第 9 页

secret, made it that much more appealing.

Kennedy also found the Klan to be a slick money-making operation, at least for

those near the top of the organization. Klan leaders had any number of revenue

sources: thousands of dues-paying rank-and-file members; business owners who

hired the Klan to scare off the unions or who paid the Klan protection money;

Klan rallies that generated huge cash donations; even the occasional gunrunning

or moonshine operation. Then there were rackets like the Klan’s Death Benefit

Association, which sold insurance policies to Klan members and accepted only

cash or personal checks made out to the Grand Dragon himself.

After just a few weeks inside the Klan, Kennedy was eager to hurt it any way he

could. When he heard about Klan plans for a union-busting rally, he fed the

information to a union friend. He passed along Klan information to the assistant

attorney general of Georgia, an established Klan buster. After researching the

Klan’s corporate charter, Kennedy wrote to the governor of Georgia suggesting

the grounds upon which the charter should be revoked: the Klan had been

designated a non-profit, non-political organization, but Kennedy had proof that

it was clearly devoted to both profits and politics.

None of Kennedy’s efforts produced the desired effect. The Klan was so

entrenched and broad-based that Kennedy felt as if he were tossing pebbles at a

giant. And even if he could somehow damage the Klan in Atlanta, the thousands

of other chapters around the country—the Klan was by now in the midst of a

serious revival—would go untouched.

Kennedy was supremely frustrated, and out of this frustration was born a stroke

of brilliance. He had noticed one day a group of young boys playing some kind

of spy game in which they exchanged silly secret passwords. It reminded him of

the Klan. Wouldn’t it be nice, he thought, to get the Klan’s passwords and the

rest of its secrets into the hands of kids all across the country? What better way to

defang a secret society than to infantilize—and make public—its most secret

information? (Coincidentally, in Birth of a Nation, a former Confederate soldier

is inspired to start the Klan when he sees a pair of white children hide under a

sheet to scare a group of black children.)

Kennedy thought of the ideal outlet for this mission: the Adventures of

Superman radio show, broadcast each night at dinnertime to millions of listeners

nationwide. He contacted the show’s producers and asked if they would like to

write some episodes about the Ku Klux Klan. The producers were enthusiastic.

Superman had spent years fighting Hitler and Mussolini and Hirohito, but with

the war over, he was in need of fresh villains.

Kennedy began feeding his best Klan information to the Superman producers.

He told them about Mr. Ayak and Mr. Akai, and he passed along overheated

passages from the Klan’s bible, which was called the Kloran. (Kennedy never did

learn why a white Christian supremacist group would give its bible essentially

the same name as the most holy book of Islam.) He explained the role of Klan

officers in any local Klavern: the Klaliff (vice president), Klokard (lecturer),

Kludd (chaplain), Kligrapp (secretary), Klabee (treasurer), Kladd (conductor),

Klarogo (inner guard), Klexter (outer guard), the Klokann (a five-man

investigative committee), and the Klavaliers (the strong-arm group to which

Kennedy himself belonged, and whose captain was called Chief Ass Tearer). He

spelled out the Klan hierarchy as it proceeded from the local to the national level:

an Exalted Cyclops and his twelve Terrors; a Great Titan and his twelve Furies; a

Grand Dragon and his nine Hydras; and the Imperial Wizard and his fifteen

Genii. And Kennedy told the producers the current passwords, agenda, and

gossip emanating from his own Klan chapter, Nathan Bedford Forrest Klavern

No. 1, Atlanta, Realm of Georgia.

The radio producers began to write four weeks’ worth of programs in which

Superman would wipe out the Ku Klux Klan.

Kennedy couldn’t wait for the first Klan meeting after the show hit the air. Sure

enough, the Klavern was in distress. The Grand Dragon tried to run a normal

meeting but the rank and file shouted him down. “When I came home from work

the other night,” one of them complained, “there was my kid and a bunch of

others, some with towels tied around their necks like capes and some with

pillowcases over their heads. The ones with capes was chasing the ones with

pillowcases all over the lot. When I asked them what they were doing, they said

they were playing a new kind of cops and robbers called Superman against the

Klan. Gangbusting, they called it! Knew all our secret passwords and everything.

