prior probability

Let’s continue with our survey of illicit promises. Thus far, we have seen examples of legal but immoral agreements (such as slave trade contracts under Imperial Spain’s asiento system) as well as of illegal but moral agreements (such as usurious payday loans). Here, let’s focus on agreements that are illegal and immoral. Consider, by way of example, the actress Felicity Huffman, who pled guilty in federal court to one count of “conspiracy to commit mail fraud” for paying a college admissions consultant $15,000 to have a proctor correct her daughter’s answers on the December 2017 SAT entrance examination. (The relevant facts are alleged here.) In other words, Huffman entered into an illicit agreement, one that was not only illegal under federal law (mail fraud) but also immoral, since her daughter received an unfair advantage over other test takers. By the way, why wasn’t her husband charged, and why isn’t the public allowed to see Ms. Huffman’s mugshot? Why do the wealthy get so many special privileges not afforded to run-of-the-mill criminal suspects?

And she served only 11 days of her sentence.

Thanks to the Amazing Alex Tabarrok, we stumbled upon this paper by Esteban Mendez-Chacon and Diana Van Patten, who provide a revisionist and alternative assessment of the reviled United Fruit Company. Professor Tabarrok provides additional commentary here.

Let us continue our survey of illicit promises, shall we? Can you think of an example of a perfectly legal bargain whose subject matter is nevertheless immoral? What about the Atlantic slave trade? Prior to 1807, when Great Britain and the United States enacted laws abolishing the slave trade, an inhumane and shameful slave trade often operated within a legal framework. By way of example, the importation of African captives into the new world colonies of Spain was based on a special contract called the asiento de negros–a royal license to traffic in human slaves. In brief, these slave trade contracts granted legal permission to certain individuals or merchants to transport and sell a fixed number of enslaved Africans to the Spanish colonies in the Americas. At one point (1713-1750), the British Government owned the legal rights to the Spanish asiento. Specifically, Article X of the 1713 Treaty of Utrecht between Spain and Great Britain granted to the latter the legal rights to the asiento or slave trade between Africa and Spanish America. (Although Britain transferred its rights under this asiento to the South Sea Company, Britain owned shares in this company.) The slave trade thus poses a moral and legal puzzle: the possibility of legal but immoral promises. Usually, a legal promise does not pose any difficult moral issues, but what is the status of a lawful contract that involves immoral conduct?

Before moving on, let me to present another example of an illegal agreement containing promises that are not necessarily immoral: usurious payday loans. No, I am not trying to troll you; hear me out. First and foremost, not all payday loans are illegal, but let’s focus on those that are. The case of Buckeye Check Cashing, Inc. v. Cardegna is instructive in this regard. In this case, the lead plaintiff, John Cardegna, brought a class action in a Florida state court, alleging that his payday loans were illegal under a State law. The defendant was a shady payday lender, but instead of charging an interest rate, the lender would charge an excessive service fee for assuming the risk of default. Mr. Cardegna claimed that this service fee was, in reality, a disguised usurious loan under then-existing state law, but what is the moral status of payday loans? Even if such loans are usurious, don’t borrowers still have a moral duty to repay the principal?

I presented a fourfold classification of illicit promises in my previous post: (i) promises that are legal and moral, (ii) those that are legal but immoral, (iii) those that are illegal and immoral, and (iv) those that are illegal but moral. Let’s begin by taking a closer look at this last type of illicit promise. Can you think of an example of an illegal agreement whose subject matter is nevertheless justified on moral grounds? How about the Montgomery Bus Boycott of 1955-1956?

I happen to be writing this blog post in the beautiful city of Montgomery, Alabama, where Rosa Parks changed the course of the United States history, and where I had the honor of visiting the Rosa Parks Museum while I was attending the 65th Annual Conference of the Southeastern Academy of Legal Studies in Business. The Montgomery bus boycott was not only a pivotal moment in U.S. history; it also required the cooperation of many individuals over an extended period of time. In summary, after Rosa Parks was arrested for refusing to give up her seat on a bus in violation of a local ordinance, churchmen like the Rev. B. J. Simms and concerned citizens like Jo Ann Robinson called for a grassroots boycott of Montgomery’s public transit system to protest segregation. Since many black people relied on the bus system, these community leaders organized a carpool operation in support of the boycott. The City, however, responded by filing criminal charges against the leaders of the bus boycott, arguing that the unauthorized carpool operation was an illegal conspiracy under a 1921 State law that made conspiring to interfere with a business a crime. Although the boycott was declared illegal by racist State judges, the unlawful boycott was in service of a noble and moral cause.

Source: @IsabelWilkersonWriter

I have been making significant revisions to my work in progress “Breaking Bad Promises.” Among other things, I have included many new examples of illicit promises, i.e. promises that are either illegal or immoral, including drug deals as portrayed in some Mexican “drug ballads” or narcocorridos by Los Tigres del Norte (one of my all-time favorite norteño bands; check out their classic song “Contrabando y traición” below) as well as historical examples drawn from the Atlantic slave trade. Here, however, I shall present my fourfold taxonomy of illicit promises.

In summary, there are four possible types of illicit promises:

(i) promises that are both legal and moral,

(ii) promises that are legal but immoral,

(iii) promises that are both illegal and immoral, and

(iv) promises that are illegal but moral.

To bring these abstract categories to life, I will illustrate all four types in my next few blog posts.

Ada Lovelace (1815-1852), an English mathematician and writer, was best known for her work on the “Analytical Engine,” considered to be the first computer. The dress in her honor (pictured above) is available here.

If you haven’t seen the new logo yet, you may see it for yourself here. Below are what some well-known consumer goods might look like if they adopted FACEBOOK’s new approach to branding. Credit: @kunelgaur.