Unconventional Thinking, Congress, and Facebook: the War against the Average American

I love these paragraphs from a recent New Yorker article on basketball (Malcolm Gladwell, May 11, 2009, "How David Beats Goliath"):

This is the second half of the insurgent’s creed. Insurgents work harder than Goliath. But their other advantage is that they will do what is “socially horrifying”—they will challenge the conventions about how battles are supposed to be fought. All the things that distinguish the ideal basketball player are acts of skill and coordination. When the game becomes about effort over ability, it becomes unrecognizable—a shocking mixture of broken plays and flailing limbs and usually competent players panicking and throwing the ball out of bounds. You have to be outside the establishment—a foreigner new to the game or a skinny kid from New York at the end of the bench—to have the audacity to play it that way. George Washington couldn’t do it. His dream, before the war, was to be a British Army officer, finely turned out in a red coat and brass buttons. He found the guerrillas who had served the American Revolution so well to be “an exceeding dirty and nasty people.” He couldn’t fight the establishment, because he was the establishment.

T. E. Lawrence, by contrast, was the farthest thing from a proper British Army officer. He did not graduate with honors from Sandhurst. He was an archeologist by trade, a dreamy poet. He wore sandals and full Bedouin dress when he went to see his military superiors. He spoke Arabic like a native, and handled a camel as if he had been riding one all his life. And David, let’s not forget, was a shepherd. He came at Goliath with a slingshot and staff because those were the tools of his trade. He didn’t know that duels with Philistines were supposed to proceed formally, with the crossing of swords. “When the lion or the bear would come and carry off a sheep from the herd, I would go out after him and strike him down and rescue it from his clutches,” David explained to Saul. He brought a shepherd’s rules to the battlefield.

The price that the outsider pays for being so heedless of custom is, of course, the disapproval of the insider. Why did the Ivy League schools of the nineteen-twenties limit the admission of Jewish immigrants? Because they were the establishment and the Jews were the insurgents, scrambling and pressing and playing by immigrant rules that must have seemed to the Wasp élite of the time to be socially horrifying. “Their accomplishment is well over a hundred per cent of their ability on account of their tremendous energy and ambition,” the dean of Columbia College said of the insurgents from Brooklyn, the Bronx, and the Lower East Side. He wasn’t being complimentary. Goliath does not simply dwarf David. He brings the full force of social convention against him; he has contempt for David.

I am citing this New Yorker piece in-depth because it perfectly summarizes my own mentality ("tremendous energy"). The "outsider" mentality may be one reason few people can tell I'm a lawyer. Like the immigrant basketball coach, I wholeheartedly agree with playing unconventionally to win, and I'd like to think my own outsider status causes me to act differently than 99% of lawyers. Like the New Yorker-profiled basketball team, I fight corporate Goliaths on a more-than-average basis, and I've gained the ire and disapproval of several of the ultimate insiders--judges. Why should you care? Because, as I will show you, America's legal and political systems are tilted in favor of the establishment and against the middle class.

The problem with the author's basketball/war analogies is they don't emphasize an unfortunate third party--referees. In a large athletic conference, in court, or in war, the bigger entities tend to get the benefit of the call (i.e., a favorable appellate court reversal or the ability to escape war crime prosecution) as well as the benefit of being repeat participants. The author mentioned that in one game when the referees didn't like the coach's style, they called fouls against the team at a 4-1 ratio, causing the unconventional team to lose. The same bias sometimes happens in court.

In court, the big firms and companies sometimes get "assists" from the legal system, even if neither side will ever admit it. Part of that is due to the convoluted evidence code and the expense in admitting certain documents, which are much easier to handle for corporations with large litigation budgets. But even removing the evidence code's rigors, bigger firms and companies are repeat players in court, which builds a familiarity with judges, clerks, and other government workers. For example, I had a case where my client had sued a county. The judge's office was in the same building as the lawyers representing the defendant/government. Whom do you think is going to get the benefit of the doubt in that case?

Making matters worse, many judges tend to be former D.A.s or city/county attorneys. Thus, in many modern day governments, workers in the legislative, executive, and judicial branches tend to know each other. Instead of breeding contempt, this familiarity tends to create an implicit "scratch-your-back and I'll scratch yours, and we'll all retire with our government pensions" culture. Such a culture is against the idea of America itself, which was created with three separate, independent branches so that various factions would fight each other if one branch attempted to increase its power. The founders may not have envisioned a situation where all three branches were riding high on government pensions, automatic payroll deductions from government employees via taxpayers, and lobbyist funding, thereby creating fewer incentives to look out for individual constituents. Indeed, when politicians have lobbyist money, who needs actual voters, except on one day every few years?

In short, corruption doesn't have to involve quid pro quo to result in public harm. All that's necessary is to align interests so no one in power wants to rock the boat. If you look at what's happened with gerrymandering--where the Dems and Republicans have carved up easy-to-win voting districts (in the name of racial justice, no less), it's an easy example of incentives causing corruption.

Consider defense spending. The defense budget is massive--easily one of the largest sources of government expenditures, i.e., taxpayer dollars. Many defense projects involve systems that will not be used more than a few times--making them questionable expenditures--or systems that will not be functional until 2017 and beyond, meaning such projects can afford to have further delays until America has a better balance sheet.

