Understanding Common Law (with John Hasnas)

Trevor Burrus: Welcome to Free Thoughts. I’m Trevor Burrus.

Aaron Powell: And I’m Aaron Powell.

Trevor Burrus: Joining us today is John Hasnas, Professor of Business at the McDonough School of Business at Georgetown University and Professor of Law by courtesy at Georgetown University Law Center. He’s also the Executive Director of the Georgetown Center for the Study of Markets & Ethics. Welcome to Free Thoughts, John.

John Hasnas: Thank you.

Trevor Burrus: What is law?

John Hasnas: Oh, why don’t you start with an easy question?

Trevor Burrus: We gotta have [00:00:30] a baseline, so that’s about as base as you can get.

John Hasnas: Basically law is going to be any set of rules that governs human conduct in a particular society. If you’re looking for my perspective, you can have law that’s not necessarily identified with a political authority. I write about common law and customary law quite a bit and that’s law that evolves through human interaction and doesn’t come to us through the actions of political representatives or political agents.

Trevor Burrus: Do [00:01:00] you use the Hayekian distinction between legislation and law?

John Hasnas: Whether it’s a Hayekian distinction or not, there’s an important distinction between legislation and law. Legislation is the law that comes from political action. The state legislators, the Congress, a king, anyone who is in a position of political power can legislate. Law is more general in that legislation is a form of law, but law can also be the kind of law that evolves through human interaction. In [00:01:30] England and the United States we are often referred to as ‘common law’ countries and that’s because a great deal, and in fact, the majority of our law came about through an evolutionary process that didn’t involve the action of political representatives.

Aaron Powell: Is there a difference, though? A meaningful difference between law that came about through an evolutionary process of judges interpreting cases, which are still people making decisions about what law ought to [00:02:00] be and law that came about through an evolutionary process of legislators discussing and changing their minds and legislating and re-​legislating over a certain time period.

John Hasnas: Yeah, there’s a big difference, but I have to quibble with your characterization of common law. For the last hundred years or so, the common law’s been identified with the kind of decisions that judges make in government courts. [00:02:30] So that’s probably accurate for a short period of time. But our law evolved over an extremely long period of time, and over that period of time it’s not the judges that make the law. What we call common law was originally customary law.
Customary law is the type of law that evolves when disputes arise and individuals settle them usually by appealing to some impartial third party. Originally, it could simply be a public gathering or a public assembly in which members of the community made the decision. [00:03:00] So in early days that would be referred to as the ‘moot’, which is a public gathering. Over the decades and centuries, as things evolved, the decision maker became more and more specialized and by the time you get to the Norman era in England, decisions are made by juries.
Juries are still drawn from the ordinary people in the country. Very, very, very late [00:03:30] in the system, in fact and in our system, you don’t have the courts organized into a hierarchal fashion until the late 19th century, so it’s 1873 and 1875. Before that, there were many different courts, decisions were made by the juries. Judges sometimes make decisions at the appellate level, and the basic rules of law that govern our society, meaning tort law, property law, contract law, commercial law, all of that evolves in a decentralized [00:04:00] system where disputes are settled in a way that makes the most sense, trial and error learning takes place, the solutions that cause people to function together successfully are repeated, the ones that don’t work are washed out and we have a learning system that teaches us how to live together.
It’s only when you get very close to modern times that you can call common law something that judges are decided. And, when you get to modern times, you have judges making decisions that does represent the law. [00:04:30] You can call that a certain kind of law-​making. You can contrast that to the kind of law that comes out of the political branches, which are made by political agents and, at this point, there is some kind of government agent making decisions. But if you want to make that comparison, there are still a lot of institutional feature that would make me favor the kind of law that comes out of courts over the kind of law that comes out of the legislatures simply because of [00:05:00] the political drivers that take place in the legislative area.

Trevor Burrus: Is there a difference in the sort of rule of decision making? In the sort of evolution you discussed, in some of your writing, you talked about it as more backward looking or just dealing with the case itself versus having a rule of decision that looks at it’s affect on society kind of thing and that seems to be a difference that matters to you.

