and tell them, say, that Big Widgets Inc are 10% cheaper, and see if they’ll match it.

    * If you are operating under a govt or very big organisation purchasing policy, you might now be doing something wrong …

  12. Every schoolboy knows there is a theory that ideal markets rely on transparency, many even realise this refers only to relevant matters and also excludes important and wide ranging real world dynamics such as blackmail and customer laziness.

    Clearly not all school boys grow up.

  13. Amazing drivel. He’s clearly only worried about tax revenue, which is not what we have markets for. In fact, isn’t it pretty much a given that the most efficient system for production will decimate tax revenue from same? Profits will be competed away, turnover taxes will be avoided where at all possible to lower costs.

  14. Bloke no Longer in Austria

    S Evil

    Many years ago there was Private Eye cartoon with a man from Coiuncil Planning Dept on the phone:

    “I’m sorry old boy, but you know the rules. All bribes must be received in a sealed envelope by noon on the deadline date..”

  15. Presumably he’s acquired his vast understandin of markets at the Sunday Farmers Market in Bures.

  16. “With secrecy there is an unlevel playing field, which makes fair competition impossible. ”

    Amazing. My own division has no published rates, and I would certainly be fired if I divulged pricing information and got caught.

    Competition between us and our competitors remains fair though, because we’re all operating in the same way.

    Truly amazing.

  17. Mind you, until yesterday I didn’t know that Guernsey and Jersey were part of the UK, or that the UK was founded around the year 1200.

    Educational.

  18. Max

    That’s extremely amusing from Dickie, who is quite comfortable with mass murder assuming the victims deserve it on the grounds of class.. Indeed the post features three of the ‘big four’ advocates of mass murder who regularly post supine and deeply horrific comments on the posts, all hat tipping Murphy for his deeply sinister viewpoint – for him 1979 is apparently quite literally, ‘Year Zero’ – everything that has taken place since then is bad – everything that happened before then is good. It’s such a fundamentally idiotic way of looking at history it’s hard to believe anyone would give it credence, until you read the comments – and the even more scary one from ‘Miles’:

    ‘Please do not exhaust yourself though – you are needed by society for the long term’

    Needed as what – a boogeyman to frighten small children? The mind boggles…..

  19. “The UK is about to become worse than the Soviet Union because you don’t know how much tax David Cameron’s Dad paid.

    Hmm.”

    LOL! Collapse of stout party!

  20. Ken and Luis,

    I’ve always assumed he got the job at City because he publishes with several of the staff in international politics, adding him boosts the Research Excellence submission. Yes, his professorship is in the International Politics department not economics. It probably also helps that that IP group is full of Corbynites too. But it does make it very hard to admit I work there.

  21. “In fact, isn’t it pretty much a given that the most efficient system for production will decimate tax revenue from same? Profits will be competed away, turnover taxes will be avoided where at all possible to lower costs.”

    In the short term. In the longer term new investment goes to where there is a profit and the industry collapses.

    Now to find a way to articulate my inability to follow many of the other comments.

  22. Bah…I didn’t find the original article quickly and I’m upping his view count trying.

    Wouldn’t one expect secrecy to be involved in any corruption despite the government type?

    I would think that Dear Leader and elected asshat would both use similar types of methods within the local system to collect their baksheesh. The names might change but the underlying problem should be expected in any government type. Surely no one is saying that the relatively modern capitalism versus communism debate changes basic human tendencies that have been apparent for thousands of years.

  23. Of course Ritchie’s muddleheadedly wrong here, but I’ve pointed out before that it’s quite hard to make a case for the merits of business confidentiality: if we’re focusing on the interests of consumers rather than producers, there’s something to be said for making every piece of _business_ data public.

    To take SE’s example of contract bids above, secrecy certainly helps the bidders to manipulate their customers into paying higher prices, but it’s hard to see how it benefits the customers.

  24. So Murph is now saying that Switzerland, which I always thought ranked quite highly on the nice places to live and work in scales, is a dysfunctional basket-case? That’s quite a claim to make. According to Wiki

    Switzerland ranks at or near the top globally in several metrics of national performance, including government transparency, civil liberties, quality of life, economic competitiveness, and human development.

  25. Diogenes>

    Switzerland is a total shithole for anyone who’s not a rather racist rich white man. I doubt that has anything to do with secrecy, though – rather more to do with the Swiss being a nation of hillbillies.

  26. What a well-reasoned response, Dave. Perhaps I should also point out that in your previous comment you seemed to believe that suppliers, consumers and suppliers are the same . Perhaps you would be more at home on Murph’s blog.

  27. Diogenes>

    You’re right, I can’t tell the difference between suppliers and suppliers. Is there one in your head?

    I really don’t know what’s contentious about the idea that the Swiss are a nation of hillbillies. You do know the country’s full of mountains, right? And that they have just about the lowest urban population of any developed nation? You just need to leave Zurich or Geneva and drive a few minutes to be somewhere the dialect is unintelligible and everyone has three noses.