The defense contractors realized that they had to align incentives to keep the money coming, so they started building different pieces of their systems in different states, spreading the wealth and guaranteeing Congressional votes. Some of these projects are unnecessary, but no Senator wants to be the one who tells his district Lockheed Martin is taking its business to another state. So who wins? Defense contractors and defense employees. Who loses? The people--who have to pay the bills for these systems, which requires America to print more money, which weakens the American dollar, restricts future flexibility in spending, and/or causes inflation. Thus, taxpayers, our children, and the country suffer while defense contractors and employees run to the bank. It's not corruption per se, but another case of misaligned incentives.

There are numerous instances of these kinds of misaligned incentives, and the legal system is especially rife with them. First, who makes the laws? You think your Senator and his/her staff are in a D.C. office typing up the next draft of legislation? Usually not. Typically, it's the lobbyist who pays money to get the Senator's ear and then who gives the Senator a proposed bill of law. Who can afford lobbyists? Megacorps and large organizations (such as national unions), not Joe the Plumber or Matt the Small Town Lawyer. Can you see the problem of misaligned incentives yet?

Let me make it even more clear. Congresspersons rely on donations for re-election campaigns and happy constituents. These factors tend to favor the status quo and rich people. For instance, whom do you think has the most money to donate to political campaigns? Joe Six-Pack, Big Labor, or Big Corp? If you think Congress spends its days trying to help the little guy, just remember this: politicians still have to get elected, and to get elected, they need the majority and/or money; thus, Congress can't realistically force the majority to give anything substantial to the minority. In other words, as long as Congress makes the laws, the laws will rarely help minorities who lack substantial assets, such as people of color (generally speaking), the average American family, most small business owners, etc.

One example of corporate America's obvious influence over Congress is copyright law. The internet companies managed to get Congress to pass a law (Digital Millennium Copyright Act, or DCMA) protecting them for hosting copyrighted material on their sites. To summarize, YouTube, Google, Yahoo, Craigslist, and other internet companies get a free pass as long as they follow some guidelines. Now, you'd think Congress would try to protect the end user, i.e., the internet user, who tends to vote. Not at all. If you download a copyrighted song or TV snippet on your PC that belongs to Viacom, Viacom can come after you and sue you and receive statutory damages. If it has filed for a copyright, it may ask for its attorneys' fees, even if it hasn't suffered any actual monetary loss (it's hard to prove that companies actually lose money, because many people wouldn't necessarily have bought the song or TV show they've downloaded for free). [See 17 USC 505 for attorneys' fees provision.]

The attorneys' fees provision is especially terrible for the consumer because it creates an incentive to go after the casual internet user, even if this person hasn't caused the company more than de minimus financial loss. It's also unnecessary, because corporate America has plenty of lawyers on call it can afford to pay out of pocket--it doesn't need a fee-shifting statute to protect its rights.
But what about the small town author who writes a book, only to see someone put it online for free? I've thought about this issue, and I can't come up with a reasonable compromise involving attorneys' fees, but I'm still inclined to just remove the attorneys' fees provision. Without such a provision, copyright holders would leave individuals alone and only sue entities or individuals that caused them major damages or that had enough money to pay damages. (If readers can think of a way to allow copyright holders attorneys' fees in a way that doesn't provide an incentive to sue small-time infringers when damages are de minimus, please add your comments.)

In any case, Congress gave corporate America a sweet deal when it came to copyright laws. Why didn't Congress make some effort to protect the average internet user? Well, the people who drafted the DCMA legislation were affiliated with major internet companies. They wrote what the internet companies wanted and helped get it passed. Congress rubber-stamped the proposal and didn't seem to care enough to protect the average American. Copyright is an issue that impacts almost every average voter. If Congress didn't care enough to protect the average American on this issue, what do you think happens when other laws are passed?
Here's another quick example that shows Congress passes laws to help corporations, not consumers. Facebook users, by using Facebook, have to consent to this provision (as of the time of this publication):

"If anyone brings a claim against us related to your actions or your content on Facebook, you will indemnify and hold us harmless from and against all damages, losses, and expenses of any kind (including reasonable legal fees and costs) related to such claim."

In other words, if you post a music video on your wall, and Facebook gets sued because you posted copyrighted material, you have to pay Facebook's legal fees and damages if it loses in court. Facebook has made you, the average American, an insurer for its business. Will Facebook actually utilize this provision against one of its users? Probably not. Still, the lesson remains the same: Congress clearly cares about corporations and their lobbyists, not the average American; otherwise, it would have made such one-sided indemnification provisions illegal, or at least placed a cap on indemnification reimbursement. In the end, people who think they can change society through new laws are naive. Most of the time, a new law just gives a power-hungry lawyer who happens to know the state Governor or legislator the power to interfere in your life.

I will talk more about the legal system another time. For now, I'll just say that if more non-lawyers knew how the legal system actually worked, more Americans would be libertarians. You want to make America a better place? Start with the tax code. The tax code may be a set of laws, but it's really a system of financial incentives that happens to be codified. Right now, the tax code favors big corporations, nonprofits, large banks, and housing speculation. It doesn't help small businesses much. It doesn't help families enough. That's a shame, but at least it shows who Congress is looking out for these days--mortgage lenders, developers, insurance companies, and big corporations. Where's the anger?