Democracy's 'Bad Policy' Bias

There is a difference between the study of Policy, and the study of Politics. Policy scholars ask: what should the government be doing with its coercive power? Politics scholars ask: given the current (or alternative) institutional frameworks and processes of the governing system, what is it likely that the government will end up doing with its coercive power? The Policy scholar, implicitly at least, imagines himself in the position of a kind of supreme dictator, whose policy decisions are automatically implemented by the government. The Politics scholar does not deal in these kinds of fantasies, but instead looks at what the people with the actual power in a society are likely to do. Both forms of study are useful for the social thinker in different ways. I myself normally take the role of the Policy scholar, but for this article I am going to wear the hat of a Politics scholar.

The question I will seek to answer is: what kinds of policies will a government operating with the institutional structure of representative democracy, a form of government common in Western countries, be likely to adopt? The answer, in a nutshell: bad ones! I will attempt to explain why in this article.

Rules of the Game

Democracy, at its core, is majority rule. Representative Democracy is majority rule when it comes to electing leaders, but then rule by the elected leaders at other times. In order to be elected in a democracy, politicians have to somehow cobble together a coalition of voters to support them at election time, a coalition that must outnumber the coalitions put together by rival politicians. Once elected, victorious politicians do not have to constantly abide by the wishes of the majority of would-be voters, but if they want to be re-elected, they cannot afford to alienate too many supporters in between elections.

Two Complementary Sources of Bad Policy Bias:

1. Rational Voter Ignorance:

Government has the ability to stick its fingers in many pots; interfering with many aspects of many different industries and areas of life, if it so chooses. In a democracy, voters are asked to decide, for every industry and area of life: 1. whether the government should interfere or not, and 2. if so, what exactly its intervention should consist of. To intelligently answer the first question requires at least an understanding of economics and the other relevant social sciences, and often at least a bit of knowledge about the industry or area of life in question. If the first question is answered in the affirmative, to intelligently answer the second question requires detailed, in-depth knowledge about that industry or area of life.

This is a heck of a lot of knowledge that the voter must possess if they are to make an intelligent choice. A significant amount of time and effort would have to be invested in order to even approach the goal of casting a ballot intelligently, taking all issues into due consideration. Thus, the costs of voting intelligently are quite high. At the same time, the benefits of voting intelligently are quite low. This studious, mythical voter’s choice counts as just one in millions of votes cast. Their highly researched and informed opinion could well be neutralized by another voter’s choice that was made based on the hairstyles of the competing party leaders.

Time is money, and most people would rather spend their time making money or doing something they really enjoy, rather than selflessly contributing to an infinitesimal increase in the intelligence of the average vote cast. Hence the phenomena of rational voter ignorance. Due to the major costs and minor benefits of getting really informed about all the relevant political issues, it is a rational course of action, for the vast majority of people, to simply remain uninformed about most political issues.

2. Interest Group Politics:

If rational voter ignorance is a real phenomena, than why do we observe so much political activism, so many people getting so involved in politics? Enter Interest Group Politics. It is irrational, from the point of view of most people, to get well-informed about all of the relevant political issues so as to be able to cast a truly intelligent and well-considered ballot. However, many of these people will find it rational to pick a particular political issue and really get involved with this issue. Why? Well, the costs of learning about one political issue, particularly if it’s in an area that you find particularly interesting, are a lot lower than the costs of learning about all of the political issues that are at stake in an election (ie. all of them). And, the benefits of casting a narrowly-informed vote, one that incorporates knowledge of this one political issue, are much higher than the benefits of casting a broadly informed vote. This can be for either commercial or personal reasons.

A commercial interest group seeks to encourage government policies that will tilt the economic playing field in favour of the interest group’s members, allowing them to make more money. Some examples include: 1. Domestic producers groups lobbying for tariffs to exclude foreign competitors; 2. Professional associations lobbying for licensing restrictions to keep down the supply of people allowed to do their jobs and thus their own incomes up; 3. Agricultural groups lobbying for government subsidies for their members’ activities.

As an isolated voter, trying desperately to cast a vote that reflects the ‘general interest’ of society, you are weak; as a member of a commercial interest group, voting based on the narrow economic interests of members of the group, you are strong. The latter is a much more understandable and personally beneficial way of voting than the former; and grouping together as an interest group gives the group real clout when it comes to swaying politicians, something that the isolated voter does not possess.

But not all interest groups are commercial; there are also personal interest groups. Most people feel that politics should be loftier than the mere grubbing for personal economic advantage exhibited by the commercial interest groups. However, the barriers to casting a truly balanced and well-informed vote remain as high as ever. As a result, the path that many people take is to pick a few political issues about which they are passionate, for whatever reason, and then vote based on the candidate’s position on these issues almost exclusively. These issues are not usually very technical ones, such as monetary policy, trade policy, subsidies, licensing, or technical tax reform: most people find such issues to be too dry and boring to learn about, and generally not things to get very passionate about. Instead, they are issues that people can confidently form opinions about fairly easily, and that arouse people’s passions. Such issues include: 1. Abortion 2. Gay Marriage 3. Should we invade Country X? 4. Environmentalism. 5. Universal Healthcare. 6. University tuition fees. 7. Labor Unions. 8. Redistribution of Wealth. 9. Racism/Sexism.          

Many political commentators applaud people who get involved with these personal interest groups for their alleged ‘civic engagement’ and ‘public spiritedness’. Actually though, voting based almost exclusively on your official or unofficial membership in such groups is almost as narrow as voting based almost exclusively on membership in a commercial interest group. It seems less greedy and crass, but unfortunately the actual results are almost the same: an overly narrow political focus leading to bad policy results overall.