John Hasnas: Yes, I think that the difference that you’re after is a difference between trial and error [00:05:30] learning and conscious forward looking planning. When I deal with these issues, people always characterize the common law as retrospective and legislation as prospective. And that’s entirely wrong. The common law is just as retrospective or prospective as anything else. Once you have a case decided, you have a rule of law that acts prospectively.
This may not be the most relevant example, but recently my [torts 00:05:59] class, [00:06:00] we were dealing with the case of the Titanic. The Titanic sank. When it sank, there weren’t enough spots in the life boats for all of the passengers. A lawsuit was brought and a company was found negligent on that basis. From that day until this, every oceangoing steam ship has enough spots in the lifeboats for all of the passengers because the rule acts prospectively.
Legislation is supposed [00:06:30] to be able to act prospectively, but when I talk about this, I usually ask the students, “Has anybody heard of Megan’s law?” And someone says, “Yes, that’s the law that requires sex offenders to register so people will know that they’re in the area.” And then I say, “Why is it called Megan’s Law?” And it’s because it’s named after Megan Kanka, which is a young girl who was killed by an unregistered sex offender. Legislation’s not proactive, it’s reacts to a harm done and then that [00:07:00] rule functions prospectively from then on in and common law’s exactly the same in that respect.
With regard to common law under our system, if you have a high degree of likelihood that an irreparable harm will be done in the future. You can sue for an injunction at common law, which is a way of acting prospectively that’s available. The only difference between common law and legislation is political agents can act prospectively without having to establish [00:07:30] a high likelihood of serious harm. They can prevent you from doing anything they want to do on the basis of political considerations.
The common law had to evolve over a long period of time and teach human beings how we live to together well and effectively and peacefully. It’s got a lot of wisdom in it and the idea that people who get voted into office on the basis of ideological concerns are going to know better what will work and coordinate human activity requires a great deal of [00:08:00] faith and imagination that I probably don’t have.

Aaron Powell: In the early history of the common law, before we had publishing or distribution, the internet, you talk of the common law as this thing and it’s this thing that’s evolved and it has embedded wisdom in it that’s evolved over time. What’s the mechanism by which that thing exists? If that’s a clear way to ask [00:08:30] the question. If you’ve just got villages spread out all over the map and people are bringing their concerns to someone, that someone’s making a decision, but are they aware that they’re participating in this thing called the common law and evolving it and how are they getting access to what that is before they make their decision?

John Hasnas: They’re definitely not aware that they’re participating in something. It’s only the intellectuals like us that come along after the fact and identify [00:09:00] things and then we call it the common law and we say, “Here are the rules.” The reason why the evolution of law, the customary law process is so wonderful is because it produces a set of rules that are uniform where uniformity is valuable and diverse when conditions are diverse. If you’re in a agricultural community, you’re going to have certain types of problems that come up and the rules that evolve [00:09:30] will address those issues.
And if you’re living in a dense city, you’ll have different kind of issues that comes up and the rules that will evolve will be relevant to your situation, and they may be very, very different. They’re not uniform in that respect. On the other hand, rules that prevent murder or theft or assault, you need those everywhere and those tend to evolve everywhere. Again, when I’m talking about this with students, you can talk about the United States, where the law that governs the use of rivers in the eastern [00:10:00] part of the United States, it’s completely different than the law that governs the use of rivers in the west because in the east, the value of the rivers wasn’t the use of the water, but the flow that turned water wheels that was used for power.
Out in the west, you needed the water itself for irrigation and for drinking and you have different set of rules that evolve in different locations. Nobody in the west was thinking, “I’m part of the common law of riparian rights.” That’s what professors do after the fact. [00:10:30] But what happens is when you have, you go far enough into the past before the internet, before printing, most of the issues are local. As society progresses and communication gets more effective, the units of human life become larger and the rules cover more ground.
In Old England, you had justices that would ride on horseback and ride circuit through the area. They’d go to one place, there’d be a rule of law that was effective there. They’d ride [00:11:00] to another place. At the second place, maybe they had a dispute for which there was no rule, but they remembered the rule from the other place and said, “Hey that worked pretty well.” They carried the rules with them around the country. It became called the common law because these were the rules that weren’t local, they were common to the entire realm and they were carried by the King’s justices, who were riding circuit.
That’s why it’s identified with the king’s courts, but it was a natural way of spreading the rules [00:11:30] that worked well at different locations to different locations. The common law’s always a patchwork quilt. A combination of local rules that work in the circumstances and more general rules that apply everywhere. That’s your optimal outcome. You don’t want uniformity, you don’t want the same rules governing the slum lords in the inner city and somebody renting his extra room in Utica, New York. You don’t want the same rules for Charles Manson and for somebody who’s involved in [00:12:00] a mercy killing.
You like this kind of patchwork quilt, and in contrast to legislation where you get one rule that applies the same way across the entire jurisdiction in an ill-​fitting, one size fits all form, the customary and common law gives you a very flexible, nuanced set of rules that allows us to live together peacefully.

