Insights

Who will watch the watchmen?


By Peter Davey
November 7, 2019
11min read
man with magnifying glass

man with magnifying glassIn all systems of governance, political, social and commercial, accountability is a key principle.  In the corporate governance arena it has been seen as a key check on the agency problem.  Accountability in the context of governance can be defined as answerability and enforcement.  So, in a corporate context, the directors are answerable to the shareholders for their decisions, and the shareholders have the power to remove directors if they so wish.  Equally in the political world, politicians should be answerable to the voters and the voters can remove them on election.  In an analogue world where legal and regulatory systems are properly developed, accountability and governance while at times problematic, have tended to run on fairly simple rules with one regulated environment partnering with other regulated environments towards common social goals.  The introduction of so-called “disruptive” technologies has arguably broken many of the analogue rules, creating  both a moral and regulatory maze that many people seem unable to navigate as smoothly as was once possible.

In order to understand this change, it’s important to understand the disruptive nature of new technologies. The disrupters have, simply put, built success by avoiding the normal regulatory environment of the industry they disrupt, moving so fast that the checks and balances have been left behind.  So Uber started by offering unlicensed and under-insured drivers to capture the market of legitimate taxi operators.  Facebook publishes written material and broadcasts adverts to more people than any newspaper or TV channel in the world,  but is not required to follow the rules and regulations of either of those industries.  And Amazon pays no business rates for high street shop front it does not use, nor the traditional premium paid to shop workers.  So, the commercial success of these disruptive companies is driven by blurring and thus reducing or negating the costs of compliance and tax, over and above anything clever or big from a technical point of view.  This is encouraged by the false belief that as soon as we move from analogue to digital the checks and balances of a civil society are up for grabs.  This belief is most obvious in the type of online abuse that we have seen rise to epidemic proportions where keyboard warriors make threats and pronouncements that they would never utter in the real world, safe in the belief that no action will be taken.  Likewise, in the world of politics, social media advertising is no longer expected to be in anyway honest or factual, but merely to play to the baser instincts and hot buttons of the anticipated and targeted audience, safely tucked away in their filter bubbles.

politicians agency problem

Trump, Boris Johnson e Bolsonaro

However, to go back to the agency problem, what is the incentive for the new disrupters of politics, the Johnsons , Farages, Trumps and Bolsonaros of this world to regulate industries that allow them to dishonestly influence the voter and protect them from the consequences of lies previously told.  Two of these political disrupters are already in a fight to the death to divert attention or simply ignore reports on the influence of Russia in recent elections in UK and USA. Nothing to see here, or it was the democrats honest is how these matters are currently approached.

Ultimately government is responsible for regulation of the commercial space, a role they took over from the church in the 1300s.  The difficulties we are currently facing in terms of governance are the political version of the agency problem, don’t expect politicians to do anything that is not in their own best and selfish interest.  It is interesting to note that our own government has not effective regulated for the misuse of social media either in Ireland, or indeed the rest of the world, since electoral disruption is becoming a growth industry and Ireland would hate to lose competitive advantage in a growing new market.  It comes down that 2000-year-old governance conundrum. ‘Quis custodiet ipsos custodes?’


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