Junior Ganymede
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Notes towards a definition of freedom, part 7

July 18th, 2017 by Vader

In my last post, I proposed some axioms to guide legislators in formulatings laws that are likely establish civil liberty in a free society.

The first of these axioms — the prime directive, if you will — is the presumption of lawfulness; that is, the presumption that a choice is legal, unless explicitly and narrowly prohibited by law; and should be legal, unless there is a sound basis in theory and experience for narrowly prohibiting that choice.

The presumption of lawfulness implies that legislators may not prohibit any choice unless it falls within a narrow axiomatic category that may make it a legitimate target for legal prohibition.  Even when a choice falls into such a category, it remains lawful until it is specifically and narrowly prohibited by an actual act of legislation. Furthermore, the fact that some choices falling into these categories may be prohibited does not mean that all such choices must be prohibited.

One such axiomatic category is the choices of the young or the cognitively impaired. A basic element of freedom is that one’s choices are meaningful, and such persons have a limited ability to make meaningful choices. Rather than trying to spell out in detail every choice such persons might make, and try to anticipate which are potentially harmful enough to prohibit, I think the law would be wiser to vest a power of choice on behalf of such persons to legal guardians.  The obvious example is the parent who is given the legal right, and, in fact, the duty, to prohibit his young child from impulsively dashing into heavy traffic. Such guardianship is best exercised by a person who has a strong incentive to make good choices on behalf of his charge, and the law does well to assume that the ties of familial affection are the best such incentive. This assumes a culture in which families are honored and sustained.

It seems to follow that parents should decide if and when their children are allowed to consume alcohol. I think this is a further argument for the proposal I made in my last post, that the age of presumptive majority should be higher than the present age of 18. This would clear the way for restoring in loco parentis in our colleges, which is the best hope for cleaning up the binge-drinking, hook-up culture that infests so many of our institutions of higher education. Of course, this requires that colleges want to clean up the binge-drinking, hook-up culture, and I think that would be a major reform in itself.

Another axiomatic category of choices subject to legal restriction are choices that are fraudulent. By this I mean that the party offering the choice is willfully and knowingly misrepresenting the consequences of the choice. I think this axiom is sufficient to cover such widely accepted elements of law as the law of obligations, of which the most prominent branch is contract law. A person who enters a contract without a real intent to carry out his part of the contract is misrepresenting himself and thus the choice he is offering to other parties to the contract. As a practical matter, because of the difficulty of judging intent, the law must presume that a person who fails to fulfill a contract had no real intent to do so when he made the contract. This does not prohibit such narrow exceptions as bankruptcy, the risk of which is known and can be taken into account by a party entering into a contract.

A fourth axiom is that legislators may prohibit choices that pose a clear and present danger to third parties. This covers all manner of violent crimes and crimes of recklessness, from murder to drunken driving.

I think these three axiomatic categories of proscribable choices are likely to have broad, if not universal, support. There is, of course, much in the details that will be difficult to work out and on which reasonable people will continue to disagree. It takes no persuading to convince a rational person that a very young child does not understand the consequences of his actions. But there will always be debate on how best to teach children to make meaningful choices. For example, must not children sometimes be allowed to make choices they do not understand, and suffer the consequences, so that they will learn? This highlights the delicate and vital role of parents and other guardians. Likewise, there will always be debate on how we decide that a youngster has now reached accountability. Does legal responsibility come all at once? Our laws lean that way, though I note that a 19-year-old, who is a legal adult everywhere in the United States, is also prohibited from certain choices regarding alcohol that are permitted to 21-year-olds. At what age do we permit young people to be legally responsible for certain choices? That debate will continue because there is no obvious bright line, though I think neurobiology may provide some guidance (and suggests that the present presumptive age of responsibility in the United States is too young.)

Likewise, it takes little persuading to convince a rational person that the law should prohibit choices that pose a clear and present danger to third parties. There will still be debate over what “clear” and “present” mean, and how severe the impact on others will be before we label it a “danger.” Few of us object to laws prohibiting driving while intoxicated, but there will always be debate about the presumptive level of intoxication. And there is a school of thought, though not widely supported, that the level of intoxication should not be presumed unlawful unless actual harm comes to others — and then it is the harm that should be punished, and not the state of intoxication that led to it. One can argue this case from the presumption of lawfulness, but I believe this must be weighed against real lives saved by strict enforcement of a prohibition on the drunken driving itself. I think I would argue that good reasons for driving while intoxicated are so rare that the presumption of lawfulness is overcome at some level of intoxication, regardless of whether harm has yet come to others.

