How to Make Transparency Work: Activist

NEW YORK (TheStreet) -- Lawrence Lessig's recent thought-provoking article in the New Republic challenges the assumption that more sunlight is always a better disinfectant for corruption and bad behavior than less.

Although his primary focus is on how more transparency doesn't always lead to better political outcomes, there are obvious implications of his argument to the world of corporate governance and executive compensation.

The critique, entitled "Against Transparency: The perils of openness in government," offers a partial explanation of why, even after Enron and Worldcom when everyone agreed that corporate boards screwed up in overseeing their companies, boards failed again in the recent mortgage bubble. It also suggests what must change now to finally improve corporate governance and executive compensation.

Lessig's argument is that it's become accepted wisdom on both sides of the political aisle in recent years that more transparency is always better. And, in an age of super-computers and ubiquitous access of the Web, it has become easier than ever to make data available.

The assumption many make is that making information available will curb bad behavior before it happens, because the actors will know they are subject to being called out.

Lessig challenges this by using the example of publishing a politician's calendar online. Does this level of information really help the public better judge his or her actions? Does it encourage the politician to behave more justly, knowing others will see his or her breakfast meeting took two hours instead of one last Thursday?