The Age of Information is Here!

At the end of the last century, Robert Kiyosaki, author of the Rich Dad Poor Dad book series and cash-flow games, declared that the Age of Manufacturing is dead; we are now in the Age of Information. Recently he was interviewed in a video, “Industrial Age vs. Information Age” posted on the Web.

Looking at the emphasis in the media about job creation in the manufacturing sector, you’d never know it was the Age of Information. And looking at the US government, you’d never even dream it was the Age of Information.

If you were asked if the we have a Bureau of Information in the US, you’d probably think about it and say, well, isn’t that what Homeland Security is about? Its budget has risen dramatically since its inception ten years ago. But this secret data collection on behalf of our national security is not the kind of information I’m talking about.

There are other kinds of information that are desperately needed by both the government and the public. Government and public Information is not a luxury. We need other databases for issues that are just as important to our economic welfare and survival as those national security databases we spend so much money on.

A database to curb fraud

For example, at the same time September 11th happened, so did the biggest health insurance scam ever. Employers Mutual scammed patients and doctors in every state of the union. At the pharmacy, HIV and cancer patients were denied expensive prescription drugs they had paid premiums for. Others were denied operations; at least one lost partial sight as a result.

How could this happen? Because the federal government and the states had no database of frauds. Nor did states communicate with each other. States began issuing “cease and desist business” orders to Employers Mutual, but it paid no attention. At one point, Employers Mutual claimed it had the total endorsement of a state insurance commissioner who had just called its owners a “pack of scoundrels” on his state web site. The problem was laypeople and even state commissioners in other states did not know about this.

And we all know about Bernard Madoff’s even bigger scam. Con men and women flourish when no light is shined on their  activities. A national database (with public and private information sections) about past and possible current fraud schemes is missing in this country.

A database to track life insurance policies

A few years ago, a friend found a longstanding series of payments for a life insurance policy in her parent’s effects, but the insurance company claimed it had no record of any policy at all, not even a canceled one. That’s when I learned there is no database of life insurance policies in this country.

The Wall Street Journal has reported that state insurance commissioners in California and Florida s are now looking into allegations that “Life Insurers Skimp on Payouts”. It’s being alleged that insurers are using their databases to cut off annuity payments when their clients are deceased, but ignoring those same databases when it comes to notifying heirs or the state governments who process unclaimed property.

John Hancock Financial Services has settled with the state of California and promised to do a better job of monitoring itself when it comes to researching the deaths of its clients. This week the Wall Street Journal says “MetLife Is Probed on Death Benefits”.

It’s chilling to think that large insurers have been slicing and dicing tranches of life insurance policies for resale in the derivatives market. These companies have no records for what they are selling in the way of life insurance derivatives.

And apparently they have no way of even keeping track of whether the policies underlying a life insurance derivative are covering a living person or one who is dead and whose heirs or the states should have received a payout!

A database  to ensure regulation of the financial sector

Right now the government is almost completely dependent on the companies it regulates to provide it with the documents it needs to regulate those companies. A keep problem with this is that it prevents government from reacting to a crisis in any kind of timely way.

Instead, data has to be collected from a variety of sources in order to assess what’s going on. In an age of algorithms and high-speed trading that can wipe out savings and pensions in an instant, that just isn’t good enough.

Also, there is a problem that companies themselves do not really know what other companies are doing. It’s easy for one company to feel it isn’t doing anything wrong. Only when the effects of all companies choices descend, as in a freeze-up of lending, does one company see what its practices have led to.

And that doesn’t begin to cover the damage done by people who knowingly do the wrong thing with no concern for who gets hurt.  When it comes to protecting our financial security, can we really afford to keep letting the wolves guard the hen house?

The Age of Information

I could go on. There are many other areas, such as health care costs that the public could benefit from having more information available about. For an intriguing look at the “liberation” of non-copyrightable government data, such as SEC filings and state law, into the public domain see the video and booklet, 10 Rules For Radicals by Carl Malamud. At issue is which kinds of government information should be available to the public as well as to government agencies. And there is the key question too of how much private sector information should remain private.

I can’t answer those questions. All I can say is that it’s high time we start discussing them. And I mean discuss them not as abstract academic exercises, but discuss them as an important part of our political process during election times.

Copyright © 2011 Nancy K. Humphreys