Years ago, when I was a tax lawyer, I used to advise clients to assume in their planning that there are no secrets. “The government will eventually find out everything,” I told them, “so your tax planning should be designed to work under the full light of day.”
I can’t say everyone truly believed me (although the ones that wanted to stay as my clients certainly did). Even I had a few doubts, especially when I saw people routinely cheating and getting away with it.
Once my practice shifted, and I became a full-time energy lawyer, the real truth of the concept of “no secrets” became clear. In the highly specialized, but sometimes also extremely opaque, environment of energy regulation, many people want to have secrets. I am now convinced that they rarely succeed.
The area of energy regulation is characterized by something called “information asymmetry”. Basically, this is the underlying reality that the utilities have control over all of the information about their businesses and operations. When they apply for new rates, or other approvals, those applications are all about their businesses. They provide all of the information on which the regulator bases their decision. This one-sided access to information should, in theory, mean that the utilities can, if they so choose, “hide” things about their companies that are embarrassing or would weaken their case.
What happens in fact is two things. First, the applications are subjected to scrutiny by experienced industry experts, and new or different facts emerge from that review. Second, because of the expected scrutiny (and also, I think, because most utility people are inherently honest), many utilities prefer not to have any secrets in the regulatory process. The two feed on each other, in a kind of iterative loop.
How does the truth emerge? If you ever watch a good cross-examination, or look at well-written interrogatories, you will see how. The staff of the regulator, and the representatives of the stakeholders, have seen many other applications, so they have an intuitive familiarity with the subject matter. Anything that doesn’t fit within the norm is an anomaly, and it has to be tracked down and resolved. That process often results in a new fact – a new truth – emerging from the picture the utility is trying to paint.
For example, in a good cross-examination, the key is to get people to talk “off-message”. That is, you want them to talk about their work, and what they do day to day, but spontaneously, rather than couched in the prepackaged messaging pounded into them in their witness preparation. Usually that’s pretty easy. People want to talk about the things they do. They are often proud of their work, and justifiably so. While they may be petrified that they will say something wrong, their basic instinct is to talk honestly.
This is why good cross-examinations can sometimes seem a little boring or pointless. The key part is to get people talking openly, and that is less about “cut and thrust” and more about prompting and listening. Once you get them to do that, anomalies will appear, and you can follow them up.
There still remains the question of how we actually figure out the new facts, when people don’t want to tell us. It is one thing to know that there is some anomaly. It is another to know what is actually there. Recently, I enjoyed a lengthy discussion on this specific question in the company of a group of almost impossibly big-brained people (no, not lawyers; philosophers). The answer that emerged was: cosmology.
Einstein, Hawking and others have spent decades studying things that they can’t see, and yet they know with some degree of certainty a lot about those very things. How is that?
Think of the search for new planets around other stars. In 1995, Swiss scientists Didier Queloz and Michel Mayor “discovered” a planet orbiting the star 51 Pegasi, the first such discovery in history. They didn’t actually see it, of course, because it is much too far away. Instead, they inferred its existence by measuring tiny changes in the velocity of its star, changes that could only come from a planet’s gravity.
Since then, more than five thousand planets have been discovered, but (except for a new and still rough technique called coronography), we have not seen any of them. We measure their effects on nearby objects, on light passing through the system, or on other phenomena. Still, with that entirely indirect information, we know a lot about each of them – size, density, composition, orbit, etc.
Black holes are another great example. We can’t actually see black holes, because light can’t escape from their gravitational field. We do know where they are, and many other things about them, because we can see the impact they have on other stars, and how they bend light from other stars behind them.
All facts – including secrets – affect the things around them. The more you know about the things around a fact, the more you can narrow down what that fact is. You don’t need to hear it directly. No-one needs to “spill the beans”. Sooner or later, the surrounding, public facts will leave only one possibility that can be true.
The best example of this arises when people try to keep secrets within an organization, or within a community. The CEO has a strategy, but he or she doesn’t want anyone to know it too soon, so he or she shares it with no-one. This has to be a secret, right? The best way to keep a secret is to tell no-one.
Not so, as it turns out. The CEO isn’t sharing the strategy itself, but as it unfolds each of the various effects of the strategy will be known to one or more other people. Those effects are typically not secrets. They are just facts, not really attached to the strategy in any obvious way. If you can learn about those effects, they will first tell you – through seeing a consistent pattern – that there is a strategy. Later, as you explore further effects, you can describe the strategy with greater and greater detail.
This is a kind of sequential elimination, but it is less analytical than that implies. Imagine instead the unknown fact as a small, dim object in the middle of an open field at night. Now add some surrounding facts. Each of those facts is like a light of greater or lesser intensity, adding some illumination to your unknown fact. Those most closely connected to the unknown will give off more light. The way to illuminate the unknown fact better is not to squint (i.e. analyse more carefully), but simply to accumulate more light sources around it. If you get enough of them, you will see the unknown fact clearly.
What is interesting about this is that the surrounding facts are generally not secrets. They are shared freely by the people in the organization, with each other and with those outside of the organization. None of them seem confidential. People being people, they talk about their work, and the people they work with. The surrounding, non-secret facts come out.
But to any astute observer, those non-secret facts will also disclose – sooner or later – any secrets within the organization. They paint a picture, and there are hidden facts within that picture, fuzzy spots implied by the rest of the picture. One of the vice-presidents has a drinking problem? Even if it is well disguised, at least some of the symptoms will be known and shared. The director of IT is thinking of firing the procurement manager? Clues abound, if you’re looking.
You don’t need anyone to “blab” the secret. No moles or other illicit sources are required. You just need to be attentive to the facts that are available to you, and what they imply. If you pay attention, secrets are no longer secret. In effect, there is no confidential information.
Einstein said that gravity bends space-time around an object. If we know how space-time has been bent (for example, by knowing the motions of other objects, or the trajectory of light), we know the location, size and composition of the object. Similarly, every secret fact “bends” or alters the facts around it. The more we know those facts, the clearer our picture of the secret.
There are probably some secrets in fact, in the sense that no-one actually knows them. Those are not real secrets, though. They are just facts that have not yet been discovered by others. All or the vast majority of things we think are secret are open to anyone who wants to see.
The view that you should live as if your life is an open book is probably right, because it probably is.
– Jay Shepherd, April 10, 2015