Financial Crises a Blueprint for Future Privacy Crises?


I am reading a book on corporate governance and was struck by three passages. 

The first:

“The system essentially consisted of a self-regulating cohort of knowledgeable insiders that was based on the old doctrine of caveat emptor. The government’s role was largely one of establishing fiduciary and property laws. What derailed the system in the 1920s turned out to be a fantastic stock market bubble, in the course of which risking share prices drew thousands of unsophisticated investors into the market, where, in search of quick and sure profits, they could be relied upon to make unwise and ill-informed investment decisions. Under such circumstances, there were plenty of opportunities for them to suffer serious losses, often promoted by people and firms who were well entrenched in the inner circle of the time.”

The second: 

“Financial market regulation at the time was based on a simple concept of accountability for full disclosure of material information, together with “fair” trading practices, with the intent of protecting unsophisticated investors who were inadequately prepared to look after themselves.”

The third:
“The SEC believed that transparency would be the best approach to fair and efficient markets, and by insisting on full, accurate, and timely disclosure of large quantities of information, the market players could check and balance themselves.”
I am struck by how investors rush into purchasing products without giving much thought to how those products might play out in the further. Today, consumers willing give away their information for the new shiny gadget or app, but do not understand the implications. Today, the FTC insists on transparency much like the SEC of yesteryear. It didn’t work then and it doesn’t work now. 
Bad decisions, bad actors, inexplicable business models and unintelligible disclosure- does that sound familiar? Notice and choice didn’t work then and it doesn’t work now. 

One thought on “Financial Crises a Blueprint for Future Privacy Crises?

  1. It is rational ignorance at play. Generally, we do ok by not delving into details but making hunches and basing our actions on others (herd mentality) or external clues. It works for us most of the time but occasionally it fails……and fails big.

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