Sunday, August 31, 2008


Contracts are promises made in the context of proposed reciprocity. Contracts, therefore, take the familiar form: "if you scratch my back, then I'll scratch yours." When faithfully executed reciprocity advances the interests of both parties, and entire communities benefit economically. Fraud (or theft) takes place when either the buyer or seller deliberately fails to fulfill their end of the bargain; that is, when the seller fails to deliver the product or service as promised and/or when the buyer fails pay for those products and services as promised. (Bi-lateral fraud is rare, and philosophically interesting.) Reciprocal altruism is embedded in human nature in the sense that when we are cheated, we naturally experience powerful feelings that drive us to seek retribution. Hence, fear of retribution alone can provide a powerful incentive to uphold contracts. However, many cheaters do not fear retribution because they know they can escape detection and/or physically thwart retribution. Private retribution is obviously more difficult when the cheater is more powerful than the victim. Habitual cheaters can be thwarted by warning other members of the community. "Beware! Joe does not keep his promises." In a small community, where cheaters are easily identified and located habitual cheating can usually be held in check by word of mouth; and powerful cheaters can often be held accountable by coalitions comprised of the victims relatives and friends. However, in large communities, cheaters can more easily conceal their identity and/or hide from the victim or other potential victims. This advantage can often be partially neutralized via surveillance technology, mass media, and/or weaponry: but not enirely. Therefore, in large communities, there only two ways to control cheating. First, we can employ legality and tap into coercive power of government to monitor and enforce laws against cheating. Or second, we can use morality and simply teach everyone to keep their promises. My view is that today we need both. Today, we obviously cannot solely rely on parents, and public schools to teach their children not to cheat, let alone steal from others, or even kill others. Therefore, I believe that large communities really do need tax-supported criminal justice systems to monitor and enforce laws that control cheating. But, unfortunately many cheaters are highly intelligent, and have learned how to avoid getting caught. Therefore, it is essential that we also teach (at least) our most intelligent progeny not to cheat. That way, criminal justice systems can focus their efforts on cheaters that are easier to detect, catch, and punish. Take for example, the proverbial bank robber that scribbles his threatening note on the back of one of his own deposit slips, and then conspicuously drives away in a getaway car licensed in his own name. Even the most inefficient governments can handle cheaters like that! We also have to teach buyers that if it looks "too good to be true," it probably is! Buyer beware!

Freedom's Philosopher

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