I have saved the case of fraud for last because it is the one that is mostly likely to be seriously questioned. It seems clear to me that a just system of law must compel fulfillment of contracts. One might think that this would be the most uncontroversial aspect of a legal system, and it is, in fact, widely supported across the center and right of the American political spectrum. Even extreme libertarians support the concept of contracts as legally binding obligations. Only in some quarters of the far Left do I see opposition to the law of contracts.

A contract is valid only if it is freely chosen by both parties; contracts created under duress will not usually be enforced by the court. Contracts vary in their level of formality, but those contracts with the most serious consequences invariably involve a deed of contract in which the consequences of entering the contract are spelled out. We assume that the parties to such contracts are competent adults who are capable of making the meaningful and consequential choices spelled out in the contract. The power to enter contracts is thus a power to exercise freedom and deserves the support of law.

The scattered opposition I see to the law of contracts seems to reflect a desire to correct undesirable outcomes. Thomas Sowell has characterized this as the quest for cosmic justice. A good example is Gottsdanker v. Cutter Laboratories, which helped entrench the concept of strict liability. The facts of the case are not in dispute. Cutter Laboratories was one of the first pharmaceutical firms licensed to sell polio vaccine. There is no dispute that Cutter followed the procedures for producing the vaccine outlined by Salk and the FDA. There is also no dispute that Cutter’s vaccine passed the required safety tests. There is also no dispute, in hindsight, that the outlined procedures and safety tests were inadequate. As a result, the vaccine contained live virus, which caused 40,000 cases of polio, of which 56 developed paralysis and five died. Cutter’s good faith is attested by the fact that many of the victims of the defective vaccine were children of the company’s own officers and employees, who were among the first to receive the vaccine. Under the traditional law of contracts, Cutter could not have been held liable either for negligence or breach of contract; indeed, neither was argued. Instead, the “King of Torts”, Melvin Belli, successfully argued that Cutter should be held to a standard of strict liability in which the mere fact of harm was sufficient to justify damages.

This is a wonderful example of the legal maxim that “hard cases make bad law.” One cannot help but be sympathetic to the children and their families. The desire to use the blunt instrument of the law to correct a bad outcome is understandable. Indeed, I suspect some readers will think the worst of me for suggesting that this was the wrong decision, so entrenched has the concept of strict liability become in our society. But strict liability is a misguided attempt to produce cosmic justice rather than human justice. It has materially contributed to ours becoming a litiginous society, in which we attempt to shift the consequences of our choices onto others as much as possible. And, in the particular case under consideration, the decision changed the terms of the contract, after the fact, without the consent of all parties. Cutter had contracted to provide a vaccine produced according to an outlined procedure which passed certain tests. It did so. In holding the company liable, the court altered the contract out of sympathy for an admittedly sympathetic plaintiff. This is bad jurisprudence.

But I do understand why many readers will be mystified that I disagree with the decision in this case.

Closely related to strict liability is the deprecation of the assumption of risk. The assumption of risk is the legal doctrine that, if a reasonable man could foresee that a certain adverse outcome was possible from making a certain choice, he could not hold others liable for that outcome. He had assumed the risk when he made the choice. This doctrine is not altogether dead; it remains unlikely, for example, that a professional football player could recover damages for cracked ribs from a violent tackle, because even quite dimwitted adults understand that football is a contact sport and cracked ribs is one of the foreseeable adverse outcomes. But the growing pressure to hold NFL liable for cumulative brain damage from repeated violent tackles reflects the weakening of this legal doctrine. Likewise, a medical practitioner who spells out the risks of a certain course of treatment has some protection from a malpractice suit if the risk becomes reality — at least outside of west Texas and parts of Florida.

A related criticism of the axiomatic category of fraud is that it does not define fraud broadly enough. This is what I will call argumentum ad asymmetricum, in the best tradition of legal dog Latin. I alluded to this in the previous post, when I suggested a fourth axiomatic category of decisions made on asymmetric information. The idea here is that fraud should be broadened to cover choices offered to another where the person offering the choice is possessed of information the other person does not have.