Imagine that a politician cobbles together a winning coalition of the following commercial and personal interest groups: domestic steel producers, dairy farmers, the auto workers union, the anti-abortion group, the anti-gay marriage group, and the environmentalists. The policies that he will probably have to promise are: 1. Higher tariffs on foreign steel. 2. Higher subsidies to dairy farmers. 3. Legislation to give the auto workers union leaders more power or leverage in negotiations. 4. To make abortion a criminal offence. 5. To not recognize gay marriage legally. 6. To legislate tougher standards on industrial emissions and to set aside more areas as national parks.

There are three serious problems with this platform. First, many of these policies will end up harming either the general consumer of goods or services by making them more expensive, or the general taxpayer who must fund these policies, or both. These general groups are not suitable interest groups; and hence their interests have little chance of being protected via the political process. Second, what if you are a voter that, for instance, wants abortion to be legal but that also wants tougher standards on industrial emissions? Should he vote for the candidate or not? Such a voter will be forced into a ‘lesser of two evils’ voting scenario, and the part of his opinion that did not determine his vote will be disregarded by the politicians.  Third, this platform does not deal at all adequately with all of political issues facing the government to be elected, nor does any real political platform. The politician has already made his coalition, so there is no need to promise any additional policies. Political issues not addressed, such as monetary policy, can simply be decided by the elected politician at will, without any democratic input, in whichever way serves his interests.

Thus, due to the nature of democratic politics, voters segment themselves into various commercial and personal interest groups, who consider politics exclusively from the point of view of their own narrow economic interests or pet personal issues of interest. Coalitions of these narrow interest groups that politicians cobble together are in no way a substitute for broad, well-considered, and well-informed voting, aimed at promoting the ‘general interest’, by the majority of voters. Unfortunately, due to the phenomena of rational voter ignorance, the latter is not achievable, and hence democracies will always be dominated by narrow interest groups. The result will be that the general interests of citizens will be routinely sacrificed to narrow special economic interests and to narrow, tunnel-vision perspectives on emotional issues, such that almost everyone in the society will be made worse off by the totality of the democratic process.

Alternatives:

So democracy has some serious problems: but what are the alternatives? Authoritarian systems are also dominated by interest groups; the main difference is that access to firepower and fighters replaces the number of voters at its disposal as a measure of interest group power (access to money is important to interest groups in both systems).

One alternative, tried by the US in its earlier years, is limited government, or ‘fenced-in democracy’. Here, the system is democratic, but the government is only permitted to interfere in a limited number of industries and areas of life. A written document, the Constitution, is what is supposed to limit the government to these areas. The problem is that a piece of paper has no real power to limit government. Through a series of constitutional amendments, changes in public opinion, and creative ‘interpretations’ by the US Supreme Court, most of the limits originally placed on the US federal government were pretty much eviscerated by the end of the 1930s. The democratic system broke through its fences, and there is no reason to believe that the fate of any future experiments in limited government would be any different.

Another alternative is to attempt to do away with the idea of having a centralized, monopolistic government entirely. The free-market would reign supreme in all areas, including in the provision of law and the protection of person and property against aggression, areas long thought to be the core, fundamental functions of any government. A combination of private security forces, ‘crime insurance’ and ‘contract insurance’ companies, ‘personal reliability’ rating agencies, and private arbitration firms could conceivably perform these functions in a society without a government. One could of course think of a number of problems that might arise with such an institutional structure, the analysis of which would concern Politics scholars. But given how flawed democratic systems are, the question is: which institutional structure would result in the more serious problems, democracy or a Stateless society? I, for one, am not sure what the answer to this question is, but I do know that the question deserves a lot more attention than it has currently been given.      

        

Critique of US Presidential Quotations

John F. Kennedy: “And so, my fellow Americans, ask not what your country can do for you; ask what you can do for your country.”[1]

Brian: This line is probably the most famous piece of self-serving drivel a politician has ever spoken. And yet, for some reason it’s widely considered to be some kind of great, inspirational saying.

Here’s my translation of the statement into its intended meaning: ‘And so, my fellow Americans, inquire not whether the government can actually do you any good; simply inquire how to best go about sacrificing your interests for the sake of the government.’

The message of this line is absurd on its face. What the heck is the point of supporting a government, or a ‘country’ as Kennedy elusively puts it, if it doesn’t actually do you any good, but simply demands that you sacrifice for it? Kennedy is telling us that we shouldn’t even consider the benefit side of the governmental cost/benefit analysis (perhaps because it would seem embarrassingly small next to the costs). But this is surely an absurd procedure; flouting all of the rules of rational decision-making. It would be as if a doctor, when asking a patient to consider getting surgery, said: ‘ask not whether the surgery will do you any good; ask only about the sacrifices you will have to make to render the surgery successful.’ I think I would want a second opinion…

Franklin Roosevelt: “Let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country.”[2]

Brian: On the contrary, let us immediately forget the mystical and ludicrous notion that the government is ‘ourselves’. Even if we were to temporarily bend reality and, for the sake of argument, liken government to a voluntary club freely joined by its citizens, it would still not be ‘ourselves’. If I join a debating club that holds annual elections for its leadership positions, I do not somehow ‘become’ the debating club, or fuse my essence with the debating club. I remain myself, and the debating club remains a collective grouping of individuals, formed for a delimited purpose, that now includes me as one of its constituent members. If the government were a voluntary collective grouping like this, the same would apply to it.