Trevor Burrus: If the rules are a patchwork, like you said, when you mentioned Charles Manson and mercy killing and things, [00:12:30] which makes sense, but doesn’t that start to make it seem like that there’s not law? Because if you have a country, and this came up with the same mandatory minimums, where people started saying it’s unfair if this defendant who’s convicted gets five years and this other one gets 15 years. It seems not like law if it’s that’s random and discretionary.

John Hasnas: Okay, it’s not random. It’s not discretionary-

Trevor Burrus: Yeah, sorry, random is a bad word.

John Hasnas: … it’s diverse. But [00:13:00] it’s not that it’s not law. I hear the following argument quite a bit. You actually have to have the government make the law, because if you didn’t have government, meaning the political agents, make the law, then there would be no uniformity in the law and there would be different rules in one place or another, or people with one socio-​economic level would be governed by different rules than people at another.
And when I hear that, my only response [00:13:30] is probably a sarcastic one, which is to say, that explains why the government has to provide manufacture and provide all of us with our clothing. Because if the government’s not providing the clothing, then people in different locations could be wearing different types of clothes and there would be shorts in one place and long pants in another place and rich people would have different kind of clothes than poor people.
Why would anybody think that uniformity in clothing is valuable? [00:14:00] And why would anybody think uniformity in law is valuable? What you want is rules that allow people to live together. I think what you’re referring to is something else. You’re referring to criminal law and so far, nothing I’ve said applies to criminal law. Because the law I’ve been talking about is the law that coordinates our behavior. So that’s torts, that’s contracts, that’s commercial law, that’s property. Criminal law is something else. Criminal law is the part of our law where the state is allowed to punish citizens [00:14:30] for violating it’s rules.
In that context, do we want a higher level of uniformity? Yes, if the uniformity is something that greatly curtails the power of the state to act. I mean, in our system, the glory of the English and American system is the state doesn’t get to punish citizens or individuals unless it can prove every element of a crime beyond a reasonable doubt, which is a very high standard. And the [00:15:00] reason why we have that standard is because we don’t want to make it easy for the state to deprive people of their life, liberty and property. It should be a very high standard.
So if you are saying we should have a uniformly high standard to curtail the government’s ability to deprive us of our rights, I’ll go along with you in that respect. But even if we’re talking about criminal law, I mean, the criminal law is going to be different in some farming community out in the west as opposed to [00:15:30] what crimes are issue in the middle of a densely populated city. You’d still have some level of diversity, however, with regard to crime, the essence of crime, which is the attacks on your person. Murder, theft, life, property, those kind of things. Those are uniform. People need that wherever they are, or they don’t get society going at all.
So that’s uniform, but that’s uniform because it makes sense for it to be uniform.

Aaron Powell: [00:16:00] Is this, though, somewhat of a almost Pollyanne-​ish view of what emerges from the common law? Because if the common law is necessarily culturally embedded, you would imagine all sorts of situations where the decisions that people are making might be either suboptimal or harmful to certain groups or discriminatory, you know, people of certain skin colors can’t start businesses or you can’t trade with them and things like that.
So do we need [00:16:30] kind of a legislative safety valve or some ability for someone to say, “Look, the common law is wrong here and we’re going to fix it.”

