When I lived in Taiwan once some time ago I practised some illicit journalism. It was the spring of 1989 and while mainland China was busy using tanks to crush an outbreak of democracy the island of Taiwan was passing through its own painful transition from one-party authoritarianism into something better.

Ostensibly we were only there so my wife could study Chinese, but I had the sneaky feeling that someone in the government knew I was doing more than sightseeing. On one occasion, a local acquaintance took us to visit some of her relatives who were active in the ruling Nationalist Party. One of them asked me if I didn't feel guilty as a journalist, "always stirring up trouble."

Being even more self-righteous then than now, I insisted that by sharing information, rather than letting governments keep it secret, journalists made a country richer and more efficient.

When it comes to the economic advantages of information, I am more convinced than ever that spreading it around is a good thing.

Rather than letting an infection of secrets accumulate, I told him, we repeatedly lance the wound and let the poison out.

Today, I confess, I am less of an idealist than I was in 1989. But when it comes to the economic advantages of information, I am more convinced than ever that spreading it around is a good thing. 

As a result, I can't help seeing the WikiLeaks phenomenon in this context.

'Perfect information'

Believing in the economic importance of information is not exactly radical. To traditional economists, something called "perfect information" is a requirement for the perfect marketplace.

Of course, this perfect state is a fiction. Anyone who understands the world realizes that in muddy reality, perfect anything is only imaginary. But the principle that information is essential to functioning markets is useful and, once explained, seems obvious.

Imagine that you go to a public market and have your choice of two ways of buying tomatoes. One vegetable stand offers you tomatoes in a closed cardboard box labelled "Farm Fresh Tomatoes." The other lets you see them, smell them, feel them or even taste a sample. You know which you would be more likely to choose.

Can you remember back to 2007 and those Structured Investment Vehicles (SIVs) and Collateralized Debt Obligations (CDOs) that helped create the credit crisis? They were the first kind of tomatoes. They were bundles of debt served up in closed boxes labelled "Triple-A Investments (honest)." Big European banks bought them and only later found out that the tomatoes inside were rotten.

We are all still suffering from the bad information that led to that bad decision.

The great Oz

The principle of market information goes well beyond the strict world of the money economy. Every time we make a political decision, whether actually voting or just sharing our moral indignation at the coffee shop, the wisdom of our choice depends on information.

But some of the recent revelations from WikiLeaks have shown us that many of our conventional wisdoms are untrue. Hamid Karzai is not the saint Canadian politicians once made him out to be, for example. Chinese officials are said to be at their wits' end over North Korea. In the Middle East, Saudi Arabia, not just Israel, also thinks that Iran is a menace.

Regardless of whether you believe that WikiLeaks' Julian Assange is a hero or an anarchist, or whether you think the 22-year-old army private who is alleged to have stolen the secrets was striking a blow for freedom or undermining democracy, there is a one-time lesson from WikiLeaks: In general, we have been getting bad information.

We have been assuming that when we read the news and hear what our politicians say, that we are squeezing the tomatoes and making an accurate decision. But suddenly we discover we have been getting our news from boxes with false labels.

And the horrible thing is that these are not secrets being kept from foreign governments. The Chinese and Saudis know their own views on North Korea and Iran, and presumably what they have told American diplomats.

For the most part these "secrets" are secret to nobody but the citizens of the government that has been trying to keep them. Like a scene from the Wizard of Oz, the U.S. government has, preposterously, told its own employees not to read the WikiLeaks documents.

"The great Oz has spoken. Pay no attention to that man behind the curtain."

Asymmetric information

Economist Joseph Stiglitz (and two others) won a Nobel Prize for his work on something called asymmetric information, which is based on the idea that if one party to a deal knows more than the other, markets become distorted and inefficient.

Good information is essential to the efficient operation of a market democracy. It is how we decide where to spend our collective resources most wisely.

It is this kind of distorted market that WikiLeaks has exposed, one where the government holds all the cards and may have been a bit of a card sharp as well.

It may be that our governments have never been very honest with us. But I think we should all take this occasion to remind ourselves that good information — something approaching truth — is more than some airy-fairy goal of do-gooders. Good information is essential to the efficient operation of a market democracy. It is how we decide where to spend our collective resources most wisely.

It is easy to forget when media organizations of all types struggle with budgets and look desperately for cheaper ways to attract an audience, that muck-raking journalism has been an essential ingredient in creating pluralistic democracies. As I told the Nationalist official in Taiwan, struggling to tell the truth in the face of the "official" story is the only justification for the existence of the news media. Otherwise it is just one more form of titillating entertainment.

I realize this isn't an easy notion for governments to digest. The fact is nobody likes to have his secrets spilled.

No doubt Richard Nixon, like my Taiwan interlocutor, thought Watergate reporters Bob Woodward and Carl Bernstein were just "stirring up trouble."

In places like pre-democratic Taiwan, where people stopped believing what was in the official press, they ended up depending on rumour instead. Worse, they started to believe cranks and demagogues (of which the internet now offers an infinite supply).

In the halls of officialdom there has been talk of creating more internal security because of WikiLeaks. But maybe our governments would be better to let the information market do its job, to open up the box and let us examine the tomatoes.

In the case of the Wizard of Oz, when finally caught, at least he admits he's "a humbug" for telling lies. But Judy Garland had a different view. "You're a very bad man," she scolded.