prior probability

Alas, according to this report (hat tip: @kottke), this infamous bridge in North Carolina was recently raised an extra eight inches (to 12′ 4″).

Continuing with my survey of illicit promises, Tess Wilkinson-Ryan and David A. Hoffman’s recent critique of hush contracts deserves mention. (Wilkinson-Ryan and Hoffman, law professors at the University of Pennsylvania, published their powerful critique in The Atlantic.) Their Ivory Tower critique, however, is highly selective and downright dangerous: selective because it focuses only on a small subset of nondisclosure agreements, such as those involving prominent media men like Harvey Weinstein and Matt Lauer; dangerous because Wilkinson-Ryan and Hoffman want State legislatures to criminalize the use of hush contracts by business firms. Or in their own words: Continue reading →

Thus far, we have surveyed three types of agreements or exchanges: illegal & immoral ones; legal & immoral ones; and illegal & moral ones. This leaves one last category–agreements that are both legal and moral. By definition, such exchanges are not illicit, since they raise neither legal nor moral issues; nevertheless, I include this fourth category for completeness. Don’t most confidentiality agreements or “hush contracts” fall into this category? To see why, I shall present a modified version of the famous “Prisoners’ Dilemma” to illustrate this category. Continue reading →

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?