Opinion from a Libertarian ViewPoint

The Case for Legalizing Blackmail | Mises Wire

Posted by M. C. on February 23, 2019

Due to Jeff Bezos’ public accusations against the National Enquirer, the topic of blackmail is in the news. Tyler Cowen wrote an article for Bloomberg in which he largely took it for granted that blackmail was a bad practice, but he at least linked to a 1985 law review article by Walter Block and David Gordon arguing that the practice should be legalized (if not necessarily praised).

Continuing the discussion, over at the website EconLog, David R. Henderson chimed in on the side of Block and Gordon, and also linked to Robin Hanson , who thinks nobody has ever offered a good argument for keeping blackmail illegal. On the other hand, at the same EconLog website, Scott Sumner rejects these defenses and argues that blackmail is a socially harmful practice that the government rightfully outlaws.

In the present article, I’ll summarize and elaborate upon Block and Gordon’s case for legalizing blackmail, and I’ll point out some of the major problems with Sumner’s arguments in favor of its current prohibition.

Blackmail Is Not Extortion

Although people (even some of those linked above) often conflate the terms, blackmail and extortion are distinct. As Block and Gordon use the terms, extortion refers to demanding money (or other compensation) from a victim under the threat of doing something that violates rights—such as initiating physical assault or arson.

In contrast, merely blackmailing someone only involves “threatening” to do what the blackmailer has every right to do: namely, spreading gossip or embarrassing photos, etc. From a libertarian standpoint, this is a critical distinction. Consider: If nobody would object to the legal right of the National Enquirer to publish stories about Bezo’s infidelity, and the photos that go along with the gossip, and furthermore nobody denies the Enquirer’s legal right to refrain from publishing this material, then how in the world can it be a rights-violation for the Enquirer to ask Bezos for a financial contribution to determine which of these perfectly legal alternatives it will choose?

As with other defenses of unpopular characters, here too Block and Gordon are not necessarily saying we should admire the blackmailer. We may even go so far as to condemn him morally, and to denounce him as a bad person. But from the standpoint of libertarian theory, the activity of blackmail doesn’t violate anybody’s rights and therefore should be legal in a just society.

Possible Social Benefits of Institutional Blackmail

We can take the analysis further, using economics (rather than libertarian philosophy). Notwithstanding the popular revulsion against blackmail, there are actually potential social benefits that would flow from its legalization. In other words, the current policy of legally prohibiting blackmail might carry some significant unintended consequences.

First and foremost, allowing for legal blackmail contracts would probably bolster people’s privacy and reputations. Yes, it’s true that the prospect of a big payoff from a “blackmailee” would give an incentive for people to dig up dirt (especially on the rich and famous), but the whole point of digging up the dirt is to charge the blackmailee for silence

Sumner’s Objections

In this section, I’ll address some of the arguments economist Scott Sumner deployed in favor of the prohibition on blackmail. As we’ll see, they are quite weak.

For example, Sumner writes:

Consider that privacy and good reputations are widely viewed as being desirable. Most of us would like a bit of privacy and also a good reputation with the general public. That’s why libel and slander are illegal. Legalizing blackmail is effectively creating an industry that devotes resources to destroying privacy and destroying reputations.

Here Sumner has things backwards. Blackmail devotes resources to maintaining privacy and sparing reputations. When the tabloids get their hands on a naughty photo, the possibility of legalized blackmail lets them first offer it to the “victim.” By making blackmail illegal, the government currently makes it far more difficult for people to maintain their privacy and reputations.

At face value, Sumner’s claim would be akin to saying, “Legalizing automobiles is effectively creating an industry that devotes resources to destroying mobility and destroying transportation.”

Now in fairness, what Sumner is getting at is that with the option of legalized blackmail on the table, people will have an incentive to dig up dirt, who otherwise might not bother to do so. But as I explained in the previous section, to the extent that the “targeted” behaviors are actually socially destructive, then it’s good that society is devoting more resources to discouraging them.

In response, Sumner claims that “most blackmail involves issues of sex, gender and drugs..[L]et me just say that I believe that our society is unable to think rationally in these areas.” That may be true, but bringing in economic calculation is a way of helping to rationalize social norms. For example, hypocritical social attitudes would at least be made transparently obvious in the type of society I’m describing. Right now, with blackmail illegal as Sumner desires, people in polite society can claim to be shocked, shocked when some high-profile celebrity or politician gets caught doing something that a majority of them do as well, behind closed doors. But in a world of legalized blackmail, it would be harder for philanderers to denounce Bill Clinton (or Donald Trump) when they were currently paying monthly hush money to a company which had proof of their own infidelities…

Be seeing you

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