Using Tranparency to Regulate in the Age of Technology: A Case Study of the Childcare Business in Kent County, Michigan

SPNA Review Volume 5 | Issue 1 Article 5 1-1-2009 Using Tranparency to Regulate in the Age of Technology: A Case Study of the Childcare Business in Kent County, Michigan Susan Toman Follow this and additional works at: http://scholarworks.gvsu.edu/spnareview Recommended Citation Toman, Susan (2009) "Using Tranparency to Regulate in the Age of Technology: A Case Study of the Childcare Business in Kent County, Michigan," SPNA Review: Vol. 5: Iss. 1, Article 5. Available at: http://scholarworks.gvsu.edu/spnareview/vol5/iss1/5 Copyright ©2009 by the authors. SPNA Review is reproduced electronically by ScholarWorks@GVSU. http://scholarworks.gvsu.edu/ spnareview?utm_source=scholarworks.gvsu.edu%2Fspnareview%2Fvol5%2Fiss1%2F5&utm_medium=PDF&utm_campaign=PDFCoverPages Toman/Using Transparency in the Age of Technology USING TRANSPARENCY TO REGULATE IN THE AGE OF TECHNOLOGY: A Case Study of the Childcare Business in Kent County, Michigan Susan Toman Grand Valley State University In the shadow of a mountain of scandalous behavior exhibited by both government and business, it is easy to lose trust that any regulatory method can be effective. Transparency holds promise as a means to hold business and government accountable; particularly when both mandatory and voluntary disclosure are driven and shaped by their intended audience: Consumer/customer, employee, supplier, regulator or investor. With the beginning of the Obama Presidency, there is hope for increased governmental legislation and support for disclosure in all sectors (Obama, 2008). Transparency first was a term adopted by the business community to “describe the obligation to disclose basic financial information…” (Tapscott, 2005). Transparency has strong supporters regarding financial information. The Sarbanes-Oxley Act of 2002 was enacted to increase transparency in corporations. High-level officials in the financial market support transparency. SEC chairman Christopher Cox has proposed a requirement that companies disclose the pay of all highly compensated employees, including nonexecutives. “I have a feeling that when people are forced to undress in public, they’ll pay more attention to their figures” (Krunacher, 2006). Transparency has come to encompass far more than financial disclosure. “People and institutions that interact with firms are gaining unprecedented access to all sorts of information about corporate behavior, operations and performance…The corporation is becoming naked” (Tapscott, 2005). The internet provides a new tool for transparency involving the potential for dialog between government and business and their various constituencies. Transparency could become a two-way street in which public services are responsive to service users as well as answerable to them” (Stirton, Lodge 2001). Transparency can give the public the ability to watch what is truly happening in government, in business, in schools, and all the places in which there is a vested public interest. It can act as a stimulus for good behavior. As Jeremy Bentham said, “The more strictly we are watched, the better we behave.” (The Bentham Project, 2007) THE FRAMEWORK FOR TRANSPARENCY For transparency to truly work both as an informer for decision-making and as a watchdog over behavior, an infrastructure for transparency must be built. Although this concept may seem a bit foreign and also a bit impossible to implement, it is possible. Ten years ago, there was no talk of an information highway, but now such a highway exists. The information highway was not built overnight. It was not built by one entity or group, nor was it built according to a prescribed plan. The best description of how it came to be would be to say that it evolved. Just as the information highway evolved, it is possible for an infrastructure of transparency to evolve. The base of such an infrastructure would involve setting appropriate goals and reporting requirements and standards for various businesses and public services. The goals would need to be set in an atmosphere of neutrality, with the assistance of experts in each field, and with representation by the various stakeholders including advocacy groups and consumers. In general, those forming the infrastructure must include a balanced representation of the stakeholders. The group will need to recognize that none of the single represented parties will be able to get all their goals into the specifications for that service or all the reporting requirements they may want. There will need to be in this group a willingness to consider “tradeoffs and reach consensus on sacrifices as well as aspirations” (Sage, 1999). At times, the group will need to ‘vote’ to allow experts in the field to make the final decision as an acknowledgement of the complexity of the world in which we live. The negotiation of the goals and reporting requirements and standards must take place practicing transparency with clear reports in the media. There must be a mechanism that provides the public with a genuine opportunity to voice their opinions. “In Madison’s phrase, ‘Knowledge will forever govern ignorance; And a people who mean to be their own Governors, must arm themselves with the power which knowledge gives’” (As quoted by Sage, 1999). Setting an infrastructure for mandatory and voluntary transparency standards with civic and business involvement makes increasing sense in a market-state world. “Just as markets fail from lack of information, so too can societies. Mandatory disclosure laws have a role in bringing difficult decisions into the open and providing the deliberative process with the information needed to resolve them. In a representative democracy, citizens often insist that the deliberations that affect them be conducted in public view” (Sage, 1999). 28 Toman/Using Technology as a Regulator Transparency-Distinct Information for Different Groups Voluntary and mandatory disclosure of information must be provided in different ways to different groups in order to be meaningful and useful. For example, a consumer seeking to make a sound purchasing decision needs a certain set of information. A prospective employee evaluating whether a company is a good fit for him to seek employment with needs a different set of information. Community members interested in the environmental impact companies in their community are having also need a different information set. For a transparency infrastructure to work there needs to be acknowledgement of the different information needs of different groups. For example, there would be different information reporting requirements and standards for consumers, for regulators, for stockholders, and for employees. The following chart illustrates what such various disclosure standards might look like for these various groups: Table 1: Disclosure Standards Group Consumers/ Public Information Provided Safety of product Environmental Impact Statement Cost per unit Where manufactured Average Lifespan o (...truncated)