Of course, the government is even less ‘ourselves’ than the voluntary club is. This is because those that control the government use aggressive force to carve out territory for themselves, over which they claim a monopoly on the use of ‘legitimate’ aggressive force thereafter. Anyone who wants to live in that arbitrarily-claimed territory must submit to the dictates of the claiming government, or face violent reprisal. If they want to keep their homes, people can’t freely join or leave different ‘government clubs’, as they could with the voluntary clubs. Hence the personal, individualized element is even more lacking in the government case than it was in the voluntary club case.

Ah, but Roosevelt says that ‘the voters’ are actually the ultimate rulers of the democratic government, so the government, while perhaps not ‘ourselves’, at least shouldn’t be considered an ‘alien power over us’, right? Wrong. Firstly, while a majority coalition of voters may indeed have some power in the government, this certainly does not mean that I, personally, have any power in the government. What if I want nothing to do with these majority coalitions, whose decisions I routinely find to be either ignorant or repugnant? In that case, I submit that these majority coalitions of voters are powers as alien to me as any authoritarian despot.

Secondly, even the majority coalition of voters, taken as a collective, doesn’t have all that much power in a representative democracy. They are only in a position to really exercise their power every few years when an election is held. In the meantime, elected governments can do all kinds of things that wouldn’t have been supported by the majority of voters on an issue-by-issue basis. Also, nowadays, a lot of executive and sub-legislative (‘drafting regulations’) power is vested, for better or for worse, in the hands of unelected government bureaucrats. If the politicians were really serious about making voters the ‘ultimate rulers’, than they would opt for a system of direct democracy, where individual government measures were separately voted on by the citizens in a constant series of mini-referenda. But that’s not how democratic governments run these days, so even for a majority coalition of voters, let alone for the voter outside of that coalition, the government remains an ‘alien power over us’, contrary to Roosevelt.

 

Theodore Roosevelt: “To educate a man in mind and not in morals is to educate a menace to society.”[3]

Brian: This quotation is based on an excessively pessimistic view of human nature. As phrased, it asserts that a smart, educated person, if not indoctrinated with dogmatic, baseless moral commandments, will necessarily seek to harm his fellow humans living in society with him. It implies that the non-indoctrinated man is, by nature, a psychopath, someone with no sympathy or compassion for his fellow human beings. Compassion and sympathy, accordingly to this view, are traits that must be pounded into people’s heads through a process of ‘moral education’.

But this view, of course, is nonsense. Sympathy and compassion for fellow humans living in society with you, is a trait that is naturally hardwired into most people’s brains due to evolution. The early hominid species that survived the Darwinian struggle in order to give rise to us Homo sapiens were social species; species that grouped together in order to better survive the struggle for existence.  To facilitate this cooperative grouping together, individuals who had more sympathy and compassion for their fellow group/society members tended to survive and thrive in social settings, much more so than individuals lacking these traits. As a result, natural selection operated to select sympathy and compassion for group members as traits leading to better survival chances, which explains why these traits are innate to most modern humans. Humans for whom these traits are seemingly lacking, such as psychopaths, were probably born with them, but lost them as a result of a very traumatic childhood. All of this can be found in Charles Darwin’s The Descent of Man, and in Peter Kropotkin’s Mutual Aid, among other works.

But perhaps Roosevelt really meant something else when he used the word ‘society’, something that would save his statement from falsehood. If we substitute ‘government’ for ‘society’, then the statement makes a lot more sense. With this modification, Roosevelt is saying that the educated man who is not indoctrinated with moral commandments will be a menace to government. And with this statement I would agree.

I suspect that for most people, in most areas of interest, the costs of having a government interfere in the area outweigh the benefits of that interference. If this were recognized by many people in a society, the government would be in great danger of losing a significant amount of its power over that society. But here’s where moral indoctrination comes to the rescue of the government. If enough people are indoctrinated with moral commandments such as ‘always obey the law’, ‘respect authority’, ‘put the interests of the country before your individual interests’, and others, than the government’s position and power will be a lot more secure. I suspect that, implicitly at least, this is what Roosevelt had in mind when he made the statement.

Jimmy Carter: “In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns. But we've discovered that owning things and consuming things does not satisfy our longing for meaning. We've learned that piling up material goods cannot fill the emptiness of lives which have no confidence or purpose.”[4]

Brian: According to Carter, ‘strong families’, ‘close-knit communities’, ‘faith in God’, and ‘hard work’ are good, while ‘self-indulgence’ and ‘consumption’ are bad. We can identify a clear pattern here: everything that is done for your own sake is bad, while things that are done for the sake of something else (particularly abstract entities such as ‘families’, ‘communities’, and ‘God’) are generally good. The ‘hard work’ that Carter lauds can’t mean working hard for your own sake, because that would inevitably result in ‘self-indulgent consumption’. Thus it must mean ‘hard work’ done to serve other peoples’ or other entities’ interests.

This philosophy is similar to the one behind John F. Kennedy’s famous quote, critiqued above. This philosophy tells people to forget about their own desires and interests, and to concern themselves only with the interests of collective entities that are ‘higher’ than themselves, entities which could, conveniently, include ‘countries’ or ‘governments’. This philosophy of self-sacrifice in the name of collective entities is well suited for maintaining the power and legitimacy of governments, which is why so many politicians tout it.

Returning to Carter’s statement, he continues by stating that self-indulgent, material gratification cannot satisfy our ‘longing for meaning’. Firstly, it is highly arrogant and presumptuous of Carter to tell every American what ‘they’ have discovered about ‘their’ longing for meaning, or even to assume that every American has such a ‘longing’ in the first place. What the heck does Carter know about the inner deliberations of millions of Americans concerning the ‘meaning of life’?  Maybe some of them find piling up material goods to be quite meaningful!

