Paul Pillar

Shining a Light on the Private Sector

The Washington Post has a sensible editorial about a case the Supreme Court is hearing this week concerning application of the Freedom of Information Act (FOIA), the statutory basis for orderly (i.e., not leaked) release of information held by the federal government. The case involves a claim that corporations should be considered “persons” for purposes of exempting—as the statute provides—from disclosure under FOIA information that would be a breach of “personal privacy”. The case was brought by AT&T, which seeks to prevent release of information that was uncovered in a federal investigation and is the subject of a FOIA request submitted by a trade association that includes AT&T's competitors. The Post argues that for the court to stretch the personal privacy provision to cover corporations (beyond trade secrets and other proprietary business information, which the law already explicitly exempts from disclosure) would be as big a mistake as the court's determination last year that unlimited corporate campaign contributions are to be considered a personal exercise of free speech.

If the Supreme Court were to make that mistake—and encouragingly, in oral arguments on Wednesday it seemed to be leaning against doing so—it would confirm its deference to corporate America that it demonstrated in the earlier campaign contributions case. But there is something else also going on in the FOIA matter—something that involves greatly different, and illogically different, American attitudes toward the public and private sectors regarding the holding and disclosing of information. As for the government, the American public insists, first of all, that it be made as open as possible. Americans don't like secret governmental institutions. That's the whole idea behind the FOIA, which presumes that information ought to be released unless a specific case can be made that it shouldn't. This law is the opposite of the British Official Secrets Act, which presumes instead that government information in general, going even beyond what we would consider classified material, should not be disclosed. This part of the American outlook is why even egregious and intentionally disruptive disclosures such as the WikiLeaks escapade do not receive the universal condemnation they deserve but instead may be perceived admiringly as a Robin Hood effort.

At the same time, Americans have a negative and suspicious attitude about information their government may hold about them. They want their government to be open, but they want their own lives to be closed to the government. This attitude comes up repeatedly even when the personal information involved has an important and legitimate national security use, most notably in antiterrorism measures.

Neither of these characteristically American attitudes regarding information and government are exhibited regarding information and the private sector. There is no FOIA applicable to corporations and other nongovernmental organizations (which can be touched by FOIA only if, as in the AT&T case, their affairs became the subject of a governmental investigation). And there is nowhere near the concern about what government agencies might do with personal information that gets expressed about what use corporations might make of similar information.

The illogical part of this set of American public attitudes is that the damage that corporations can do to the lives of Americans with personal information—and with corporate activities about which the public does not have information—is at least as great as any mischief that agencies of government can do. Corporations have huge amounts of data about our finances, our purchasing habits, our health, and much else, and there generally are no mechanisms external to these organizations to oversee the use of the information and to ensure that it is not misused. As for the potential for damage to the public from corporate activities taking place outside the public eye, we need look no farther than the Great Recession that the nation is still struggling to get out of, and that the nation got into in very large part because of recklessness in the bloated and vastly overcompensated financial sector. A reminder of some of this is the report this week in the New York Times about how the titans of Goldman Sachs (where the titans are still called partners, although it is a mystery how Goldman still has partners even though the company has been publicly traded for several years) made out quite nicely with some well-timed grants of stock options at the depth of the recession. The great majority of things that this sector and other sectors of American business do not only is outside the public eye (apart from minimal reporting requirements for publicly traded firms) but also largely free from any effective accountability. What passes for corporate governance in the United States is often instead a self-perpetuating, self-aggrandizing oligarchy of senior executives.

The more light that can be cast on all of this, consistent with protecting legitimate trade secrets, the better. Let the sun shine in.