Setting the Boundaries of Transparency
Today's national movement for transparency seeks to put government spending details on the Internet in an easily searchable format. This idea dates back at least to President Thomas Jefferson, who said public expenditures should become "as clear and intelligible as a merchant's books," allowing "any man of any mind" to "comprehend them, to investigate abuses and consequently to control them." But in an era when technology puts this vision within our grasp, the current popularity of the concept leaves it vulnerable to thievery by those with agendas antithetical to its goal.
Jefferson never meant to imply that the private finances of ordinary Americans and groups of Americans — those "merchant's books" — should be subjected to the same level of public exposure, but there are those who would advocate for that very result. Transparency should never be defined as a "right" of the government to provide private individuals, businesses and organizations access to the financial records of rivals and enemies. Understanding this distinction means more than just advancing the legitimate Jeffersonian goals of transparency; it means respecting individual liberty itself.
In the 1958 U.S. Supreme Court decision NAACP v. Alabama, the Court ruled that the civil rights organization had a right to protect the identities of its donors and members from the prying eyes of the state of Alabama. The NAACP had recently endorsed the successful 1955 Montgomery city bus boycott and provided legal help to African-American students who were seeking to defy segregation at state universities. In response, the state attempted to impede the NAACP's work by demanding the list of names of Alabama residents who were NAACP members. The assumption being that this would coerce NAACP supporters into keeping their money in their pockets because they would fear segregation-supporting neighbors who might impose economic sanctions — or more violent alternatives — against anyone whose name appeared on that list.
The Court ruled that this was an assault on both free speech and the right of assembly, using a gruesome historical analogy that compared "compelled disclosure of membership in an organization engaged in advocacy of particular beliefs" to "a requirement that adherents of particular religious faiths or political parties wear identifying arm-bands." The ruling further identified "inviolability of privacy in group association" as often being "indispensable" to preserving freedom of association, particularly "where a group espouses dissident beliefs."
Thus, while Jeffersonian transparency seeks to empower private individuals and groups to expose government abuses, forcing those private actors to reveal the names of their financial supporters instead empowers government to embarrass and intimidate its nosy critics — a result that would bring about less transparency, rather than more.
Modern examples of concern are easy to come by. Among the allegations against Illinois Gov. Rod Blagojevich is the assertion that he attempted to bribe the Chicago Tribune with public funds, demanding in return an end to critical press scrutiny of his behavior. If it is true that the governor and those like him would so abuse the existing power over the public purse to silence such an established and mainstream watchdog as a major newspaper, then to what end would he go if given the additional power to expose the donors of a more vulnerable critic that relies entirely on private donations for support, such as a think tank or a civil liberties group? Similarly, what could disgraced Detroit Mayor Kwame Kilpatrick have done with such weaponry?
At best, forcing public exposure of voluntary, private, charitable giving in the name of "transparency" would create useless voyeurism. At worst, it would be a major abuse of political power waiting to happen.
Who should have a right and need to know about the inner workings of a private organization? Already, charitable organizations such as churches, think tanks, civil rights organizations and the like must file an annual IRS 990 form revealing a variety of aggregated details about both their expenditures and operations. These forms are public documents. Upon request, anyone can obtain a copy and learn how much the group spends on the compensation of key staff persons (who must be named and itemized in the 990), travel, fundraising, legal costs, rent, assets, investments and much more.
Aside from maintaining compliance with the Internal Revenue Code, the thoroughness of the data required by these forms allows many charitable organizations to use them as fundraising tools, literally demonstrating to a prospective contributor how the dollars are spent. A private donor voluntarily giving to a private cause such as this knows who has his money and approves of how it is being used. Otherwise, he would presumably cease giving or ask for more information before doing so. An acceptable level of transparency in the transaction is implied by the donor's willingness to give — it is a consensual relationship that is the business of only the two parties agreeing to it.
In contrast, there is nothing voluntary or private when that same "donor" is taxed. He has no right to expect that the money will be spent as he would prefer; his only remaining right is that of being assured that his funds are being spent as judiciously as possible and within the letter of the law. Unlike the private transaction outlined above, there is no theoretical limit to the standard of transparency that should be demanded of government. The "full Jefferson" should apply: Within reason and the bounds of existing technology, the taxpayer has every right to a detailed and itemized accounting for every nickel.
The spending from the "merchant's books" is the merchant's after-tax money and thus has the merchant himself to carefully look after it: Private money is privately watched, just as it should be in a free society. Jefferson's transparency vision is concerned instead with giving that merchant a better and well-deserved look into what happens to the rest of his money, and that is where his latter-day champions should keep their transparency noses pointed.
Kenneth M. Braun is a policy analyst specializing in fiscal and budgetary issues at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.