How Would We Have Law, If Not For the State?

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by Gene Callahan

The case of Acme Rent-a-Car was in the news recently in Connecticut. The enterprising company was monitoring its customers driving speed with a global positioning system, and adding $150 to their bill whenever they went over 79 miles per hour for over two minutes.

The State of Connecticut, in the persona of Consumer Protection Commissioner James T. Fleming, decided last week that Acme must refund all of charges the practice had added to its customers’ bills, and cease the monitoring immediately.

For one thing, Fleming contended, the customers were not adequately informed of the practice. They did sign a rental agreement that mentioned the additional charges, but Fleming concluded: "Most consumers had no idea what they were signing up for."

Well, one might respond, "Read the darn piece of paper you’re signing!" Nevertheless, since Acme’s practice was quite innovative, it probably should have made a point of explicitly mentioning it when renting a car to a new customer.

But that wouldn’t have helped, because Fleming decided the practice was illegal anyway: "This just wasn’t fair," Fleming said. (Here we see the new arbiter of legality: a bureaucrat’s conception of what is "fair.") "It is not a car rental company’s job to enforce the speed limit in any state." As complainant James Turner put it: "No company – outside of the government policing agencies – should be able to issue moving violations."

Fleming’s and Turner’s terminology is questionable: it seems doubtful that we should call what Acme was doing "enforcing the speed limit" or "issuing moving violations." Acme was not concerning itself with what the State did or did not permit on "the State’s" roads, but with how Acme wanted its own cars to be used. It did not declare that it had the right to fine any driver whatsoever for violating its restrictions, only those with whom it had contracted. It did not claim the right to take away a driver’s license to drive for too many "violations." (It might stop renting to him, of course.) It did not send a man with a gun to the side of the driver’s car to see if there was some further pretext for harassing him. It seems to me that Acme is pointing to an important distinction in saying that the charge was not a "penalty," but a deterrent to keep people from driving at unsafe speeds.

Acme attorney Max Brunswick penetrated the heart of the State’s position in his comments about the hearing:

Seems to me that… the state [has] a problem with speeding that they can’t control and they’re not willing to let it be done privately. We’re saving lives on the highway. The people complaining about it are the people who want to speed.

But Brunswick’s position is nave: Of course the State cannot let private arrangements improve the situation on the highways! As Rob Moody said:

The state probably went after Acme because a private company was threatening its monopoly on laws and law enforcement. The state should be happy that another entity is helping it enforce its laws, and is doing so for free. Instead, it says that entity is breaking the law by helping it enforce the law!

Once people began to see that voluntary action could make highways better places than the coercive activity of the State makes them, why would they continue to support government control of the roads? Just as easily and unobtrusively as Acme controlled speeding by its customers, private road owners could make their roads safe, sane places to drive. Some road owners might put absolute limits on the speed driver on their roads and simply ban a driver from the road for violating that limit. Other road owners might set sliding scales for speed, so that as a driver’s speed went increasingly above or below the average speed for that road he would pay a progressively steeper road charge for the privilege. At the end of the month drivers would get their road bill via e-mail and be able to calculate how much their desire for speed cost them. And we could be just about certain that no private road owner would close down a lane for branch trimming during commuting hours, as the government likes to do.

In a case last month with a similar private law aspect, the U.S. Supreme Court decided 6-3 "that an anti-discrimination suit filed by the Equal Employment Opportunity Commission overrides an agreement in which an employee has consented to settle disputes with his employer through binding arbitration." (As reported by CNN.) Again, we find private parties (in the EEOC case, Waffle House and a fired employee) voluntarily reaching an agreement that, at the time it was signed, must have seemed to each party as an improvement in its own situation.

Companies sometimes become wary of hiring minority or disabled workers because of the many opportunities anti-discrimination law gives them to sue if they are fired. (See "What Is Disabled?" by Lew Rockwell on the bind in which employers find themselves.) From the point of view of "protected" workers, an agreement makes them less of a potential liability when they are hired, since they have promised to use arbitration in case of a firing dispute. Because they have less potential liability, they are now more affordable and more likely to be hired. Or, from the point of view of Waffle House, the agreement was a way in which it could hire more minorities and disabled workers than would be prudent otherwise.

However, such an agreement interferes with the State’s monopoly on law, and its ability to stifle the interaction of free individuals through the threat of violence. Even the "conservative" Supreme Court knows that the State cannot tolerate competition from less coercive and less expensive private legal arrangements.

Here is the answer to those who ask: "Without the State, how could we have law?" Private law would be flourishing today, if the State did not attempt to stamp it out wherever it arises.

Paul Kozlowski, owner of Acme Rent-a-Car, is setting up a legal defense fund. Those who would like to support him can contact him.

Gene Callahan [send him mail] has just finished a book, Economics for Real People, to be published this year by the Ludwig von Mises Institute.

2002, Gene Callahan

Gene Callahan/Stu Morgenstern Archives

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