Big Brother Should Be Watching

Law and Economics Paper #8

Human behavior may be analyzed according to the economic principle of cost-benefit. In committing a crime, a perpetrator analyzes whether the benefits exceed the costs of his punishable act. Cost may be measured according to the corresponding punishment for his criminal act as well as the chances of getting caught. Most of the time, the commission of a crime does not really depend on whether or not the perpetrator knows that what he is doing is wrong.

The cost-benefit principle, like all economic theorems, operates on the premise that all beings are rational. Thus, knowing that what he will be doing is wrong, the criminal decides to commit a crime because he thinks that either he will not be caught (or at least the chances of getting caught are slim) or that his needs outweigh the ramifications of his act. This mental process of analyzing the costs and benefits can be likened to a man's conscience. What spurs a man to do wrong? Perhaps the more important question would be, what could give the potential criminal the appropriate incentive to choose not to commit a crime?

Enter punishment. Is punishment a sufficient deterrent? Most modern criminal systems view imprisonment of a criminal or the meting of penalties as forms of retribution, reformation or deterrence. Is the cost to the state or society of inflicting punishment commensurate to the degree of deterrence or reformation? Imprisonment entails certain costs to be shouldered by the State. So is the execution of a criminal. Some statistics show that the possibility of being subject to the corresponding penalty for a crime does not adequately serve as a deterrence. Neither does incarceration serve as an effective means of reforming a prisoner. In Middle Eastern countries, commission of a crime comes with immediate and drastic punishment, a thief ends up having his hands cut off no matter how high or low the value of the object he stole. However, in the Philippines, the re-imposition of the penalty of death a couple of years ago did not drastically reduce the commission of crimes punishable by death.

Perhaps the key lies in effective enforcement of the law. In Singapore, even a minor infraction of the law is dealt with --- from jaywalking to spitting on the streets, to chewing gum. A perpetrator is more likely to commit an unlawful act if he knows that the probability of being apprehended is slim. This fear of being caught would appear to be more effective than the fear of being meted the appropriate penalty. Hence, in a room full of valuables, a thief would be more likely to steal if there weren't any security cameras than he would if the room didn't have any other form of security. This is not to suggest that we would be better off having a totalitarian government where restriction consists in careful surveillance of the citizens. The deterrence of a crime must not solely be left to the conscience of the criminal. The state must take an active role in ensuring the public and in warning the criminal that any unlawful act would be dealt with swiftly and appropriately.

"He who does not prevent a crime when he can, encourages it."
-Lucius Annaeus Seneca

Right to Free Expression vs. Intellectual Property Rights

(A Blog Reaction to the Article, "A Chinese Blogger's Tale", published in BusinessWeek on March 2, 2006.)

par•o•dy (păr'ə-dē)
n., pl. -dies.
1.
a. A literary or artistic work that imitates the characteristic style of an author or a work for comic effect or ridicule.
b. The genre of literature comprising such works.
2. Something so bad as to be equivalent to intentional mockery; a travesty: The trial was a parody of justice.

It was written in the stars. Hu Ge, by his name alone, was destined for infamy. Although perhaps not in the same league as Weird Al Yankovic who liked to star in his own parodies, Hu Ge made quite a big splash in the vast and unchartered place called the internet. How could he have survived that feat alive without being gunned down by operatives of China’s Secret Service is a mystery. But he survived.

Without the name or the unbelievable luck, would Hu Ge still be able to hide behind the mantle of free expression or would he be hung with the noose of Intellectual Property Law?

