Monday, 16 July 2012

Libor, Malfeasance, Data and Complexity

Thomas Redman wrote about the Libor scandal; arguing that improvements to data quality will help to reduce malfeasance.

I agree with a lot of what he says, but I believe that good data, on its own, is not enough. We also need visualisation and data exploration tools to understand the data, simplicity to communicate that understanding, and an educated and intelligent workforce to comprehend the implications.

So, here is my response, emphasizing simplicity partly for rhetorical effect, but mostly because it is the most difficult thing to achieve:

A safe, crisis-free future requires both good data and simplicity.

We can build a world so complex and hidden that there is no obvious fraud, or we can build one so simple and transparent that there is obviously no fraud.

The former is a recipe for catastrophe, but the latter requires considerably more effort.
Obtaining trustworthy data is hard enough, but building simplicity is subtle, and difficult. There is a degree of complexity which is intrinsic to every problem, and which cannot be eliminated, so beware of false simplicity that merely pushes complexity somewhere else. Non-essential complexity may be banished, but essential complexity must be consumed.