RE: Privacy
Wed, 31 Mar 1999 22:11:41 -0800

Billy Brown, <>, writes, regarding making fraud illegal:
> I think this protection is necessary to the functioning of any modern
> economy, because it is a large part of what makes it possible for strangers
> to do business with each other. Without it, you are forced into a position
> where you must investigate the reputation of everyone you ever buy anything
> from, which is completely impractical for a modern consumer (let alone a
> modern business).

There seem to be two models. In one, fraud and possibly libel is illegal. People assume that others are honest and react to them on that basis. People who are dishonest are punished. An infrastructure is needed to provide this punishment and to determine when proscribed forms of dishonesty occur.

In the other model, fraud, libel and other dishonest actions are legal. People have to assume that others may not be honest. Reputation will be crucial for establishing relationships and trust. An infrastructure is needed to maintain information about reputations and to determine when claims of lying and other breaches of faith are true.

It is not clear to me which system has lower costs. In each case you need an infrastructure, along with some mechanism for determining when lies have occured. I have a personal preference for the second system, as long as it is not much more costly. It relies more on voluntary relationships. There are fewer laws, fewer prisoners.

Also, with a reputation system, people can make their own decisions about what levels of risk to accept in a relationship. A legal regime is going to be inherently boolean and provide the same enforcement of honesty for all parties, regardless of whether it is appropriate in a given relationship. The reputation system is more flexible.

> wrote:
> > Lying in love may
> > be OK (or is it?), but how about breaking a promise in a marriage
> > contract?
> That would be breach of contract, not fraud.

Would you suggest that breach of contract should also be a criminal offense? Or could it be dealt with through damage to reputation?

> [...]
> Yes, libel law is a swamp. I don't see a good resolution to that problem
> either way - their needs to be some kind of protection against real smear
> campaigns, but I don't see a good way to write such a law. Until someone
> comes up with a good solution to the problem, my instinct is to make no
> laws.

As with the case of fraud, a libeller takes the chance of damaging his own reputation. And the damage he can cause to others is limited in a system in which statements not backed by strong reputation are ignored.