John Hasnas: My answer to that, I hate to use the word, my answer to that epistemic. I’m talking about human knowledge. Here’s where things get Hayekian. The common law is always wrong. It’s always wrong. There’s always ways in which it’s not solving problems properly. In fact, the only reason why we make any progress [00:17:00] is because it’s wrong. When it’s wrong, people’s activities aren’t coordinated properly, lawsuits come up, people keep trying to find a better rule and the trial and error learning … The common law’s a learning process. It teaches us what we need to live together and it does that always because it’s always wrong.
The common law can be, it’s often said in order for human beings to progress, we need our problems. Well, we need to have the common law make mistakes in order to learn which [00:17:30] way to go. That’s what teaches us. Aristotle characterized human beings as the rational animal, but that’s wrong. The essence of human beings is not their rationality, it’s their imagination. Human beings are the imaginative animal. So we can imagine that if we just give a certain bunch of smart people the power to correct what’s wrong with the common law, then they’ll get things right and they’ll do better because they’re the smart people. [00:18:00] So let’s just invest the best and the brightest with legislative authority and we’ll tell them, “Just correct what’s wrong with the common law.”
The only problem is they don’t know. It’s not the only problem. One of the problems is they don’t know. The other problem is that they have incentives and interests that may draw them away from that goal. But even the smartest people in society are not smart enough to predict the best way to coordinate the activity of thousands and millions of people. The common law’s always wrong, [00:18:30] it’s how we learn, it’s a learning mechanism, it’s not utopian. It constantly moves us in a positive direction over time, which to me is utopia. The effort to do better and get it all right, right now, and correct all the mistakes we can see by investing some people with the power to make the law is a very poor bet.
That could work, but the odds on that working better than the slow, evolutionary learning process, I wouldn’t put any money on it. All [00:19:00] the evidence we have over all human history suggests that not a good way to figure out what the law should be.

Trevor Burrus: Is the analogy, ’cause you mentioned Hayek, is that you’re kind of making that if you think that the economy is constantly never in equilibrium and constantly adjusting and learning where new sources of value can be played in people’s imaginations and that’s why it works, is that the same with law than? Is that basically the analogy you’re making? And that no one can plan an economy ’cause [00:19:30] it’s always moving and churning in a way that similarly that common law is?

John Hasnas: Yeah, I don’t know if that’s the analogy I’m making. It’s an analogy that you could make. You made that [crosstalk 00:19:40]. That analogy’s okay with me. What I’m describing as Hayekian in the sense that Hayek believed that there was some kind of group selection going on. That if you stumbled upon the right way of living you would be more prosperous and the people who had a rule [00:20:00] that didn’t work as well would eventually lose out to you.
Now, in a sense, I am saying something like that, because I think in order for human beings to succeed in anything, they have to learn how to banish violence from their interaction and live in peace and start to cooperate. The ability to cooperate is what allows human beings to progress. And as a result, the common law tends to produce peace as it’s outcome. Human beings [00:20:30] are ill-​motivated. There will be people who are prejudiced, bias, that don’t want to allow people from different skin colors or different religions to participate, but it’s very hard to get oppressive rules out of the common law because you’d have to want to spend your own money to oppress other people.
If you want to engage in oppression, what you want to do is pay somebody else to do the dirty work for you. You need a government to engage [00:21:00] in effective oppression. The common law doesn’t produce rules of segregation or Jim Crow. In fact, here’s the model. If you want to understand how either markets or sort of the free society works, then look at legislation. Because legislation only exists where people can’t do things through free cooperative interaction.
So why [00:21:30] was there Jim Crow legislation? Because on a market, or in the common law system, you couldn’t effectively segregate and oppress black people. You needed legislation to do that. If you see legislation, that tells you what the market wouldn’t do. So if you think that Jim Crow legislation isn’t evil, then that suggests the common law and the market wasn’t effective at segregating black people. That you wouldn’t need a law to do what you can do through voluntary cooperative means. There could’ve [00:22:00] been people that were terribly racist and prejudiced all across the south, but if you asked them how much money they wanted to spend to put their racist policies into effect, it was very, very small.
On the other hand, if a politician came up and said, “Look at this immoral intermingling of the races. If you vote for me, I’ll make a law that says black people and white people can’t sit in the same street car.” That would cost you nothing to engage in the oppressive conduct. Somebody else is going to foot the bill. You’re much more likely [00:22:30] to get the kind of oppressive … You don’t get rules that help suppress religious minorities out of the common law. You get that out of government action.

Aaron Powell: If common law is so great, compared to legislation, why is there so much legislation? Why is all around us, across the globe, everyone’s legislating instead of just watching the common law do it’s thing?

