Tuesday, August 21, 2012

The Paradox of Blackmail (Part Two)

David Letterman: Blackmail Victim

(Part One)

This is a series about the so-called “paradox of blackmail”. The paradox arises from the fact that blackmail is criminalised, despite involving otherwise lawful acts. Take the classic information disclosure case as an example. Here, one person (the blackmailer) threatens to disclose truthful information about another person (the victim) to a third party, unless the victim pays them a sum of money. This is criminal despite the fact that the blackmailer is legally entitled to disclose the information, and legally entitled to enter a contract for silence (if they don’t initiate it). It is only when they combine the lawful threat with a conditional demand for payment that their act becomes illegal. Why is this?

In part one, I set out the nature of the paradox and distinguished between extortion, which involves unlawful threats, and blackmail, which involves lawful threats. It is the criminalisation of the latter that is theoretically interesting, not the former. I also discussed Richard Epstein’s attempted to resolve the paradox. This came from his article “Blackmail Inc.”. I suggested that in this article Epstein offered the following argument in favour of the criminalisation of blackmail:

  • (1) If an activity would sustain and support deceit and fraud on a massive scale, then it ought to be criminalised. 
  • (2) Blackmail would sustain and support deceit and fraud on a massive scale. 
  • (3) Therefore, blackmail ought to be criminalised.

As I said the last day, I don’t think much of Epstein’s argument and I want to justify this evalution now. To help me out, I’m enlisting the help of James Lindgren’s article “More Blackmail Ink: A Critique of Blackmail Inc., Epstein’s Theory of Blackmail”. One can see why from the title.

Lindgren’s article performs a number of useful services. First, he provides what are, to my lights, convincing counterarguments to Epstein. Second, he reviews seven other attempted solutions to the blackmail. And third, he offers his own explanation for the wrongness of blackmail. In this part, I look solely at the first of those, leaving the other two til the next day.

1. Should Concealment be Criminalised?
We start, as we must, with the first premise of Epstein’s argument. One of the key perspectival shifts adopted by Epstein was the shift away from focusing on the actions of the blackmailer to focusing on the actions of the victim. He argued that the victim in an information disclosure case of blackmail is always engaged in a sort of long-term fraud: they are hiding information from a third party in order to gain some advantage (reputational or financial) from them.

And fraud of this sort is generally deemed to be wrong. To intentionally gain from another through false representation is a crime in most countries, and uncontroversially so. So if a given practice greatly assists in perpetuating and extending fraud, then arguably there are good reasons for criminalising it. In other words, there is arguably a legitimate transference of wrongness going on here: the reasons for criminalising fraudulent practices carry over onto any practice that greatly assists those practices.

That, at any rate, was the basic defence of premise (1) outlined in part one. The problem is that this basic defence is terribly sloppy. Leaving aside the problems with the notion of transference (we’ll get to those in a minute) there are deeply troubling issues with the alleged wrongness that is being transferred — i.e. the wrongness of fraud. These issues stem from the failure to distinguish between justifiable instances of concealment and unjustifiable instances of fraud.

To see the difference, Lindgren asks us to consider possibly the most common cases of blackmail in the 20th Century: the homosexual blackmail. The set-up is obvious: a man (or woman) works for some powerful company or institution. They enjoy certain privileges and benefits as a result. The man, however, is a closet homosexual and someone discovers this fact. They threaten to reveal this information to the man’s bosses which, given the social mores of the time, will lead to ruin. But they will remain silent for a fee.

If Epstein is right, the closet homosexual, by concealing information about their sexuality, is engaged in an unjustifiable form of fraud. Thus, according to Epstein we should really be asking — as he does at the end of his article — why they are not subject to criminal sanction, not why the blackmailer is. But that doesn’t seem right. It seems like the closet homosexual is perfectly within his rights to conceal the information about his sexuality from his bosses. There is a right to privacy here which modulates the wrongness of gains made by false representations. Not revealing this kind of personal information may create a false impression, and you may well be aware that this false impression is being created, but there’s nothing wrong about it.

What’s more, this is only one example of the justifiability of concealment. Others abound. For example, Lindgren points out that courts frequently conceal information from juries — for example information that might be “unfairly prejudicial” — so as to improve their decision-making. Similarly, concealment is often essential in bargaining and negotiation: if one reveals too much too soon, one is likely to be much less successful at the bargaining table. Are we to deem these instances of concealment worthy of criminalisation?

Surely the answer is no and surely this reveals a fatal flaw in Epstein’s reasoning. At the heart of most blackmail cases is the concealment of information. On some occasions, the concealment of information is perfectly justifiable. But if the concealment of information is justifiable then it follows, by transference, that being an accessory to concealment is (at least sometimes) permissible. Since that is all that blackmail is, it follows that there is nothing necessarily wrong with blackmail.