Hu Ge is fortunate indeed. He must’ve been born on an auspicious day. There has been a growing trend in the relaxation of the fair use principle espoused by many jurisdictions. Influenced by our colonizers, we copied the fair use doctrine and incorporated it into our Intellectual Property Code* as Section 185 reproduced in part hereunder:

Sec. 185. Fair Use of a Copyrighted Work. -
185.1. The fair use of a copyrighted work for criticism, comment, news reporting, teaching including multiple copies for classroom use, scholarship, research, and similar purposes is not an infringement of copyright…In determining whether the use made of a work in any particular case is fair use, the factors to be considered shall include:
(a) The purpose and character of the use, including whether such use is of a commercial nature or is for non-profit education purposes;
(b) The nature of the copyrighted work;
(c) The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(d) The effect of the use upon the potential market for or value of the copyrighted work. x x x”

Hu Ge was saved by his caustic tongue, eye for details, and artistic prowess. By the mere fact that he wanted to scoff at Chen’s The Promise, he was given a virtual license to morph something that was distasteful in the first place, to something that was actually funny. Not only was his parody a lawful exercise of free speech, it may also fall under the mantle of “criticism” which specifically is defined by law as “not an infringement of copyright.” American Jurisprudence qualifies the fair use further by categorically stating that a parody is a defense to copyright infringement and falls under the fair use principle.**

Is it good policy?

Should we import the Acuff-Rose doctrine to our sunny shores? It might have disastrous consequences. Not all jurisdictions concur with the Acuff Rose doctrine. In England, Japan and Canada, parody does not serve as a valid defense in infringement cases.***

Adopting the Acuff-Rose doctrine might result in the obsolescence of an author’s moral rights.**** It also detracts from the effectiveness of the fourth fair use principle (The effect of the use upon the potential market for or value of the copyrighted work.).

Intellectual Property Rights were codified into law in order to avoid a tragedy of the commons. The Intellectual Property Code serves to strike a balance to rights that an author might keep in relation to his works as well as to diversity and incentive for the creation of new works. A parody, no matter how funny, expresses disrespect for an author’s work and must properly be made only with the author’s permission. To relax our laws drastically so as to encourage the distortion of original work would be a Hu Ge mistake.

-----------------
*Republic Act 8293
**Campbell v. Acuff-Rose Music, Inc. 114 S. Ct. 1164 (1994).
***http://www.cll.com/articles/article.cfm?articleid=25#fn3
****Article 193, RA 8293

have/havenot2

Law and Economics Paper #7

A rough survey of prevailing Philippine jurisprudence shows that consonant with Galanter and Albiston’s postulates, the haves have indeed come ahead. Of course, the law and trends in legislation serve to equalize the status of the parties appearing in court. In some instances even, the Supreme Court has shown a preference to the have nots, brushing aside procedural rules in favor of greater substantive justice, bandying about the saying “those who have less in life, must have more in law.”

The case of Oposa v. Factoran comes to mind in analyzing the competition between the repeat players (often, but not always, the haves) and one time litigants. In this case, the issue to be resolved existed between a class of people representing the future generation and huge lumber firms backed up by politically powerful players. In ruling for the have nots (the class representing the future generation), one would think that the lumber firms would sustain great losses as a result. It is interesting to note that while being victors in this case, the Court said that to attain relief, one must implead each and every lumber company granted a license to operate. To litigate and implead each and every lumber company would require a lot of resources. To a have not, resources are scarce. Despite this seemingly false victory, the after effects of the decision can be seen to influence future policy considerations. And this, is precisely what the future generation might have wanted in the end.

In the other case of Fortich v. Corona, the industrialists/ rich landowner won over the farmer-beneficiaries of agricultural land under the Comprehensive Agrarian Reform Law. Here, a second motion for reconsideration, a prohibited pleading, was entertained by the court, which ruled in favor of the landowner. In this case, however, it is obvious that external factors such a judicial bias come into operation. Moreover, Supreme Court decisions involving CARL are not always resolved in favor of landowners.

Do the have nots really have more in law? In terms of quick individual impact reliefs, perhaps, it is possible for have nots to come out ahead, if they are in the right. Jurisprudence however, does not reflect settlements made before a case is even commenced. To pursue a case and use all remedies accorded by law to a litigant still requires a lot of resources only the haves have.

haves/havenots

Law and Economics Paper #6

Virtually every aspect of life as we know it, is a struggle between the haves and the have nots. Justice, often characterized as blind and impartial offers a promise to the have nots --- that despite the disparity in economic status, the have nots may still be able to defend their rights through the courts of law, a place where it is possible to get ahead of the competition even with scarce economic resources.