Secondly, the ‘meaning’ or ‘purpose’ of life, contrary to Carter, is to self-indulgently consume, or enjoy, that life. If part of that self-enjoyment comes from starting and maintaining a loving family, engaging in community life, or worshipping Gods, than that’s all well and good, but it doesn’t take away from the fact that all of these activities are ultimately pursued for the sake of self-enjoyment. Carter tries to dodge this by equating ‘self-indulgence’ and ‘consumption’ with material pleasures alone; but this simply will not do. The Merriam-Webster dictionary defines ‘self-indulgence’ as: “excessive or unrestrained gratification of one’s own appetites, desires, or whims”[5]. The Oxford dictionary defines ‘consumption’ as: “The action of using up a resource.”[6] Neither of these definitions is tied to material gratification alone. One can easily have an ‘appetite’ or a ‘desire’ to start a family or to engage in community life, just as one can easily use up either material resources or other resources (such as concentration, physical exertion, or time/a part of your lifespan) in order to satisfy these non-material appetites or desires. Like many of its enemies, Carter tries to smear egoism by making it appear to be narrower than it actually is by falsely confining it to material gratification alone.

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[1] Inaugural Address, 1961, http://www.americanrhetoric.com/speeches/jfkinaugural.htm

[2] Address at Marietta, Ohio, 1938, http://www.presidency.ucsb.edu/ws/?pid=15672

[3] http://www.quotationspage.com/quote/41338.html

[4] ‘Crisis of Confidence’, July 15, 1979. http://www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-crisis/

[5] http://www.merriam-webster.com/dictionary/self-indulgence

[6] http://www.oxforddictionaries.com/definition/english/consumption

Should Penalty Clauses Be Enforceable? (Legal)

            Courts enforce ‘liquidated damages clauses’, but they refuse to enforce ‘penalty clauses’. A liquidated damages clause, found in many contracts, specifies the amount of damages that are to be paid to the victim, in case of breach of contract. Courts are generally willing to enforce these, however, these clauses are always scrutinized. They are scrutinized because courts refuse to enforce ‘penalty clauses’, which is what a liquidated damages clause becomes when it specifies an amount higher than what the courts consider to be the expectation damages for breach of that specific contract (the amount of money it would supposedly take to put the victim of the breach in the same position as he would have been had the contract been performed).

           Let us consider an example. Imagine that Justin Bieber signs a contract with a concert venue, promising that he will perform at that venue at 1:00 PM on May 25. Because the venue is planning to spend a lot of resources and effort to promote and prepare for the concert, and because they do not want to tarnish their reputation with a no-show, they want to make extra sure that Bieber will show up. Thus, they specify that if Bieber does not show up by 1:00 PM on May 25 to perform, he must forfeit $1 trillion to the owners of the concert venue, a figure far higher than the total expenses that they will incur to promote and prepare for the concert.

            Feeling confident that he will not break his engagement, Bieber signs the contract. Unfortunately, in a fit of youthful exuberance, Bieber parties too hard on the night of May 24, and does not show up for 1:00 PM at the concert venue the next day. According to the contract, Bieber must forfeit $1 trillion to the owners of the concert venue. Now, the question is: should the courts enforce this term or not?

            I think that in this case, they should not. Why? Because it is impossible in this case for Bieber to fulfill his contractual obligation through Specific Performance, given the time-sensitive nature of the task Bieber promises to perform. The default rule governing this case should be that the venue is entitled to a modified form of Specific Performance, that is, Bieber doing the concert at that venue on a different date, plus compensation for any costs that the venue must incur to reschedule the performance, including the cost of mollifying and refunding the tickets of disappointed patrons. If they do not want this, than their other option should be to collect Expectation Damages, calculated so as to be as generous as possible to the venue, from Bieber.  The final option is, in the unlikely event that paying the $1 trillion specified in the clause is less onerous to him than these two options, than Bieber should be allowed to opt to pay the $1 trillion instead.

            In what cases should penalty clauses be enforceable, if any? I think that they should only be enforceable when there is a possibility still open to the promisor of specifically performing. Though all contracts are to some extent time-sensitive, many are less so than the Bieber example given above. I suggest that for a penalty clause to be enforceable, the promisor must first breach by missing the deadline set in the contract, and then he must be allowed a period of time deemed reasonable by the court to correct his mistake and perform the contract. This gives the breacher an option: perform the contract within the grace period allowed by the court, or pay the sum of damages, ‘penalty’ or not, specified in the contract.

            With this option, the breacher can determine which is more costly for him: performing the contract in the grace period, or paying the agreed damages. The more certain, ex ante, the contracting parties want to be that potential breachers will choose to perform the contract in these circumstances, the higher they can set their agreed damages clauses in the contract. Parties who highly value certainty in the performance of their contract will choose to set their agreed damages higher than parties who value certainty in the performance of their contract less highly. Allowing parties to tailor their contracts based on their preferences in this regard is positive, as it allows for the existence of contracts that are more suitable for advancing the joint-interests of the contracting parties.             

            But how about for very time-sensitive contracts such as the Bieber hypothetical discussed above? Shouldn’t the parties be allowed a way to make their preferences for certainty of performance known and executable here too? Ideally, yes, but it is simply too harsh to allow potentially astronomical stipulated sums of damages to be awarded when the breacher has only one, time-constrained shot at performance. The reasoning is related to the recognized contract defense of Impossibility, where a fundamental change in circumstances has virtually or literally made the performance of the contract impossible for one of the parties. In such cases, courts will usually excuse the party in breach from paying damages. Though it is not impossible for Bieber to have shown up to the concert on time, once he has missed the concert, it is then literally impossible for him to perform his end of the contract. While he should by no means be excused from all damages for this, he should not have to pay the potentially astronomical amounts that could be specified in ‘penalty clauses’.

