DataMarket blog

Foreigners used to know one thing about Iceland. Since last autumn, they tend to know two:

• Iceland is green and Greenland is ice
• Iceland is bankrupt

Neither is fully accurate. In fact:

• Iceland is greener than Greenland, but the dominant colors are black and gray of volcanic origin
• Iceland is not bankrupt, but experienced one of the most spectacular economic crashes any Western country has since the second World War.

The Crash

A banking system that was more than 10 times larger than the nation’s GDP all but vanished in 3 days in early October. The currency has devalued roughly 50% to our most common trading currencies, inflation has been in the double digits for over a year, serious currency restrictions have been put in place, the stock market has lost over 90% of its value, housing prices are falling rapidly and foreign debt has increased dramatically.

I guess you could call it “rather a mess”.

On top of this, investigations of the crash continue to reveal negligence by regulators, mistakes in governance, failure by government institutions to take action, incredibly unfortunate series of events, miscommunication and seemingly fraudulent and criminal actions by key players in the Icelandic finance sector. And the investigations have barely begun!

As you can imagine, following such a catastrophe we have a serious trust issue.

The public hardly trusts the government (one has already fallen in public protest), let alone the semi-resurrected financial sector. In fact, most commercial activity is seen as highly suspicious and any sign of wealth is seen as a clear indication of wrong-doing.

This trust issue reaches abroad. Many Icelandic businesses are met with suspicion judged on origin alone and it is easy to get the feeling from recent developments that foreign governments don’t fully trust ours.

This level of distrust will destroy any rebuilding efforts. Restoring trust is the single most crucial thing for us to be able to move forward.

Brutal Transparency

Sometimes people talk about “brutal honesty”. I believe that the way to restore trust lies in “brutal transparency”. Iceland, more than any other nation needs to reinvent the way the government operates and the way business is done.

The public sure is ready for it. Many of us feel ashamed and to an extent responsible for what has happened as we failed to keep a watchful eye out and voice our concerns.

Earlier this month our company – DataMarket – together with the leading local news portal mbl.is launched an interactive model (unfortunately Icelandic only) of a giant loan agreement the parliament is debating. Almost 25 thousand people dug in. A nation where 10% of the population is eager to explore and experiment with a financial model of an international loan agreement, is a nation that is clearly on its toes about current affairs and will not be betrayed again. People crave data and understanding.

We need to show that we have nothing to hide – neither to each other nor to the rest of the world. Luckily we are extremely well equipped to do so. I’m pretty sure this is one of the best-measured economies in the world. For another project, we’re monitoring over 7 million variables measured as time series and recorded by the various government institutions. Almost all transactions, even at the retail level are real-time (transactions between banks happen instantly) and electronic making it a virtually cash-free economy for the last decade or so. Businesses as well as the infamous banking sector are running state-of-the-art IT systems and could easily meet the demands of such an arrangement.

“Brutal transparency” is – in other words – a low hanging fruit for us. The hard bit is introducing this new way of thinking.

A few days after the crash I outlined on my personal blog a few ideas about how total transparency was the future of finance. I believe this now more than ever, but I also believe it should reach all branches of the government and business in general. For example:

• Publicly traded companies should not file quarterly reports, they should file every day.
• Company ownership should not be a secret, it should be publicly available information.
• Every bill that the government pays should be open data.
• Composition of managed funds should be available in real-time to any customer.
• Retailers should be required to publish their prices online in real-time allowing for meaningful price comparison.
• Any data gathered or recorded by the government should be open data, unless privacy or other higher-order priorities prevent it.
• Every single national budget item should be tracked in real time demanding explanations if they are significantly off-target.
• …this list could go on.

And efforts should be made to make all of this easily available and understandable to locals and foreigners alike.

The Icelandic Model

I have met with government officials and public sector management that truly get the concept of transparency and open data, believe in its power and want to make it happen. But further education is needed. The sprouts are there but the field is not blooming.

Businesses also need to understand that in the current climate transparency is a competitive edge making them more desirable to do business with, invest in and trust their services.

A serious effort in open data and transparency could not only restore the trust that has been ruined, but also make the “Icelandic method” a model for others to follow.