John Hasnas: As someone [00:23:00] with a philosophy degree, as someone with a law degree, I can talk to you about how concepts are related, but I can’t talk to you about what motivates human behavior. My belief is the one I mentioned earlier, that human beings, they have imagination. If you put a rat in a maze, and he’s looking for cheese, he will go down a blind alley. When he sees the wall, he’ll go back, he’ll go some other way. Only human beings can run into a blank wall, [00:23:30] go away, imagine that there’s a door there and go back another time.
I mean, that’s why we vote for a President every four years, isn’t it? Because this time will be different. We can do the same thing time after time after time, and imagine a different result. We’re able to act imaginatively rather than rationally, and it’s always easier to think, “If we just got the right person in power, then Camelot would come back and everything would be fixed.” And [00:24:00] sticking with the common law means we admit it’s going to take a long time. We admit we’re going to make incremental progress. We admit that things will only get better slowly.
It was hard for me to go this route also when I was younger, and then I ran into these economists and they explained to me about marginal effects. The magic of marginal effects. If you get a little better each year, in 20 years, you’re twice as well off as you were before. Okay, that’s great. That’s the common law model. On the other hand, we can all imagine [00:24:30] that we’ll win the lottery tomorrow and be billionaires, so let’s just get this guy in power and he’ll fix everything.
This is a matter of human psychology. I can’t account for it. I don’t have much confidence that my talking in a podcast can convince people to behave differently, because it’s so seductive. But that’s just a feature of the way our psychology is at the moment.

Trevor Burrus: Is the common law well-​suited for modern times? You talked about [00:25:00] localism a lot and the patchwork quilt where it came out of, but we don’t really necessarily have local economies anymore. And it would seem to make sense to have something like the UCC, the uniform commercial code, adopted by all these states so people can go across the state boundaries and make deals, and that’s legislation. Or, you know, complex financial instruments. Can there be a common law that arises?
I mean, I can understand cattle coming onto your land and who pays if they trample your crops, but derivative trading [00:25:30] or any of these things, is it really going to work for something like that?

John Hasnas: Yeah, that’s why we really need it. Alright, so if I argue for common law, it’s interpreted as saying we want to go back to ancient times. Here’s the argument against common law: technology has surpassed our ability to learn things through the common law process. Now society is too high-​paced, there’s too much technology, you need something better now.
That argument’s been made for the last 300 years. I mean, [00:26:00] you can read that argument when they’re talking about the railroads. “The nation is connected now, we can get from one side of the country to another in a couple of days. You can’t wait for the slow evolution of the common law.” That argument is always made, and it’s always ineffective. The UCC is a great example. What’s the UCC? Law professors sat down and looked at the way commercial law had evolved through common law processes [00:26:30] and then they codified it. They learned from the common law, they turned it into a code.
That’s probably a good thing, but that’s the past. What we need the common law for now is all the things we don’t know how to do. The faster technology develops, the more we have technology that we don’t know what the risks are, that we don’t know what the safety rules are. In my torts class, half the cases are about railroads because that was new technology in the 19th century. 30 years from now, when people are in the classroom teaching what I’m teaching, [00:27:00] the cases will be about reproductive technology or the internet.
We’re already getting cases in the casebook about cyberspace and internet and what constitutes conversion or a trespass [inaudible 00:27:12] on the internet. It’s because with the new technology, we don’t know the rules yet, and the common law allows us to derive them. On the other hand, we do have people down in Washington that make these rules to govern how people can interact on the internet. And they have no idea [00:27:30] what they’re doing.
The more technologically advanced society gets, the more complex society gets, the less possible it becomes for us to solve the problem through getting smart people to sit down and think about it and predict the future. The more we need the common law learning process, so today it’s ever more essential, it’s even more essential then it was in the past.

Aaron Powell: In that realm of cyberspace, given how much more of our lives, our interactions, [00:28:00] our economic exchanges are happening there, can the common law work in an environment where, so you say we’re interacting with these people and they want to impose rules of how we can interact and what the remedies are, but when you’re happening online, it’s all governed by code, right? And so the code is, in a sense, like the code that Facebook runs [00:28:30] on is a necessary set of laws by which you and I can interact on Facebook, because we have to participate within the constraints of that code and that code has to be built before we can start interacting.
And so does cyberspace almost push us to a regime of necessary legislation because everything’s happening in this very strictly coded environment where you have to have the smart guys figure, sitting at Facebook, figure out how we’re going to interact and what the rules are going to be before we can do it?