Although the disposition of justice merely involves the application of laws crafted to ensure fairness and equity, extraneous factors come into play as well. Albiston, in her article “ The Rule of Law and the Litigation Process: The Paradox of Losing By Winning,” explores these factors in relation to the federal employment statutes and Family and Medical Leave Act. I agree with Albiston when she said that some forms of winning claims are, in the bigger scheme of things, losses to the one-shot players (employees) than to the party (repeat-players, or often, employers) who ends up paying the claim.

Out of court settlements or cases settled in the arbitration level are highly encouraged by the courts and the law. Hence, in our legal system, we have conciliatory measures in the barangay level, mediation level, pre-trial level (referral to commissioner) and even during and after the trial proper. Settling cases even before a full blown trial proves to be an efficient way of minimizing the use of resources (expending time, money, emotional and physical efforts). In the long run, however, a quick settlement at the arbitration level serves to bind only the parties concerned and does not in any way enrich jurisprudence. As a result, one-time players (usually the “have nots” are not able to generate enough muster backed by jurisprudence in order to support future claims by members of the same class.

What Albiston proposes, is that the haves are masterminds of a plot to ensure that jurisprudence would always end up in their favor and if there exists a possibility that a decision would affect future business or dealings, the haves would more likely settle, even if it involves the payment of a big claim. Although the postulate has shades of a conspiracy theory, it is a rational explanation of behavior through an economic perspective. Indeed, it would be more efficient if repeat players strategize to ensure wins in every court case, in order to avoid harmful jurisprudential precedents. It is unfortunate, however, that strategy does not really enter a one-time player's mind since, for have nots, immediate relief is the economic.

unnecessary precautions

Law and Economics Paper #5

Is it really better to be safe than sorry? The Precautionary Principle presupposes that there is lack of sufficient information to form a rational basis for avoiding risks. Hence, even if the probability of an unfavorable outcome for a certain event is low, the high level of impact of this event necessitates aggressive means of caution or avoidance.

The flaw in this Principle would be the very premise it operates on: lack of sufficient information. Information on all ramifications of a new experiment could be costly and hence, government policy dictates the application of the precautionary principle. I agree with Sunstein when he said in his paper that the precautionary principle is basically useless. Aside from hindering growth, the precautionary principle also disseminates incorrect information. The decision to avoid all risks is basically anchored on the whims of policy makers. Hence, an aggressive campaign against harmful emissions may not necessarily do away with other environmental problems.

Although the precautionary principle's aim is to avoid all risks with high impact, such avoidance of risks is made without looking at the bigger picture. Take cybercrime for instance. The impact of someone hacking into the Department of National Defense mainframe could have deleterious consequences for the whole nation. Does this possibility necessitate a government movement for denial of internet service from the rest of the world? Another example would be the sudden popularity of canola oil over its local counterpart, coconut oil over a decade ago. It was thought that coconut oil was high in cholesterol and harmful to health. It was only a couple of years ago when numerous studies conducted proved that coconut oil was healthier than canola and that the risks attached to canola oil (from canola being mostly genetically modified to be pest resistant) were higher.

From an economic point of view, the precautionary principle is far from being efficient. It makes no sense to totally prohibit an action for the mere low probability of the happening of a high impact event when benefits from this action grossly outweigh the disadvantages. Human behavior is more averse to the possibility of loss than to that of gain. But then, if the gain involves the creation of a means to prevent present losses or inefficiencies, would it not be better to take the risk? Even if the government applies the precautionary principle to some fields, it totally turns a blind eye to others. Hence, the low probability of a high impact unwanted event still exists, but is not seen. What happens then if the unwanted event happens?

A better option would be to encourage a new field (formerly subsumed under the precautionary principle) and if there are any fears surrounding its implementation, to create safeguards or countermeasures in case that 1% probability of an unwanted event happening does indeed happen. This would be a better option that just throwing darts while blindfolded.