  28. Anon

    I cant believe that he would boost the RAE submission. He doesnt publish peer reviewed research and while he claims to have impact, no academic is going to give it any credence. I assumed that he got the job because he has mates there and he begged, and they are too stupid not to back him. Otoh, universities can afford to employ cretins like the idiot women at SOAS talking about cultural appropriation.

  29. Dave,

    To take SE’s example of contract bids above, secrecy certainly helps the bidders to manipulate their customers into paying higher prices, but it’s hard to see how it benefits the customers.

    You didn’t understand my example in the slightest, did you?

  30. I would say it was auto correct and the perils of not proof reading. Customers, suppliers and consumers, all mixed up by the massively xenophobic Dave. Truly worthy of someone who should be worshipping the great Murphy. And the Swiss, one of the richest nations on the planet, are hillbillies. Great insight, Dave. Would you like to do a casting film for me?

  31. Bloke in Costa Rica

    I suppose Dave (and, by extension, Murphy) is agin the Chinese Wall that is a necessary construct, both legally and ethically, if two elements of a large organisation are handling different sides of a complex merger, for example.

  32. Bloke in North Dorset

    Jack C

    “With secrecy there is an unlevel playing field, which makes fair competition impossible. ”

    Amazing. My own division has no published rates, and I would certainly be fired if I divulged pricing information and got caught.

    Competition between us and our competitors remains fair though, because we’re all operating in the same way.

    In my consulting days I saw the prices that my clients paid to buy equipment from different multinational companies. Each client got their own deals and they were sworn to secrecy on what they had paid. As a consultant we had even more NDA to sign.

    Each was a willing buyer so why do they need to know what their competitors paid for the same equipment or services, or even what someone in another country paid?

    The only time we need real transparency is when it is Governments handing over our cash, and in the EU there is a very clear process that ensures transparency whilst at the same time protecting commercial interests.

  33. Bicr, it seems obvious to me that, as a buyer, I don’t want my suppliers to know about competing tenders. And the same thing goes for the end consumer, who picks according to value. Is Dave the person who sees Joos everywhere? Is that why he is so anti Swiss for no adequately explained or intelligible or factually correct reason?

  34. Ken,

    This was a common occurrence in the last REF, get in some “names” on small contracts. As you can imagine it turned into jobs for your mates. Then if you do get into a top journal the university can take credit for all the authors. Actual impact of the work being low on the list of things that matter. I mean they couldn’t have given him a job for the prestige of association or for his people skills.

  35. I’m not sure I agree with you here Tim. Secrecy includes, for example, not having to reveal the contents of your tax return. So if you’re a blogger specialising in screaming about tax abuse, but your access to grants is by way of creating a ‘partnership’ that doesn’t reflect the commerical reality so as to be able to say “I’m not a sole trader” causes others to question your tax affairs, well then Secrecy allows you to keep your return tucked away nice ‘n’ cozy.

  36. And Secrecy allows you to decry Secrecy everywhere whilst all the whole making sure nobody ever knows what you yourself are up to.

    It’s win-win this hypocrisy, sorry, Secrecy lark.

  37. “Would you be proud of your dad if he’d run a business based in a tax haven?” asks Ritchie. He could ask his own kids.

  38. BICR>

    Why would you have a Chinese wall if nothing about the deal is confidential?

    Rocco>

    “it seems obvious to me that, as a buyer, I don’t want my suppliers to know about competing tenders”

    Why on earth would you think so? Suppliers are going to bid each other down to the bottom, if prices are public. What possible benefit is there to you in having less competition for your business?

    And by the by, I’m not anti-Swiss. I merely observed that it’s a rather racist country full of hillbillies – and anyone who’s been out of the cities there is well aware of that.

    http://www.tractorpulling.ch/de/

    It is, after all, a country famed for it’s Alpine farms. Farmers, up in the hills, extremely isolated from the outside world? Yes, those are the conditions that create hillbillies.

  39. When I was living and working in Hong Kong I had a bank account in the UK into which I sent money to pay my mortgage. Oh noes! I was syphoning money out of the HK economy!

  40. Theo
    Bures is indeed a considerable distance from Downham Market. But for a man who demonstrably cannot find his own arse with a roadmap, popping over there with the intent of shopping close to home should present no particular problem.

  41. Suppliers are going to bid each other down to the bottom, if prices are public.

    For a good or service where that will work, you hold an auction. Where multiple elements are relevant (T&Cs, delivery time, work methodology, etc, etc), public knowledge allows them to ratchet up. As well, it reduces their incentive to provide truly clever thinking, since their innovative approach can just be adopted by competitors.

  42. Noel

    Ritchie’s affairs are structured to help him trouser money to which he has no right. He makes a rod for his own back asking that question.

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