11 SEPTEMBER 1993, Page 20

CARRY ON LYING

Alasdair Palmer says we are

all guilty of dishonesty — but it may be preferable to telling the truth

LAST WEEK, an acquaintance called to cancel a lunch engagement. He said he was so ill he couldn't walk. Later the same day, I saw him running across Piccadilly in rude health to hail a cab. I didn't mind about the cancelled lunch, but what was the point of the lie? I don't know — but I do know what I'll say next time we talk. I'll pretend to think he really was ill, ask tenderly about his health, and say how glad I am that he's better . . . About the only thing I won't do is call him a liar — and that, of course, will mean becoming one myself.

No insult is more hurtful or damaging than being called a liar. Yet everyone lies — and anyone who claims he doesn't is certainly lying. Lies have an infectious quality, even when recognised as lies, part- ly because it is such a social faux pas to accuse someone of telling them. We place so large a premium on truth-telling that no one wants to admit how dishonest we all are. There's a silent conspiracy in which we all participate: no one wants to face the truth about the abundance of falsehood. The colleagues who covered up for the incompetent Birmingham pathologist whose inaccurate reports led to dozens of misdiagnosed bone cancers evidently found it easier to continue to pretend there was no problem, even though the cost was more misdiagnoses, all with potentially devastating consequences. It is surprisingly difficult to imagine what the world would be like without any lies at all. What would happen to politi- cians? What would they do? More to the point, what would they say? Try to imagine strictly honest assessments of, for example, Conservative Party unity from Sir Norman Fowler, of the Health Service blunders from Virginia Bottomley, of future tax increases by Kenneth Clarke, and of the premiership of John Major by John Major. These things are unimaginable.

But the truth is politicians are not all that different from the rest of us. You may think you don't lie, except on trivial occa- sions like cancelling inconvenient lunches; but think of the simplest business negotia- tion: deception is vital to success. When- ever a price is negotiable, securing a bar- gain depends on getting something for less

than you are actually prepared to pay for it. Anyone who has ever bought a house, a company, or negotiated an employment contract will know what that means. It means convincing the seller that your upper limit is lower than it actually is: you have to lie about the most you are pre- pared to pay.

Bargaining is usually a long and boring process, and leaves both sides feeling that they could have done better if they had managed to deceive better. In the economists' dream world of perfect com- petition and perfect information, where everyone is transparent to everyone else, there is no room for deception and so no role for negotiation: an exchange is com- pleted instantly, or not at all. That piece of make-believe — as unrealistic a condition as any wild-eyed utopian thinker has ever dreamed up — is essential to all economists' technical proofs of the effi- ciency of the free market. It is as far away from the functioning of real markets as it is possible to imagine, which may say something about economists' ability to tell the truth.

In the world as it actually is, dishonesty has an enormous economic impact. Spec- tacular individual cases of fraud like Robert Maxwell's or BCCI's are the least of it. So is the notorious black economy, variously estimated at between 5 per cent and 10 per cent of our total national prod- uct. Dishonesty permeates the whole sys- tem like a penetrative dye. For the fact is that lying about the nature of a business 'talking it up', as it is euphemistically described — is an essential part of making it work. No company report ever says, `We've had an abysmal year, we have made a series of disastrously inept decisions, the management is paralysed by internal dis- sension, and it isn't going to get any better for the foreseeable future' — though fre- quently the directors and chairman know that that accurately describes the past 12 months as they sign a report earnestly stat- ing the opposite. 'Creative accounting', whose infinite elaborations keep so many accountants gainfully employed, helps to ensure that a company's figures do not jar too severely with its directors' reassur- ances. Many people's jobs depend on the deception: part of the skill of stock-market analysts — and one reason they get paid so much — consists in being able to see through lies and accurately identify a com- pany's real, as opposed to pretend, prospects and value.

The prevalence of dishonesty costs us all massive amounts of time, energy and money: to perpetrate it (a lie always requires more conscious maintenance than the truth), to detect it, to punish it. But, bad though the blizzard of lies is, a sudden outbreak of total honesty would be much worse — at least for the economy. The crit- ical difference between a recession and a recovery is confidence: the elusive sense on the part of consumers and producers that times are going to get better, and that it is safe to spend and invest money. The fastest way to ensure a collapse of confidence would be the adoption of scrupulous hon- esty in financial matters by everyone. The shock would cause a stock-market crash and a wave of bankruptcies. There are not many companies which could survive publi- cation of everything their owners and man- agers know about them.

Nor could many people. Honest assess- ments of others are almost invariably offensive, and we have evolved a whole code of behaviour in order to prevent peo- ple from making them. In England particu- larly, being well-mannered or polite means being able to lie about your thoughts and feelings sufficiently convincingly so that no one can detect them. The acquaintance who lied to me last week was certainly well brought up: he spared me his honest evalu- ation of why he wanted to cancel our lunch. Doth any man doubt,' wrote Francis Bacon, 'that if there were taken out of men's minds flattering hopes, false valua- tions, imaginations and the like, but it would leave the minds of men poor shrunk- en things, full of melancholy and indisposi- tion, and unpleasing to themselves?' That lying is necessary to life is part of the char- acter of existence both social and profes- sional — but it is surprising how resolutely we deceive ourselves about it.