            Thus, the courts’ complete rejection of penalty clauses is not a good solution, but neither is accepting all penalty clauses, in all circumstances. Instead, penalty clauses should be enforceable, but only if the party in breach has a realistic opportunity to mend his ways and perform the contract after all in order to avoid the penalty. Otherwise, for very time-sensitive contracts such as the Bieber hypothetical described above, the breacher should have the option to undertake a modified form of Specific Performance (performance on a different date), plus paying the victim back for necessary rescheduling costs, provided that the victim wants this.     

Human Feelings: More Than Just Chemical Reactions

Neurochemistry is an area of science that has been advancing fairly rapidly in recent years. Scientists have discovered that specific chemicals produced by the brain are associated with specific kinds of feelings experienced by the owner of that brain. Dopamine, endorphins, epinephrine (adrenaline), serotonin, oxytocin, and vasopressin are examples of such neurochemicals. Taking mind-altering drugs (whether recreational drugs or anti-depressants), or engaging in certain activities such as physical exercise or sex, can stimulate the production of some of these chemicals in the brain, thus altering your general mood.   

            

           Now, this is all very interesting, and neurochemistry is certainly a worthy area of research. However, there has been a tendency to make broader claims for the findings of neurochemistry than they are entitled to, a tendency to try to explain all human feelings through the findings of neurochemistry. To combat this tendency, I must insist on the fact that neurochemicals are not the only ingredient in human feelings. Feelings are so much more than just these chemicals.  They are produced by a combination of: chemicals and context, with context probably being the more important of the two.

            

           Human feelings never occur in a vacuum; they always have a specific intellectual context. By intellectual context, I mean the totality of what makes an individual human being who they are, at the moment when the feeling is experienced. The intellectual context is shaped by the unique, past experiences that have shaped an individual’s personality, experiences that contribute to forming people’s personalities in non-standardized ways due to each individual’s unique genetic make-up and brain structure. The result will be a unique configuration of preferences, values, and ideas held about the world, in place when the concrete feeling is experienced. This configuration will necessarily be different for each individual person, and will also necessarily be different for the same person at different points in their life. For every moment of an individual’s existence that passes, this configuration will change and the old one will be gone forever, never to be faithfully reproduced.

            

           In casual language, we usually refer to feelings in broad, expansive classes, such as: happy, sad, angry, euphoric, frustrated, satisfied, excited, bored, disappointed, etc… While necessary for purposes of concise communication, such language serves to conceal the vital role of context in human feelings. Everyone can feel something that they can identify as ‘euphoric’ or ‘sad’, according to the definitions which other people have in mind when they talk about these classes of feelings. This leads to the notion that feelings are objective phenomena, common to all humans and even some animals, rather than subjective phenomena that are unique to the individual, conscious human. And if feelings are objective phenomena, than perhaps they can be fully explained by the existence of certain neurochemicals, different for every feeling, produced by all humans.            

            

           The problem with this story is that it impermissibly ignores the subjective element in all human feelings: the context in which they are felt. I could say that I was ‘sad’ on March 11, 2014 at 4:00 PM, and also that I was ‘sad’ on March 29, 2014, at 11:00 PM. But in actual fact, there is no way that I could possibly be talking about the same feeling in both of those instances, even though I express them in common language using the same word. Feelings never repeat themselves over time because the intellectual context is constantly changing, nor do they repeat themselves across different individuals. Feelings are as unique as each individual, and as fleeting as each person’s momentary state of mind. Even if scientists could reproduce the exact same chemical reaction in someone’s brain at different points of their existence, there is no way that the resulting feeling would be the same in both instances. How could it be when different intellectual contexts result in differing personalities and general states of mind at the two moments when these supposedly ‘identical’ feelings are produced?  

            

           Neuroscientists, in their quest to find objective, universalizable causes of all human feelings, have attempted to explain one of the most mysterious and revered feelings of humanity using the science of neurochemistry: romantic love. Neuroscientist Helen Fisher, of Rutgers University in New Jersey, divides love into three stages: lust, attraction, and attachment. She suggests that the lust stage is driven by the sex hormones, testosterone and oestrogen. The attraction stage is driven by Dopamine, Norepinephrine (adrenaline), and Serotonin. The attachment stage is driven by Oxytocin (released during sexual orgasm) and Vasopressin[1]. Now, I am not qualified to criticize the neuroscience performed by and reported by Dr. Fisher, I will assume that it is quite sound. I merely want to ensure that this science does not lead to unsound conclusions on the subject.

            

            One unsound conclusion that could be drawn from this material is that the sum and substance of human feelings of romantic love can be explained by different combinations of neurochemicals produced. I need not descend into the hazy world of ‘spirituality’ in order to assert that this extreme reductionist conclusion is horribly, grievously wrong. All I must insist on is the fact that love, like any other human feeling, does not occur in a vacuum; it always arises in a definite intellectual context. As explained above, this intellectual context differs for each individual person, and differs for the same person at every moment of their lives. This is not to say that the chemicals identified by Dr. Fisher and others don’t play a role in human feelings of romantic love: they probably do. But the fact is that they are not the only ingredient, and probably not even the most important ingredient, in the recipe that produces human feelings of romantic love.