John Hasnas: [00:29:00] Yeah, I don’t see that analogy. I like to think of the internet, the web and cyberspace as a microcosm for all of the past. And what do I mean by that? If you go back far enough in time, the original rules comes about because two people get into a dispute and they don’t know how to settle it and then they bargain. They have to make rules for themselves, and those tend to get repeated.
[00:29:30] Law originates in negotiation and contracts that the successful ones are repeated over time and eventually it turns into rules. Well, in cyberspace or with Bitcoin or with all these other things for which I have to say, I have no understanding, when I look at what’s going on, somebody’s going something and then offering it to somebody else, and those two people need some kind of rules that will coordinate their, “Why would [00:30:00] I buy this?” “Well, here, I’ll offer you this kind of assurance,” and “I’ll agree to that.”
What’s happening is the rules are evolving first from bargaining negotiations from people just doing things, and as the user base gets larger and larger, the rules that are evolved through negotiations which worked tend to be accepted more widely and you’re getting sort of an analogical process of rule development in cyberspace that mirrors the way our basic rules of tort law [00:30:30] evolved over centuries in the common law, because when you have something new, nobody knows how to interact, and at first, you have to actually make a bargain with somebody about what your relationship will be.
And there’s probably thousands of people trying that and 900 of them are making stupid plans that don’t work. But somebody must have figured out how to make Bitcoin reliable enough so other people would buy it. And once that was [00:31:00] observed, if I know what’s going on, it seems like a lot of people are copying it and you’re getting these cryptocurrencies. Now I understand nothing about it, but the process I’m observing looks to me a lot like the process that produces the kind of rules that we normally would call customary or common law.

Trevor Burrus: What about something like environmental regulation? If we find out that there’s a chemical in this coal dust or something and the smart scientists of the EPA find that out [00:31:30] and they ban it. Is the common law going to be able to deal with that situation? Stop harm to our planet before it happens?

John Hasnas: What you just described is not stopping harm before it happens.

Trevor Burrus: That’s a good point, yes.

John Hasnas: It’s providing remedy for harm that happens [crosstalk 00:31:47]. And can the common law do that? Yeah, absolutely. In fact, if you’re concerned about environmental regulation, you have two options. [00:32:00] Environmental problems are usually referred to as ‘common’s problems’, so there’s a famous article, The Tragedy of the Commons. What it say is when a resource is unowned, it’s in every individual’s interest to exploit the resource, but nobody suffers the detriment of its degradation, so it becomes overused and depleted. And there’s two solutions, so environment problems tend to have that characteristic. You put all your soot or garbage up into the air, you get rid of your waste [00:32:30] and you share the detriment with all the rest of society.
The same thing with water. You put out chemicals, you get rid of the chemical, but everyone else shares the loss. So what can you do about this? And traditionally, there’s two solutions to these common’s problems. You can either privatize the commons, or you can restrict access. So restricting access means you get somebody with a gun and you tell him to make the rules and prevent people from over-​utilizing the resource. [00:33:00] So you get a regulator in to prevent dumping, and in that solution what you have is it’s still in everybody’s individual interest to exploit the resource, but now you have somebody trying to prevent it through coercive means. The incentive is still there, you’re trying to restrict access.
The other alternative is to privatize the resource, in which case the parties that utilize the resource also incur the personal detriment and that gives them the incentive to use it in such [00:33:30] a way that the resource is maintained. Those are the two solutions. Those two solutions correspond to regulating the environment through legislation and regulating the environment through common law. Common law is the process by which we create private property rights.
If you will, common law is the method by which we privatize the commons. Because people will use common resources, as long as they can use it without conflict, they use it freely, they walk around, everything’s [00:34:00] fine, and then when the resource starts to get scarce and to use it people come into conflict, a conflict is what gives rise to a lawsuit. A conflict is what gives rise to the need for a new rule and the rule usually assigns private rights in one way or another.
So property law is common law. It’s the rights and property that evolve that allow people to cooperate. With regard to environmental problems, if you put some chemical out and it ends up on my property, I sue you, [00:34:30] and I try to recover. There’s cases where a cement plant is putting out particles that are landing on a farmer’s property and that cement plant, it’s doing a lot of good for the locality, 300 people are employed, it’s making a commercially valuable product, but it’s putting out particulate matter on some farmer’s land. Can that farmer sue and get an injunction and force the cement plant to stop doing that? And the answer is yes.
Because the private [00:35:00] rights of the individual will stand up even against all of those social welfare arguments you want to make that the company, or the cement plant should be allowed to engage in this activity. That’s pretty powerful environmental regulation. You can protect the privately owned environment at the expense of other people’s jobs. Yeah, the company’s going to have to bear the cost of figuring out how to make cement without polluting the environment.
In our current political [00:35:30] climate, one of the highest profile issues is tort reform. Everybody wants tort reform. People are down in Washington lobbying federal legislatures, state legislatures save us from the regulatory power of tort law. We’re over-​regulated. Save us from this power. Well, if that’s the powerful regulatory mechanism, and you’re concerned about environmental damage, then what you want is [00:36:00] to harness the regulatory power of tort law to protect the environment, and you do that by letting private parties sue to protect their interests, and that’s when you have private control.
You’ve got two models. You can restrict access through regulation or you can privatize through common law processes. For every single case, you have to make a judgment as to which one of those is [00:36:30] more likely to protect the environment more effectively.