Insider trading laws are probably the most extreme example of this phenomenon. The person trading stocks on the basis of inside information, defined (roughly) as information not freely available to other traders, is regarded as engaging in a form of fraud. For example, a trader in petroleum stocks who gets inside information that a company has struck a gusher may offer to purchase stocks that he, but not the other party, knows are about to increase significantly in value. One can argue that, in not disclosing this to the other party, he is misrepresenting the choice being offered.

There are two objections to this, one pragmatic, and the other both pragmatic and theoretical. The first is the one pointed out by some economists, which is that trading in inside information has the effect of externalizing that information. When a trader is suddenly interested in a particular stock, the price of that stock will tend to go up, regardless of whether other traders know why. This transmits information — the fact that stock in the company is likely to become more valuable — across the market. This is actually what markets are supposed to do and are good at, if not interfered with. From this perspective, there is a trade off between the loss suffered by individual traders who underestimate the value of their stocks, due to lack of information, and the gain for the market as a whole from that information getting out. How one weighs this trade off will govern what kind of insider trading laws one supports.

The other objection to argumentum ad asymmetricum is that all trades are asymmetric. Economics understand this well enough that there is even a popular economics blog entitled Asymmetric Information. The effect of trying to prohibit trades on asymmetric information is to prohibit pretty much all trades.

There is a deeper problem with argumentum ad asymmetricum, which is that it leads to pervasive paternalism. Almost all choices are made on incomplete information, and if we attempt to impose cosmic justice by requiring that both parties to a contract be equally informed, and prohibiting choices where one party has an advantage in information, we will wind up pretty much prohibiting all choices. On the contrary, I think we need to strengthen the concept of due diligence, which is that a party to a contract is expected to have made a reasonable effort to inform himself before signing the contract.  This also presumes a robust concept of assumed risk. A party who has a poor outcome from a choice, where the risk of that outcome could have been foreseen with a reasonable amount of investigation, should have no claim on the courts, and choices where due diligence would reveal such risks should not be curtailed by law unless they fall into some other axiomatic category (such as foreseeable harm to third parties.)

It is here that the distinction between the Freeman and the Consumer comes up again. A Freeman is willing to pay the cost of due diligence, and assume risks, in order to make consequential choices. A Consumer wants to make choices without any need for due diligence and without assuming any risk if things turn out badly.

As I write this, the debate over health care is reaching a new fevered pitch. This is a topic probably deserving several posts of its own, but I can think of few issues that more clearly distinguish Freemen from Consumers. I’ll have more to say in my next post.

Comments (5)
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July 18th, 2017 12:17:26

July 21, 2017

There is something strained about making contract law a question of fraud avoidance. Better to make it about making choices more meaningful–since I can’t make a meaningful choice to contract if that choice doesn’t constrain me in the future.

July 21, 2017

The notion that a contract binds your future self crossed my mind, but I didn’t much explore it (having so many other avenues for inquiry open before me.)

I have perhaps fallen into the mathematician’s trap of trying to minimize the number of axioms in favor of theorems. But on reflection, I think you are right, and the notion of choices being binding across time is an important one worthy of its own axiom.

July 30, 2017

Excellent work as always, Vader

Insisting correctly on the responsibility of parents brings up a right the Founding Fathers though to ludicrous to mention, the Right of Parents to their own children.

Intoxicated/Impaired driving might be relatively simple if we only refer to alcohol, but there are enough legal medications that depending on the person, may or may not impair someone. And how do you tell? The police are NOT infallible here.

However, your distinction between Freeman and Consumer was an impressive one. I would like to hear more about that. I have not heard that before.

August 3, 2017

Let me add, that I really do crave to hear a clearer exposition of Consumer vs Freeman.

How does this affect building safety codes, for instance? I think it is ridiculous and obnoxious that we can’t use kitchens in our meeting houses for more than warming things up, but safety codes have done some good. Where do we draw the line?

It isn’t reasonable to have zero laws, but clearly, we can have too many. How do we optimize freedom in such a case, while balancing the public good?

August 4, 2017

Good questions all, which I will ruminate on over the next three weeks as I travel to view the upcoming eclipse.

I want to amend my axiomatic approach to civil liberty in light of G’s astute comment, and I want to specifically address Freemen versus Consumers, particularly in light of the recent lost debate on Obamacare.

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