            

           When entering into a romantic relationship, the two people bring with them their unique genetic make-ups, past experiences, values, preferences, and world views. During the course of the relationship, the experiences of the relationship itself will be partially shaped by, and will result in a modification of, what was brought into the relationship by the two people (except for genetic make-ups which aren’t modifiable). This process will be incredibly complex, and will be influenced by an almost infinite variety of factors. The ‘love neurochemicals’ could certainly play a role in influencing these vital experiences, but so could many other things, from what was said by one person to the other at a certain point in time, to how well one person supported the other during a time of difficulty, to even something as seemingly trivial as what the characters in one person’s favorite romantic movie ended up doing with their relationship, and what the portrayed results of these actions were. 

           The results of this process will produce a different, unique intellectual context at each moment when a feeling of love is experienced by a person in a relationship. This, in turn, will result in a different feeling of love for each individual, and a different feeling of love at each moment of an individual’s romantic relationship. Thus, feelings of love are not comparable between individuals, nor are they comparable at different moments in a given individual’s existence. Each feeling of love is a unique one.

            

           It is understandable why scientists aren’t keen to take on this kind of mind boggling complexity, and instead choose to focus on more objective, reductionist factors instead. However, the complexity of a set of factors is not a justifiable reason to ignore these factors when trying to explain a phenomenon. Much to the dismay of some scientists, it is likely that due to the extreme complexity and subjectivity of these important factors, love will remain a mysterious phenomenon for the foreseeable future. Perhaps, ultimately, it is better that way anyway.

              

                       

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[1] BBC, “The Science of Love”, http://www.bbc.co.uk/science/hottopics/love/

The Mighty Contract And Its Prerequisites (Legal)

            In his article, ‘Consideration and Form’, renowned American legal philosopher and contract law scholar Lon Fuller wrote the following about ‘private autonomy’, which he considered central to contract law:

“This principle simply means that the law views private individuals as possessing a power to effect, within certain limits, changes in their legal relations. The man who conveys property to another is exercising this power; so is the man who enters a contract. When a court enforces a promise it is merely arming with legal sanction a rule or lex previously established by the party himself. This power of the individual to effect changes in his legal relations with others is comparable to the power of a legislature. It is, in fact, only a kind of political prejudice which causes us to use the word “law” in one case and not in the other, a prejudice which did not deter the Romans from applying the word lex to the norms established by private agreement.”[1]

           

           In light of this, I define ‘Contract’ as follows: A voluntary, mutually agreed-upon, and mutually beneficial change in two parties’ legal relations with one another. Contracts can take the form of a transfer of legally recognized property titles (conveyance contract), the making of a legally binding promise (promissory contract), or the waiver of some existing legal liability for causing injury or trespass (liability contract).

            

           At first glance, these ideas might seem strange. The common view of law is of rules imposed from on high by legislatures and judges. But, through contract, private individuals can make law for themselves in many fields, and can use the apparatus of judges and police officers as tools for making these laws enforceable.

            

           This system of private, voluntary law making through contract actually has a pretty broad and important scope. The bulk of what we know as property, contract, and tort law is within its realm. There are really only a few things which ‘law imposed from on high’ must deal with before voluntarism can do the rest. These are: 1. Assignment of initial property rights. 2. Determining when a contract exists and interpreting its meaning. 3. Determining when an injury or trespass is ‘caused’ by another person or not. 4. Setting Default Rules. 5. Maintaining the legal apparatus. Let us consider these five in turn.

            

           Property, contract, and tort law all revolve around property rights in persons and things. The voluntary system of exchanges and contracts can modify property rights in all kinds of important and beneficial ways, but it cannot establish an initial assignment of these rights. The first question the law must answer with regard to the initial assignment of property rights is: who owns the labor and the body of each individual person? Anglo-Saxon Common Law (and any other civilized legal system) answers: the individual person themselves! When it comes to children, the answer is a bit more complicated, but for adults, the individual adult is recognized as initially possessing the right to bodily integrity (freedom from gratuitous bodily harm imposed by others) and the right to dispose of their own labor powers as they see fit.

            

           The second question is: how does private ownership in previously unowned land and material goods get established? Anglo-Saxon Common Law generally answers: the first person to possess and use the unowned land or material good should be the legally recognized owner of it. The pioneer who clears a patch of unowned wilderness to start a farm is recognized as owning that patch; the gatherer who picks a basket of berries from an unowned forest is recognized as owning that basket of berries. Robbery of a parcel of land or a material good does not establish the robber’s legal title to that good, unless a significant span of time (usually 50 years) has passed, in which case the heir or the purchaser of the robber’s lands or goods will get full, uncontestable legal title to them. One can certainly think of other ways of establishing legal ownership in previously unowned land and material goods. For instance, the government with military power over a territory could claim all privately unowned land for itself temporarily, and then auction it off to the highest private bidder. Whichever way or combination of ways the legal system chooses, the important thing, for the purposes of establishing a legal system based on free contract, is that there be a recognized way of turning unowned things into legally recognized private property.

            

           Once the question of initial property rights is settled, people can start entering into contracts with one another to modify and transfer these property rights. People can exchange their labor and material possessions for the labor and material possessions of other people, and will do so as long as the deal is mutually beneficial. For simple hand-to-hand exchanges, all the legal system has to do is recognize the changed titles to property. 

