Rising global info-confusion

About a week ago, I took a humble and run-down taxi from the airport to the capital city of a small Central American country. During the ride, the equally as humble taxi driver gave me a masterly lesson about globalization. After having informed him about where I’m from, he asked in one long breathless phase, “Has Comandante Chavez managed to get rid of Magistrate Sosa yet? By the way, where exactly is Venezuela? Near Spain, no?”

The taxi driver had simultaneously shown a surprising knowledge about Venezuela’s internal politics and an almost embarrassing ignorance about basic geography. This incident prompted me to reflect about the matter of global information. To begin with, it is evident that when speaking about this confusing issue, more is not necessarily better. Greater quantity of information can simply mean more irrelevant data, more often than not at the expense of pertinence. Likewise, too much information can confuse things and plant so many trees that it becomes impossible to see the forests.

In Venezuela, for example, and without getting into details, it is surprising to see how most of the nation is still blind to the terrible implications that the taxes on oil products levied by consuming nations have on our country.

The above-mentioned example makes it tempting to establish priorities. However, who are we to determine whether the internal politics of a country are more or less relevant to someone like my taxi driver than that same country’s geographical location. What’s more, when you think about it, it could just be that in a globalized world, geography as I studied it is not really relevant any more.

Upon observing how fast the volume of information is growing, I remember that a few years ago I maintained the thesis that the lack of information could actually be valuable as a promoter of development. On occasions, ignorance of certain matters kept alive the dreams of finding the greener valley.

These dreams are the ones that drove Americans to invest in Italy, Italians to move to Venezuela and Venezuelans to find work in the United States. This generated economic growth all around.

The increasing speed of today’s information flow also raises some doubts. 

Although it is certainly advantageous to insure that correct and relevant information as well as good news is transmitted rapidly, it is also certain that this same speed is usually applied when propagating incorrect and irrelevant information, as well as increasing volumes of bad news.

For some not totally identified reason, I feel that the magnifying effect of speed upon bad information is somehow greater that on good information. Making peace, for example, requires time which is often not available. Provoking war often takes just a matter of seconds.

Just who the creators and receivers of information are is also deserving of reflection. There is no doubt that the foreign investors the country most wishes to attract are those that bring with them a long-term vision and who will therefore create many permanent jobs

Unfortunately, however, we frequently confuse economic policies that are positive and adequate for the country with the information that short term capital wants to see. The main reason for this is that it is precisely those short-term investors who pressure the most for urgent and globalized information.

As a result of this, we often see economic schemes based on high interest rates, a strong currency, fiscal equilibrium and economic puritanism. All the long-term investors really want and need however, is a good internal demand and a competitive exchange rate.

I write articles, and to achieve this I frequently use sources of information that, in spite of offering a lot of detail, are not necessarily relevant or complete. My taxi driver reminded me of this risk. I may have come off as an idiot in many of my articles and probably don’t even know it due to the cordial discretion of my readers. If this were the case, thank you. Remember that my ego is not as strong as that of the New York Times, and if I have sinned, I prefer not to know.

PS. In 2003, as an Executive Director of the World Bank, I formally warned: "Nowadays, when information is just too voluminous and fast to handle, market or authorities have decided to delegate the evaluation of it into the hands of much fewer players such as the credit rating agencies. This will, almost by definition, introduce systemic risks in the market"