Aaron Powell: So I’m going to put on my left wing hat.

John Hasnas: Can you do that?

Aaron Powell: I can. I don’t actually have one, but we’ll just pretend. And those two models, so for someone who’s very left in their thinking might say those two models, the privatize versus the regulate and exclude, what’s the difference? Because [00:37:00] if the government is regulating/​excluding, it means that there’s … I mean, I still might have an incentive to go and use this thing without caring about the consequences, but now there’s consequences in the form of these people could be pointing guns at me, I could get in trouble, I could get fined, whatever.
The private ownership is simply putting a king in charge instead of a government because we’ve privatized, I’ve sold you, you now own the grazing land, but I can still [00:37:30] go and try to overgraze it, it’s just that it’s your property which means if I get caught, you can use force to exclude me, you can take me to court and fine, and so the conceptual distinction doesn’t really exist, except insofar as if it’s the government that has it, the government is at least, presumably on paper, working for all of us and so I can still use it just as long as I follow the rules, whereas the private ownership, [00:38:00] you’re an authoritarian on it.

John Hasnas: I understand your point, but I think it only sounds good because you’re leaving out the important feature that makes a difference. If you restrict access through legislation, every single user of the resource still has a personal financial incentive to exploit the resource. So they want to, they’re just not doing it because of fear. If you privatize the resource, every single user has a different incentive. The incentive is not to overuse [00:38:30] the resource, but to use it in such a way that it’s sustained.
The original article, The Tragedy of the Common, talks about shepherds sharing pasture land, and what happens is they overpopulate it with sheep because nobody bears the cost of the grass being consumed. But once they break it up into private plots, “I never put too many sheep on my private plot because I want there to be grass next year.” My incentive structure has changed. Now my personal self-​interest aligns with the collective good [00:39:00] and I behave differently. And that’s the power of privatization.
Now I may still need guards to make sure that other people don’t come and steal my stuff. That’s true and since we’re being left-​wing, the government does do things like enforce property rules and does enforce and prevent people from stealing and trespassing and things like that. So you can have the same regulatory mechanism. If you’re interested, this is now getting old, but if you can go back to the 1990s, there [00:39:30] was a public TV show, Nova, which was a science show. It’s a great science show, used to watch it all the time.
Find a tape or find a disc of the one that’s called The Kingdom of the Seahorse. This is about an hour long show, the first half hour, it’s not political, it’s talking about why seahorses are going extinct and a British marine biologist who knows everything about the seahorse, and you find out everything about the seahorse and why it’s going extinct. And she’s upset [00:40:00] and in China the seahorse is an aphrodisiac, so they just consume tons of it, and the entire population is being depleted and the Philippines is where they come from.
So this woman goes to the Philippines just to see what’s going on and she settles in a village called Handumon and she sees these people are poor and they’re only source of income is the seahorse, and they’re harvesting seahorses, but the seahorses are disappearing. What are they going do? And by the way, they don’t trust her, because every other time some English speaking white woman [00:40:30] has shown up only bad things have happened.
She just sits and watches and eventually she starts telling them things like, “You know, you’re taking the pregnant seahorses out and then you lose a lot more.” But they say, “But if we don’t take them, somebody else will.” The tragedy of the commons. So she shows them how to make little floating cages with initials on it, and when they find a pregnant seahorse, they put it in there, it gives birth, the babies get out, then they harvest it. And all of a sudden they have more seahorses.
Now they’re interested. So they start asking [00:41:00] her, “Well, what else can you do?” And she says, “Well, why don’t you set this area aside as sort of not fished. That’s like a nature preserve and you only take the ones that come out.” And she sits there and just tells them these things and over the course of time, they have a lot of seahorse, and pretty soon everybody up and down the coast, what do they do? They’re poaching. They’re coming in to steal the seahorses from Handumon.
The next thing you know, in this video, they’re out in these canoes with little lights at night, protecting their property and [00:41:30] when it becomes hard to steal, then the people from up and down the coast come down and say, “What are you doing?” And this show ends with her showing them how to make private seahorse farms, and the reason why I’m telling this story is this was so successful at saving the seahorse that the aquarium in Baltimore had an entire exhibit called The Handumon Project, which was all about how they saved the seahorse.
All of this is an example of the [00:42:00] power of the privatization rather than regulation. Nobody came in and said, “This is an endangered species, you can’t sell the product anymore.” They just aligned the incentives of the individual with the preservation of the resource and it was a major success, and of course, because it was so successful and so simple, it’s never discussed in any political conversation. It’s not regulation, it’s just something that’s perfectly effective and is a wonderful model for how you preserve environmental resources.