           Another thing people can do, and this is vital for any economy above the primitive level, is exchange legally binding promises to do something for, or to give something to, the other person. For example, one person can promise to work at a task for an employer for two weeks, and in exchange, the employer can promise to pay the worker a definite sum of money at the end of the two weeks. Or, a farmer could promise to sell a grain trader a certain quantity of wheat at a certain price on a specified date in the future, in exchange for the grain trader’s promise to buy this certain quantity of wheat at a certain price on a specified date in the future (a futures contract). Or, a creditor could agree to give a debtor a certain sum of money in the present, in exchange for the promise of the debtor to repay this sum of money, with a specified sum of interest added on, by a specified date in the future. In all of these cases, the legally binding aspect comes in when the person who made such a promise seeks to break that promise. If they do so, the apparatus of the law comes in and forces the breaker of the promise to pay out the agreed-upon (or the default) damages to the victim for breaching the contract. This legal sanction helps to make these kinds of promissory transactions, especially ones involving complete strangers, more certain, and therefore more effective.

            

            In order to enforce a contract, the legal system must first determine whether a contract between two parties in fact exists or not, and if it does, what exactly the content of the agreement is. This task cannot be done through private contracts, because the point in question is whether a contract exists in the first place and how it is to be interpreted if it does. Thus, here is the second thing that ‘law imposed from on high’ must deal with in order to facilitate the system of free contract. The legal system must determine when a contract has the mutual assent of the two parties, and must interpret the substance of any mutual agreement that exists. If it failed to do these things effectively, than the legal system might be imposing obligations on the parties that they did not mutually agree to, or it might be failing to enforce obligations that the parties wanted to be legally enforceable. The legal system, which in this context is supposed to be acting as the tool of the contracting parties, could end up becoming an ineffective tool, or could end up transforming from a tool into a tyrant.

            

           If people have a legally recognized property right in their persons and material property, than the legal system will generally seek to protect the individual’s person and material property against invasion, injury, and trespass by another party. Here is where tort law comes in. Just as, in the case of promissory contracts, the legal system had to determine when a contract existed and what its contents were, here the legal system has to determine when an invasion, injury, or trespass exists, which party, if any, caused these events, and what percentage of the causal responsibility for the event lies with that party. This is the third thing that ‘law imposed from on high’ must deal with in order to facilitate the system of free contract.

            

           The fourth task of ‘law imposed from on high’ is to set the ‘Default Rules’. The system of free contract is all about allowing parties to alter their legal relations with one another as they see fit, as long as the alteration is mutually agreed-upon by the relevant parties. But sometimes, contingencies arise which the parties did not plan for or take into account when negotiating their contracts. If the contingency does arise, there must be a ‘default’ behavior adopted by the legal system in relation to this contingency. This behavior could be doing nothing at all, or it could consist of following a default rule that will apply if this contingency arises and the parties say nothing about it in their contract.

            

            Some legal scholars think that default rules should be set based on what most contracting parties in specific circumstances would have wanted anyway. Others, such as Randy Barnett, think that the actual content of the default rules is less important than that they help reduce misunderstandings between the parties about the terms that will apply in the event of a dispute. Even if most parties choose to contract around these rules, by doing so the likelihood that both parties are consenting to the same thing increases[2].  As such, according to Barnett: “contract law should confine itself to common-sense default rules that unsophisticated parties would expect.”[3]  I tend to agree with this latter view, as it is more conducive to the system of free contract I am describing. By setting simple default rules that conform to the likely expectations of unsophisticated parties, we can both help ensure that unsophisticated parties aren’t taken advantage of, and encourage sophisticated parties to raise the issue with unsophisticated parties if they wish to contract around this default rule. The idea is to encourage parties to actually work out mutually agreeable terms for themselves, rather than to try to impose sophisticated default rules from on high that judges and legal scholars think are agreeable and should be adopted by the parties. Parties to a contract typically have better knowledge of their specific circumstances, the relevant local business conditions, and their own subjective preferences and valuations, than judges and legal scholars do. Thus, it is better if the parties themselves work out the terms, and if sophisticated parties are incentivized to discuss and raise the relevant issues with unsophisticated parties, which Barnett’s conception of default rules encourages.        

            

           In property law, the best default rule is a simple one: if parties do not mutually agree upon a transfer of property, than legal recognition will remain with the original holder of the property. If parties do not like this, than they can manifest their mutual agreement to transfer property clearly.

            

           When it comes to the promissory contracts of contract law, default rules can get more complicated. One question addressed by such default rules is: what damages or remedies are the victims of a breach entitled to from the breacher, in case of breach of contract? This is a contingency that could well be addressed in the original contract. Some contracts even specify precise sums of money to be transferred to victims in case of breach. These are known as ‘liquidated damages clauses’. But what if the original contract does not specify what damages are to be paid in case of breach of contract? In this case, the legal system must follow the default rule that it has decided upon. Here, I think the best default rule is: specific performance in most cases, but if not feasible, than expectation damages. Specific performance is a remedy for breach of contract that basically does not allow people to breach their contracts. If someone seeks to breach, the court forces them to deliver what they promised. However, as part of the default rule, if the party in breach can show that specific performance is unreasonably onerous, than expectation damages could be awarded instead. Expectation damages are a sum of money that is calculated with the goal of putting the victim of the breach in the same position as they would have been had the contract been specifically performed. These calculations can often be quite uncertain, and often tend towards undercompensation for the breach, which is why specific performance should be the presumptive form of relief in the default rule.

This default rule is one that unsophisticated parties would expect. Unsophisticated parties generally think that if you execute a legally binding contract with someone, they are seriously bound to do what they promised for you. If this proves overly difficult given changed circumstances, than it is not a giant leap to translate this expectation into a money sum of damages. If the parties to the contract think that this simple measure of damages is unreasonably onerous for the breacher, they can always choose to contract around it, as long as both parties agree to do so.    

