My take on what a Free Market provided law system may look like in practice: In a free market society the functions of security, auditing, media, consumer evaluations, insurance, investigation, arbitration, and law enforcement will be provided in tandem in order to protect the residents of this free society. The specific configuration of which agencies will take over what functions and how many agencies there may be in a given geographic cannot be known in advanced. However, a few remarks may be made in regards to economic incentives and how they may affect this industry given the obvious concerns of conflicts of interest, bribery, and other forms of moral hazard. Thus I will outline one potential scenario which is meant to be hypothetically consistent with a free market but not necessarily authoritative in its predictive powers. The accumulation of billions of minds all competing against each other to fulfill the ever changing desires of the consumer may yield for more refined and perpetually modifying systems than the one I will present. Nevertheless we may be able to outline some of the general characteristics of such as system: Bob wants to be afforded the services of security, and in the cases to where his security may be violated, he wants to know that justice will be applied against the criminal responsible and that he may receive some form of restitution. To accommodate this demand, competing Defense Insurance Agencies (DIA) offer Bob their services of protection and justice. Bob has several to choose from and makes his decision according to which DIA has a reputation and plan that suits his individual needs. Bob chooses Shield, a DIA renowned for its low prices, prevention of harm, and ability to acquire solid restitution to its client’s in the instances they are aggressed against. He chooses the basic plan which covers acts of mugging, assault, and murder in the areas he frequents the most. As part of the deal, Shield offers Bob to carry a tracking and panic device with him at all times so that they may be able to more quickly and effectively respond to any dire circumstance Bob may find himself in. In exchange for Bob’s willingness to carry such devices, Shield offers him a lower monthly premium for their services. One day while riding his bike to work, Bob is confronted by a man with a knife demanding his bicycle and rides away with it. Bob immediately alerts Shield but unfortunately by the time they arrive the mugger is out of sight. Shield then covers the cost of Bob’s bike as well as good sum more for his troubles and trauma resulting from the incident. At this point, as a means to mitigate the harm to its reputation and to recover money from the mugger that it had given out to Bob, Shield commences an investigation. After some detective work Shield gathers enough evidence to confidently name Terry as the mugger. Shield then approaches Terry demanding he pays them the amount they had given to Bob along with some extra to cover the expenses of the investigation. Terry refuses claiming he is innocent. Because Shield doesn’t want to gain a reputation for being hasty and brutish it hears Terry’s case out and cross references his testimony with the evidence it had gathered earlier. However, despite Terry’s testimony, Shield still believes Terry to be guilty. In the case that Terry has no DIA coverage for himself, Shield may proceed to contract with a third party arbiter to review the evidence and testimony of each party and come to a verdict. Now it is important to note that the “law” terry would be under would be the standards by which this 3rd party arbitrator uses to determine his guilt or lack thereof. The type of standards such an arbitrator uses are also tempered by consumer preference, if they are seen as out of touch with justice then this will have a negative impact on this particular arbitration agency’s reputation and therefore its bottom line. Terry would be encouraged to participate in such arbitration so as to make the ruling more legitimate. If Terry refuses, Shield may offer alternative arbitration agency’s to handle the case in the hopes that Terry would agree to participate. In the case that Terry adamantly refuses to go to any arbitration, Shield may proceed with a third party arbiter without him. Remember, Shield goes through the trouble of encouraging Terry to participate so as to make any subsequent ruling on the case more legitimate. For this same reason, Shield will be incentivized to offer Terry arbitration by agencies which have a reputation for impartiality, fairness, and expertise in the matter concerned. In the case that the arbitrator used comes to the conclusion that Terry is “not guilty”, Shield will likely compensate him for his troubles associated with these false allegations. It is this prospect of reputational damage and financial loss which incentivizes the DIA’s not to accuse people of crimes without substantial evidence. In the case that the arbiter rules that Terry is guilty, Shield will proceed on insisting that Terry pays up. If Terry is able but refuses, then Shield may contract with his employer to garnish his future wages with interest until Terry’s debt is satisfied. If Terry is able to pay but is unemployed, then Shield may confiscate his property and auction it off as a means to satisfy his debts and the costs of the auction. If Terry is unable to pay and unemployed, then Shield may have him work at a securitized work camp of sorts until his restitution is paid off. This may be the free market equivalent of a “jail”. However, to avoid reputational damages and accusations of inhumane conduct, Shield will have the incentive to ensure that such work camp meets certain safety standards. Of course at any time throughout this process Terry have a third party pay off his debts to Shield in whole and relieve him off his work camp duty. Furthermore, Shield wouldn’t necessarily be the firm which runs this work camp, it may contract with another firm that does in exchange for the work camp to keep a portion of Terry’s earnings. Once again, if the firm which runs a work camp acquires a reputation for implementing draconian measures or providing an unsafe environment for its “clientele” it will likely lose business to its competitors in this industry. Finally, even after Terry pays off his debt, Shield will pass his information along to a given Criminal Records Bureau which will mark his criminal actions on his record. This sort of practice also occurs in