I never felt so ridiculous in all my life! Suppose my own kid finds my Klan robe

some day?”

The Grand Dragon promised to expose the Judas in their midst.

“The damage has already been done,” said one Klansman.

“Our sacred ritual being profaned by a bunch of kids on the radio!” said the

Kladd.

“They didn’t put it all on the air,” the Grand Dragon offered.

“What they didn’t broadcast wasn’t worth broadcasting,” said the Kladd.

The Dragon suggested they change their password immediately, from “red-

blooded” to “death to traitors.”

After that night’s meeting, Kennedy phoned in the new password to the

Superman producers, who promised to write it into the next show. At the

following week’s Klan meeting, the room was nearly empty; applications for new

membership had fallen to zero.

Of all the ideas that Kennedy had thought up—and would think up in the

future—to fight bigotry, his Superman campaign was easily the cleverest and

probably the most productive. It had the precise effect he hoped: turning the

Klan’s secrecy against itself, converting precious knowledge into ammunition for

mockery. Instead of roping in millions of members as it had just a generation

earlier, the Klan lost momentum and began to founder. Although the Klan

would never quite die, especially down South—David Duke, a smooth-talking

Klan leader from Louisiana, mounted legitimate bids for the U.S. Senate and

other offices—it was also never quite the same. In The Fiery Cross: The Ku Klux

Klan in America, the historian Wyn Craig Wade calls Stetson Kennedy “the

single most important factor in preventing a postwar revival of the Ku Klux Klan

in the North.”

This did not happen because Kennedy was courageous or resolute or

unflappable, even though he was all of these. It happened because Kennedy

understood the raw power of information. The Ku Klux Klan was a group whose

power—much like that of politicians or real-estate agents or stockbrokers—was

derived in large part from the fact that it hoarded information. Once that

information falls into the wrong hands (or, depending on your point of view, the

right hands), much of the group’s advantage disappears.

In the late 1990s, the price of term life insurance fell dramatically. This posed

something of a mystery, for the decline had no obvious cause. Other types of

insurance, including health and automobile and homeowners’ coverage, were

certainly not falling in price. Nor had there been any radical changes among

insurance companies, insurance brokers, or the people who buy term life

insurance. So what happened?

The Internet happened. In the spring of 1996, Quotesmith.com became the first of

several websites that enabled a customer to compare, within seconds, the price of

term life insurance sold by dozens of different companies. For such websites,

term life insurance was a perfect product. Unlike other forms of insurance—

including whole life insurance, which is a far more complicated financial

instrument—term life policies are fairly homogeneous: one thirty-year,

guaranteed policy for $1 million is essentially identical to the next. So what really

matters is the price. Shopping around for the cheapest policy, a process that had

been convoluted and time-consuming, was suddenly made simple. With

customers able to instantaneously find the cheapest policy, the more expensive

companies had no choice but to lower their prices. Suddenly customers were

paying $1 billion less a year for term life insurance.

It is worth noting that these websites only listed prices; they didn’t even sell the

policies. So it wasn’t really insurance they were peddling. Like Stetson Kennedy,

they were dealing in information. (Had the Internet been around when Kennedy

infiltrated the Klan, he probably would have rushed home after each meeting

and blogged his brains out.) To be sure, there are differences between exposing

the Ku Klux Klan and exposing insurance companies’ high premiums. The Klan

trafficked in secret information whose secrecy engendered fear, while insurance

prices were less a secret than a set of facts dispensed in a way that made

comparisons difficult. But in both instances, the dissemination of the information

diluted its power. As Supreme Court Justice Louis D. Brandeis once wrote,

“Sunlight is said to be the best of disinfectants.”

Information is a beacon, a cudgel, an olive branch, a deterrent, depending on

who wields it and how. Information is so powerful that the assumption of

information, even if the information does not actually exist, can have a sobering

effect. Consider the case of a one-dayold car.