Aaron Powell: What you’ve just described is the way that [00:42:30] libertarian anarchists talk about anarchy.

John Hasnas: That would make sense.

Aaron Powell: And so is that then what you would advocate, is kind of this common law system taken to it’s logical conclusions that we oughta just ditch the whole façade and embrace political anarchism?

John Hasnas: If you want to look at this from a philosophical perspective, I’d say government is the entity that uses coercion. So for government [00:43:00] to be justified, for that to be okay, there has to be a justification for the use of coercion. In other words, you have to say there’s no other way of attaining this important human end, other than by forcing people to do things. So that’s the justification for government.
Well, what that would mean is you should look at everything the government proposes doing and ask yourself whether there’s a means of accomplishing that end that doesn’t involve coercion. If the answer’s yes, then the government shouldn’t be doing that. If the answer’s no, then that’s what the government [00:43:30] should be doing. And you just look at it that way, and you start at one end, and say, “Well, do we need the government to deliver the mail?” No, I know we can do that without coercion.
Start there and move step by step along and see how far you get. Do we need the government to provide the rules that allow us to trade with each other? Well, apparently the answer’s no because contract law didn’t evolve through governmental processes and in fact, the English government had to incorporate the law merchant [00:44:00] into the national law wholesale because it was a better product than what the national … So we don’t need it for that.
Okay, so do we need the government to provide courts? Because otherwise how would we settle our disputes? But there was no uniform governmental system of courts for most of our history and in fact, right now, despite the efforts of the Trump administration, [00:44:30] we live in a global economic environment, a global market, and there’s no global court and yet I never see multi-​national enterprises like blasting each other with machine guns. They seem to be able to settle disputes through some other mechanism.
In fact, one of the famous courts is the commercial court in London, it’s a British government court, that has the reputation for having judges that are very, very astute and well skilled in commercial transactions and [00:45:00] people all over the world just pay a fee and use it because that works well for them. So do we need the government to provide courts? Well, since they don’t, maybe not.
Just keep going. At some point maybe you’ll find something that you can’t do, you can’t get, without the use of coercion by some central agency. At that point, you’ve got the justification for government. For me, you just move along the line. Now, for most people, they’re going to stop somewhere along the line. As I move along the line, I haven’t [00:45:30] found an effective stopping point yet. I understood about the need to internalize externalities, but then I found out about tort law and if tort law’s already too regulative, you don’t need it for that.
How about you need the government to provide public goods. That makes sense. So that’s why we don’t have any lighthouses. But wait a minute, we did. One of your colleagues, or former colleagues, you’ll recognize who I’m talking about, I used to call him up on the phone, [00:46:00] he said, “I can’t talk to you now. I’m doing something impossible.” “What?” “I’m watching television.” Because broadcast TV, right? That’s the typical public good, you beam something into the atmosphere, everybody can receive it, there’s no way of charging, so public broadcast television is impossible to public good.

Trevor Burrus: Well, the FCC does give away the frequencies, right?

John Hasnas: Right. So it’s hard to identify any public goods until you get down to national defense and then when you get to national defense, who cares? [00:46:30] Because if you’re going to liberalize society, the last government function you’re going to think about liberalizing is national defense, ’cause that’s way at the end of the line, and by the time you get there, the question may be moot. If you’re worried about, don’t worry, be happy, forget about it. Let’s see what happens if we liberalize the world and allow more free trade and more movement of people across lines and [00:47:00] more human interaction that creates more prosperity and more economic interdependence.
At some point, whether you’re worried about national defense or not may just be irrelevant.

Aaron Powell: Free Thoughts is produced by Tess Terrible. If you enjoyed today’s show, please rate and review us on iTunes and if you’d like to learn more about libertarianism, find us on the web at www​.lib​er​tar​i​an​ism​.org.