Vegas between different Casinos owned by different parties. They may black list a certain person who is caught cheating, and let the other Casinos know about him so as to create a reciprocal relationship that the other Casinos will honor in kind as a means to continue this profitable and cooperative relationship. So to and for the same reasons the various DIA’s will want to share with each other such “risky” individuals, that they may more effectively protect their own clientele. The criminal records bureaus will distinguish themselves from one another on their ability to verify the validity of criminal verdicts against individuals. This is because, the less scrutiny such a records bureau uses against someone, the less credible their records become. Thus, such bureaus will likely review the investigative and judicial proceedings used against a particular person against their own formulated standards prior to making the requested changes to this person’s record. An additional benefit of this process is that it grants credibility to both the DIA’s and arbitration agencies since passing such an audit further legitimizes these institutions and their practices. The criminal records also serve the purpose of allowing the DIA’s to more accurately determine what the premiums for new clients should be or if they should even provide them coverage at all. This is because people who are more prone to criminal activity are more likely to be engaged in disputes with others, causing the DIA to expend more resources on this particular client. Moreover, many residential or commercial areas which have a reputation for security may not let a person with a violent criminal past enter their premises to begin with, leaving this person to be limited to roaming more dangerous areas, which will cause him to have to pay more premiums if he wants to maintain DIA coverage. Of course such areas would not want to be overly discriminatory (namely commercial areas), for these people are after all potential customers. Thus they may allow former criminals onto the premises who can demonstrate they have participated in some form of approved rehabilitation. Going through such rehabilitation may also prompt other DIA’s to offer these former criminals lower premiums as well. The preceding is of course an example of social and economic ostracism, each of which serves as powerful deterrents to criminal and unsavory behavior. Let us go back to our hypothetical encounter between Bob and Terry and assume that Terry does indeed have DIA coverage. In this case, Terry may notify his DIA (we’ll call it “Hammer Defense”) that Shield is demanding restitution for a crime he claims he has not committed (the mugging of Bob). At this point, Hammer Defense may confer with Shield and its findings as well as conduct an investigation of its own into the matter. If upon reviewing the evidence of its investigation and cross referencing with evidence gathered by Shield, it determines that Terry is indeed guilty, then Hammer Defense will compel its client to pay or have his coverage dropped. If Terry refuses at this point then the preceding outlined scenario would apply. If, however, Hammer Defense comes to the conclusion that Terry is not guilty or that there is insufficient evidence to prove his guilt it will likely share its findings with Shield. If Shield remains unconvinced a violent engagement between the agencies would be unlikely as this would be expensive, translating into higher prices for its clients, and would likely push potential customers away to more peaceful and inexpensive DIAs. Thus, such violent engagement will likely be a last resort for any DIA. Rather, what is more probable is that they will each agree upon a third party arbitration agency whose verdict both DIA’s will agree to abide by in advance. In fact, such an agency for this situation will likely have already been agreed upon by these DIA’s, as such altercations between clients of different DIA’s is predictable. Let’s say, however, that the arbitration agency used decides Terry is guilty and Hammer Defense reneges on its agreement and refuses to abide. What then? Will violence be used? No, most likely not. Instead, Shield along with the arbitration agency will threaten to publicize the welshing nature of Hammer Defense if it does not comply. If Hammer Defense continues to refuse, Shield and the arbitration agency will likely make good on their threat causing a loss in credibility for Hammer Defense and by extension power and business. Finally, the simpler situation to observe would be if Bob and Terry were each clients of the same DIA. Prior to gaining coverage, each client would likely agree to abide the ruling of a given arbitration agency(s) to be used in the case a criminal dispute arises between himself and another person covered by the same agency. In fact it is in such coverage agreement that the client will likely be notified of what arbitration agencies will be used if a dispute arises between himself and a client of a separate DIA. Remember, “the laws” any giver person is under will essentially be the standards used by a given arbitration agency when making its verdicts. Thus it is in the DIA’s best interest to choose agencies whose standards are desirable to its clients. Some people, for instance, may never want to be subject to capital punishment, and as such they may only contract with DIA’s who only use arbitration agencies which commit to never issuing the death penalty. This is just one example, but perhaps now you may realize how the discretion of the individual has a much larger impact on the type of law he/she is subject to. Of course they may not be able to be under the exact set of laws they’d like to be under, since these DIAs would still have to come to agreeable terms with each other in order remain viable. However, the customer would undoubtedly have a much larger influence over the laws he/she is subject too. Thus, a client of DIA “X” would be under a different set of laws to a client of DIA “Y” because their particular contractual relations with the other DIA’s would be unique due to the different preferences for types of laws desired by DIA “X” and DIA “Y” respectively. This is due to the fact that if one agency is bargaining in pursuit of one set of preferences, its resulting agreements will likely be different from an agency bargaining in pursuit of a separate set of preferences with the same firms. -Chase Rachels
Posted on: Thu, 14 Nov 2013 22:09:41 +0000