Wednesday, September 30, 2015

A Solution for Today's Legal Structures

A previous post presented the idea that much-maligned problems with today's legal system result because our systems were not designed to handle rapid complexity growth in our economy and society. The sheer volume of new regulation results from well-meaning bureaucrats struggling to keep up with economic and social developments. The lobbyist community has appeared to opportunistically "help" these bureaucrats understand new complexity in ways which align with sponsored interests. On the tort side, opportunistic lawyers comb the complexity for lawsuit opportunities, then search for clients who fit lucrative lawsuit niches. From the outside, laypeople see an ever-growing body of law opaque to non-experts.

How can this situation be improved?

Remember the core philosophy of common law: the primary objective of law is to be predictable. In the old days, pre-complexity-explosion, predictability could be achieved by precedent alone. As long as laws followed established precedent, the law would hold few surprises. But in the era of complexity, precedent is no longer sufficient for predictability. Humans have limited memory, limited time to fill that memory, and limited processing capacity. Once the volumes of precedent become large enough, no human can possibly hope to understand it... and we passed that point long ago. There is little point in law being predictable if it is not predictable to humans, and much of the benefit is lost once the law becomes opaque to laypeople.

On the other hand, I believe the core philosophy of common law is solid. The primary objective of law is to be predictable. So let's keep the jurisprudence, and consider how to adapt the system to an environment of rapid innovation and complexity growth.

Our goal is to find a system which produces law which is not only predictable, but predictable to laypeople. First and foremost, then, it must be simple. More precisely, it needs to be simple by human standards. Any number of nerds have suggested that we wouldn't need common law if legislatures passed laws perfectly specified in computer code, e.g. Java or C++. Hopefully half a century of AI research is sufficient to show that this is a spectacularly bad idea, but even setting that aside, it would certainly be opaque to laypeople. On the other hand, there will always be lots of unusual cases, especially in an environment of rapid complexity growth. We do need some mechanism for applying the rules to individual cases.

When a case is in a gray area, what do we want to happen? Same as in any other case. We want the outcome to be predictable. As much as possible, it should be exactly what a layperson with a grasp of the basic principles would expect. Think about that: the outcome should be whatever people expect the outcome to be.

Time for a digression. One of my favorite game theorists is Thomas Schelling. His book "The Strategy of Conflict" has been described as a guide on fighting dirty in game theory. One of Schelling's biggest ideas is a simple experiment: put two people in New York city and give them a large reward if they can meet. The two are strangers, with no way to communicate. Where do they go, and when? Schelling suggested noon at Grand Central Station, although experiments have shown that noon at either the empire state building or the statue of liberty are more popular choices. The important point is that people are able to successfully coordinate in this situation, without any communication at all. This type of problem was dubbed a "coordination problem", and popular solutions (e.g. statue of liberty at noon) are called Schelling points.

Going back to law, we see that the philosophy of common law casts law as a coordination problem. We want the law to be a Schelling point: the outcome of a lawsuit should be exactly what everyone expects. Today's common law uses precedence to achieve this. If the law follows previous precedent, then as long as everyone knows the full history, outcomes are predictable. The analogy in the New York experiment would be to give both participants a long list of all the places and times people had tried to meet. The problem is that the body of precedent has become far too large for even experts to know the full history. What we need is some new mechanism for coordination.

Let's stick with the New York city analogy for a minute. Previously, people met in New York by consulting huge volumes of records showing where previous people had met. Alas, these volumes have grown too large, and the records are too complex for an electronic search engine to help (meeting places depend on an endless multitude of special conditions, vary by hour and weather and number of window washers on the empire state building, etc). We want a new system for our hapless strangers to meet. What to do? One natural starting point is to build a very big, very obvious, very well-advertised monument in the middle of the city which says "MEET HERE" on all sides in giant letters visible from New Jersey.

That's a start, but there are problems. See, much of the complexity of the old system existed for a reason. Our giant monument is outdoors, which is great when it's sunny but not so good in rain or snow. Plus, the monument needs frequent cleaning, and no wants to be around for that. Not to mention the birds which nest there in spring... we need a more flexible system.

So we build several monuments. Some have outdoor seating, some indoor. There is a regular cleaning schedule. There is a monument in Brooklyn and another uptown, for more local meetings. But there aren't too many. Local residents can list all the relevant monuments off the top of their head, and advertising monument locations, features and cleaning schedules is one of the main jobs of the Mayor's office. Maps and schedules are readily available at regularly placed kiosks throughout the city. Precedence volumes are still available when necessary, but most people can figure out everything they need to know from the FAQ section of the pamphlets.

Now let's translate this analogy back to law. Our giant monument would correspond to some very simple but undesirable solution, like assigning everyone in the country a social rank and declaring the person of higher rank to be the winner in all disagreements. Great for predictability, but still a terrible idea. Predictability is a priority, but the laws still need to be reasonably good. So we build more monuments.

The monuments in our analogy correspond to the core principles of the legal system. The success of the whole system is measured by how well laypeople understand the core principles - the monuments - and how well laypeople can predict how the principles will apply to any particular case. Clearly, public relations and advertising is a key component of this system. The courts and regulators must constantly communicate with public. They need to set up regularly-spaced kiosks with maps and schedules and FAQs on the core legal principles. Their success will be measured by how well the public can predict case outcomes. That means regular studies run on laypeople asking them to predict how the law applies to various cases. Since the success of the bureaucracy will be measured by public understanding, the bureaucracy will be motivated to keep their core principles simple. Old monuments will be removed, and the total number of monuments will be limited.

There are still open issues. For example, how can we incentivize the laypeople in our studies to honestly report what they expect to happen rather than what they think should happen? On the public servant side, how are bureaucrats and judges incentivized to create laws which are both good and predictable, rather than just giving everyone a social rank? These are nontrivial issues, but they seem tractable. Let's leave them for later.

In summary, we want a legal system with a small, simple, actively maintained set of core principles. Public servants both apply the law to specific cases as judges and regulators, and actively spread information on the principles and their application to the population. Bureaucrats' performance is measured by studies on laypeople, where the best outcome is that the laypeople can perfectly predict how the law will apply to each case.

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