  • (4) Blackmail involves being an accessory to, or assister of, concealment. 
  • (5) The concealment of information should not always be criminalised (as is shown by the examples given above). 
  • (6) If the concealment of information should not always be criminalised, then nor should being an accessory to, or assister of, concealment. 
  • (7) Therefore, blackmail should not always be criminalised.

Formally, this argument is a direct counter to the one offered by Epstein. But perhaps its most important feature is that it highlights the flaw in Epstein’s premise (1). By assuming that concealment is equivalent to fraud, Epstein manages to reach his desired conclusion. But he was not entitled to that assumption.

2. Would Blackmail Assist Fraud and other Crimes?
Lindgren has another objection to Epstein’s argument. Let’s assume, contrary to the previous argument, that the victim’s actions in a case of blackmail are always tantamount to a wrongful fraud. Would it thereby follow that blackmail, because it assisted that fraud, ought to be criminalised? In other words, would the wrongness of fraud really transfer onto activities that encourage fraud in such a way that those activities could be legitimately criminalised?

To answer that question appropriately, we must be fair to Epstein’s original argument. As we saw in part one, Epstein’s claim was not simply that blackmail provides some mild inducement to fraudulent activities. Presumably, many things could do this both innocently and inadvertently. Rather, Epstein’s claim was that blackmail would do this on a massive scale. In particular, blackmail corporations, if they existed, could use the leverage they had with blackmail victims to encourage them to commit other offences. For example, they could encourage people to lie on loan applications or insurance claims in order to secure payment for themselves. Now, to be clear, the point is not that blackmail corporations would do this overtly since if they did that they could open themselves up to prosecution as accessories to crime; the point is that they could do this covertly or accidentally, but on a very large scale.

But would blackmail really provide covert encouragement, more so than other legitimate economic transactions. Lindgren argues that it would not. There is ample evidence to suggest that other legitimate transactions encourage fraud and cognate crimes on a large scale, but no one thinks they ought to be criminalised. For example, the threat of mortgage foreclosure, the inability to pay business creditors, the loss of a job, are all well known to promote criminal activity, but they are all legitimate. Indeed, Lindgren cites several cases in which these very things encouraged someone to engage in blackmail. Which is rather ironic, when you think about it.

But if these other transactions can encourage fraud and crime to the same extent as blackmail, and remain perfectly legitimate, it follows that we cannot deem blackmail worthy of criminalisation merely on the grounds that it encourages fraud and other crimes. In other words, the following argument seems to hold:

  • (8) Many legitimate (i.e. non-criminalisable) transactions provide covert encouragement to fraud and other criminal activities. 
  • (9) If blackmail provides no more encouragement to fraud (and other crimes) than these transactions, it cannot be justifiably criminalised on the grounds that it does. 
  • (10) Blackmail provides no more encouragement than these legitimate activities. 
  • (11) Therefore, blackmail cannot be justifiably criminalised on the grounds that it provides covert encouragement to fraud and other criminal activities.

This looks to be another telling blow for Epstein’s argument. But maybe there is hope for it yet? Maybe it is still possible to argue that blackmail is somehow exceptional in its powers to encourage fraud. Consider once more the case of the fraudulent loan application or insurance claim. If Blackmail Inc. could spawn an epidemic of these, thereby undermining key components of the financial sector, it might really be okay to criminalise it.

Lindgren deals with this in swift fashion. He points out that there is no good reason to think that Blackmail Inc would covertly encourage financial fraud at all. Quite the contrary in fact. Blackmail Inc., like any other commercial enterprise, would have no incentive to force its customers/victims to such extremes. It wants to be a profitable enterprise. If it pushes its customers to desperate measures like fraud and deceit, it will simply be doing itself out of business. So it’s far more likely that Blackmail Inc. will negotiate manageable payment schedules with its victims. This might mean they fund part of the costs of doing business in the short term, but in the long-term it will prove successful. Many businesses follows this strategy.

3. Conclusion
To summarise, Epstein thinks that blackmail ought to be criminalised because its legalisation could have devastating consequences. Blackmail Inc could open its doors for business and encourage concealers of information everywhere to engage in massive levels of fraud and possibly other criminal activities. In this post, we have seen that Epstein’s argument is deeply flawed. This is for two reasons. First, he mistakenly assumes that at the heart of every blackmail there is a wrongful case of fraud. But this is not true: on at least some occasions, it is perfectly legitimate for people to conceal information from others, even if this allows them to make gains. Second, Epstein mistakenly assumes that if blackmail covertly encourages fraud and other crimes, it can be legitimately criminalised. But, again, this is not true: there are many legitimate transactions that covertly encourage such activities, and blackmail is not exceptional in its powers to do so.

So is there any good reason to criminalise blackmail? In the next post we’ll look more closely at Lindgren’s own opinions on this topic.

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