21 Feb 2019

The Case for Legalizing Blackmail

Economics, Libertarianism 14 Comments

Seriously I am just a rebel. Where else do you get hard-hitting stuff like this? An excerpt:

The interesting aspect of this system is that it would provide an informal means of “fining” people for violating social taboos. Although this might strike some (such as Scott Sumner, whom we’ll discuss in the next section) as a horrifying means of puritanical social control, we could alternatively view it as a useful mechanism of minimizing socially undesirable behavior that augments more conventional law enforcement.

For example, consider the infamous case of the comedian Louis C.K. According to him, he always officially got consent from women before engaging in his wildly inappropriate behavior. So assuming that he is telling the truth, he didn’t engage in officially criminal behavior.

Even so, most observers agree that what he did was WRONG and should be actively discouraged by social pressure, including economic incentives. In a society with a mature, legal blackmail industry, as soon as Louis C.K. started earning some real money, the women involved could have told their stories to a company like The Truth Hurts. After its internal investigators verified the allegations and were confident “something was there,” they would approach Louis and ask (say) $200,000 for every year that they sat on the story. Out of that payment, perhaps the company would transfer half to the women complainants, likewise ensuring their annual payments so long as the public never learned of the allegations.

14 Responses to “The Case for Legalizing Blackmail”

  1. Harold says:

    Very thought provoking. Without arriving at a conclusion yet, here are some points.

    “For example, suppose The Truth Hurts Corp…develops a reputation for impeccable accuracy in the material it publishes.”

    Reputable news companies currently do have serious vetting procedures, yet they still make mistakes. Unlike the less reputable ones, they acknowledge these in the form of a retraction when discovered, but mistakes will always happen. Quite often a suggestion of scandal is enough to cause damage, so accuracy may not even be necessary for income generation. Media outlets with very bad reputations for veracity are still widely believed. I don’t see that this company is going to do any better than CNN and false blackmail claims will be made. It is then up to the victim to decide it it is worth fighting. I think your supposition is unrealistic.

    You suggest that demands could be made on the basis of “After its internal investigators verified the allegations and were confident “something was there,” This is quite a low standard and would lead to many false claims.

    This is not necessarily a fatal flaw, but I think it needs serious consideration.

    One of the comments refers to NDA’s. In some ways these are similar to blackmail, but the money is offered rather than demanded. But is there much of a difference? In most cases the NDA is with the damaged party rather than a third party. but as I understand it as long as no threat is made it is perfectly legal for a person to offer an NDA to a third party for their silence. Interestingly, there is now pressure to make these illegal, rather than pressure to legalise blackmail. In some ways, legal blackmail is already with us.

    • Matt M says:

      Indeed. I made a devil’s advocate style defense of illegal blackmail (from a collectivist perspective) in the comments on the posted article.

      But it seems to me that “legal blackmail” in the form of NDAs and private tort lawsuits with undisclosed settlements + gag orders already exist.

      If anything, their existence seems to serve as a vehicle for the rich and powerful to keep their offenses (either legal or illegal) secret and minimize the consequences of their actions, not the other way around…

  2. Josiah says:


    What makes the blackmail case extra weird is that it’s percectlh legal (in most circumstances) to pay someone not to reveal embarrassing information about you. Trump, for example, paid Stormy Daniels not to tell anyone that they had had an affair. That may or may not have been a campaign finance violation, but Daniels isn’t in any danger of being prosecuted and if Trump hasn’t been a candidate when the deal was arranged there’s be no issue at all.

    So it’s perfectly fine to sell silence. What you can’t do is *offer* to sell your silence.

    • Bob Murphy says:

      Yep Josiah, I wish I had included that in my piece, though I *did* go over that point in the Bob Murphy Show episode I recorded (which comes out next week). So don’t think I’m stealing your idea…

  3. khodge says:

    You so-called libertarians would be so much more credible if you were not hung up on little pictures of dead presidents.

    The bottom line is if you choose to make blackmail an acceptable transaction cost then you have to allow, at the very least a non-monetary response. Duels would be a workable first step.

    Blackmail is just another broken window.and legalizing it creates a whole new cottage industry of professional, full-time bounty hunters which adds as much value to the economy as government taxation.

  4. scineram says:

    Yeah, I will just take not being extorted by revealing embarassing information for now.

    But thanks for playing!

    • Bob Murphy says:

      Right scineram, nobody is forcing you to pay money to blackmailers. I’m glad we agree on what your rights are.

      • scineram says:

        I don’t think we do. In addition to not paying blackmailers I also wish to avoid being blackmailed at all. Criminalizing it helps with that.

      • Bob Murphy says:

        What about people who want to sell you heroin, or people who want to work in the same industry that you work in? It would help you if we threw those people in cages too, so are you for it?

        • scineram says:

          Heroin sellers, sure.

          Coworkers? That would make me a one man industry, and there really is no such thing. Probably my job wouldn’t exist anymore either. This whole proposal is incredibly unrealistic.

  5. Andrew in MD says:

    If blackmail were only used to extract payment from relatively wealthy people for socially detrimental behavior, that would be one thing. But blackmail can also be used to lure people who’ve made mistakes and wish to move on from them deeper into the darkness until they’re practically a slave to the whims of their blackmailer.

    Blackmail isn’t only used to extract cash payments. Someone might say, “If you don’t want X to be made public, then you’d better do X + 1.” This way blackmail can have a ratcheting effect that pulls people deeper into the hold of their blackmailers until there is almost nothing they would not do to avoid exposure of their misdeeds.

    I think that, by focusing on cash-for-secrecy blackmail and sort of assuming the good, or at least neutral, intentions of blackmailers, you’re white washing the real dangers of blackmail.

    In your vision of an AnCap society, would there be anything preventing people from using blackmail to gradually lure women into prostitution?

  6. Andrew in MD says:

    My last comment did not appear. I’m not sure if it is because of a software glitch or if it got diverted to a moderation queue for some reason.

    • Andrew in MD says:

      Thanks for approving my comment Bob. I think I know why it was flagged for moderation. I’m guessing that you added some words to the dirty words list to restrain a certain individual who liked to hijack threads with his pet cause.

      • Bob Murphy says:

        Andrew, I didn’t augment the spam filter in any way. I don’t know why it holds up some comments but not others.

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