The day that a car is driven off the lot is the worst day in its life, for it instantly

loses as much as a quarter of its value. This might seem absurd, but we know it

to be true. A new car that was bought for $20,000 cannot be resold for more than

perhaps $15,000. Why? Because the only person who might logically want to

resell a brand-new car is someone who found the car to be a lemon. So even if the

car isn’t a lemon, a potential buyer assumes that it is. He assumes that the seller

has some information about the car that he, the buyer, does not have—and the

seller is punished for this assumed information.

And if the car is a lemon? The seller would do well to wait a year to sell it. By

then, the suspicion of lemonness will have faded; by then, some people will be

selling their perfectly good year-old cars, and the lemon can blend in with them,

likely selling for more than it is truly worth.

It is common for one party to a transaction to have better information than

another party. In the parlance of economists, such a case is known as an

information asymmetry. We accept as a verity of capitalism that someone

(usually an expert) knows more than someone else (usually a consumer). But

information asymmetries everywhere have in fact been mortally wounded by the

Internet.

Information is the currency of the Internet. As a medium, the Internet is

brilliantly efficient at shifting information from the hands of those who have it

into the hands of those who do not. Often, as in the case of term life insurance

prices, the information existed but in a woefully scattered way. (In such

instances, the Internet acts like a gigantic horseshoe magnet waved over an

endless sea of haystacks, plucking the needle out of each one.) Just as Stetson

Kennedy accomplished what no journalist, do-gooder, or prosecutor could, the

Internet has accomplished what no consumer advocate could: it has vastly

shrunk the gap between the experts and the public.

The Internet has proven particularly fruitful for situations in which a face-to-face

encounter with an expert might actually exacerbate the problem of asymmetrical

information—situations in which an expert uses his informational advantage to

make us feel stupid or rushed or cheap or ignoble. Consider a scenario in which

your loved one has just died and now the funeral director—who knows that you

know next to nothing about his business and are under emotional duress to

boot—steers you to the $7,000 mahogany casket. Or consider the automobile

dealership: the salesman does his best to obscure the car’s base price under a

mountain of add-ons and incentives. Later, however, in the cool-headed calm of

your home, you can use the Internet to find out exactly how much the dealer

paid the manufacturer for that car. Or you might just log on to

www.TributeDirect.com and buy that mahogany casket yourself for just $3,200,

delivered overnight. Unless you decide to spend $2,995 for “The Last Hole” (a

casket with golf scenes) or “Memories of the Hunt” (featuring big-racked bucks

and other prey) or one of the much cheaper models that the funeral director

somehow failed even to mention.

The Internet, powerful as it is, has hardly slain the beast that is information

asymmetry. Consider the so-called corporate scandals of the early 2000s. The

crimes committed by Enron included hidden partnerships, disguised debt, and

the manipulation of energy markets. Henry Blodget of Merrill Lynch and Jack

Grubman of Salomon Smith Barney wrote glowing research reports of companies

they knew to be junk. Frank Quattrone of Credit Suisse First Boston covered up

an investigation into how his company dished out shares of hot initial public

offerings. Sam Waksal dumped his ImClone stock when he got early word of a

damaging report from the Food and Drug Administration; his friend Martha

Stewart also dumped her shares, then lied about the reason. WorldCom and

Global Crossing fabricated billions of dollars in revenues to pump up their stock

prices. One group of mutual fund companies let preferred customers trade at

preferred prices, and another group was charged with hiding management fees.

Though extraordinarily diverse, these crimes all have a common trait: they were

sins of information. Most of them involved an expert, or a gang of experts,

promoting false information or hiding true information; in each case the experts

were trying to keep the information asymmetry as asymmetrical as possible.

The practitioners of such acts, especially in the realm of high finance, inevitably

offer this defense: “Everybody else was doing it.” Which may be largely true.

One characteristic of information crimes is that very few of them are detected.