            

           Another issue in promissory contracts addressed by default rules is: when is a promise legally enforceable? Courts and contracts scholars have come up with all kinds of sophisticated doctrines to answer this question, involving ‘consideration’, ‘bargaining’, ‘promissory estoppel’, and the like. But at the end of the day, these should just be considered default rules. If parties, on a written and signed contract, write: ‘We, the undersigned, agree that this agreement is intended to be legally binding’, than that should settle the issue, without recourse to any of the doctrines above.  

            

           Another issue is: what does it take for a breach of contract to occur? Does a minor breach of a relatively minor clause in the contract invalidate the whole thing? The best default rule is that if the breaching party shows a genuine willingness and ability to address this breach and to prevent more breaches from happening in the future, than the breach is not ‘material’, and the contract is not invalidated by it[4]. If not, than the breach is ‘material’, and the contract is invalidated. This is a default rule because the parties could well stipulate in the original contract that any minor breach of any clause in the agreement constitutes a full breach. For projects requiring great attention to detail and precision, this stipulation might make sense for the parties. Alternatively, the parties could stipulate that only ‘gross’ breaches will invalidate the contract, but that the party in less than gross breach has a duty to rectify such breaches and perhaps to pay specified money penalties to the other party for any such breach.

           

           How about for tort law, an area where the concept of default rules is not typically seen to apply? I maintain that much of tort law is a series of default rules because parties should have the legal right to waive some of the ‘default’ liability through contractual waiver agreements. Given this ability, I think that the best tort law default rule is the strict liability rule. This rule states that if a party can be shown to have caused harm to the person or property of another, that person is fully liable for that harm, to the extent of his role in the causation of that harm. The major competitor of this rule is the negligence rule, which says that people are only liable for harm caused to others if they have not taken ‘reasonable’ precautions against inflicting such harm.

Whatever one may think of the substantive merits of these two rules, when considered as a default rule that should be based on the common sense expectations of unsophisticated parties, the strict liability rule clearly wins. If you cause harm to my person or property, you are responsible for recompensing me for that harm. I think that this simple and straightforward rule is the one that unsophisticated parties would generally expect to prevail. This is especially true given how hard it is for courts to define what a ‘reasonable’ precaution is, and thus to define what ‘negligence’ is. Unsophisticated parties generally don’t expect the law to be so uncertain and malleable, and even if they did they still wouldn’t really know what exactly to expect in specific circumstances. Also, for most business-customer relationships especially, the more likely potential tortfeasor tends to be the more sophisticated party (the business selling goods or services) than the potential victim (the customer). Strict liability is the most onerous default rule for the sophisticated potential tortfeasor, so they will be incentivized to communicate with and work out an alternative arrangement with the potential victim before entering into a business relationship with them.  This process of information sharing, bargaining, and eventual mutual agreement will often result in a more mutually beneficial arrangement of liability than one imposed by the courts from on high.

For example, imagine that the owner of a private playground specifies that everyone who pays for their children to use the playground must agree that the playground owner will not be liable if the child hurts themselves on the playground, unless there is something truly negligently unsafe about it such as exposed rusty nails or exposed asbestos. This arrangement will result in the relevant liability rights being modified in a way that facilitates both parties taking reasonable, not so costly precautions. The parents can drill some basic safety tips into the heads of their children, while the playground owner can make sure that the playground is free of rusty nails and asbestos. This situation is better than if the playground owner were fully liable, and had to coat everything with cushions to guard against children hurting themselves, or if the playground owner was completely free of liability, in which case rusty nails and asbestos could abound.

Thus, it is not so much that strict liability is a good rule in all, or even most, circumstances. It is that strict liability is a good default rule that incentivizes parties to work out more mutually beneficial liability arrangements for themselves.  

The final thing that ‘law imposed from on high’ must see to is: maintaining the legal apparatus itself. We have given tasks to ‘law imposed from on high’, and we have assumed that the legal system will have an enforcement arm that can enforce both the ‘laws imposed from on high’ and the private, legally binding agreements of contracting parties. This obviously requires personnel and resources to execute. Under the anarchist ideal, providers of legal services would be able to maintain themselves based on voluntary subscriptions paid by the users of their legal services. However, if one suspects that this system would soon lead to warlordism and chaos, as I do, than the legal system must impose a ‘law from on high’ that allows it to fund itself non-voluntarily. Here is where taxation law comes in. The monopolistic legal system of a given geographical area levies mandatory contributions from the inhabitants of that area, according to various principles and rules of taxation.     

So there you have it, ‘law imposed from on high’ is necessary to deal with the issues of: 1. The assignment of initial property rights. 2. Determining when a contract exists and interpreting its meaning. 3. Determining when an injury or trespass is ‘caused’ by another person or not. 4. Setting Default Rules. 5. Maintaining the legal apparatus. This done, the system of free contract can deal with most of the rest of society’s legal issues in a voluntary, decentralized, and mutually beneficial fashion. People can set and alter their legal relations with one another through the mechanism of free contract, and create rules of law that best serve their individual purposes. This empowering phenomenon allows people to take charge of a significant portion of their own legal destinies, instead of leaving it all up to judges and legislators to decide and to impose on us. All of this is what the Mighty Contract allows.     

                   

                           

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[1] Lon Fuller, ‘Consideration and Form’, 806-807.

[2] Randy Barnett, “Contract Is Not Promise; Contract Is Consent”, 660.

[3] Randy Barnett, ‘Contract Is Not Promise, Contract Is Consent’, 661.

[4] Randy Barnett, Contracts, Chapter 5: Performance.