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Friday, April 17, 2020

The Constitution as a Moral Hazard Problem

Here's an idea that I've been kicking around lately for a paper. The Constitution helps secure our freedom and well-being. In a sense, you could say that it's a kind of insurance that we rely upon. If that is so, then (like all insurance), there can be a moral hazard problem. In other words, I may feel like I need to do nothing (or not much) to safeguard my liberty because the Constitution is there. This issue is often discussed in economics or in the insurance field more generally. You could also say that this an idea behind James Bradley Thayer's famous defense of judicial deference.

How do insurers try to deal with moral hazard? Part of the answer is that they impose certain direct requirements on the insured. Part of the answer is they require the insured to take some losses in the event of an accident, to convince people not to rely totally on insurance. (A deductible, a co-pay, or an exclusion in certain situations.)

Are there constitutional equivalents for this? Sort of. There are some affirmative requirements for citizens (such as serving on juries) but not many. We do not, for example, have mandatory voting as Australia does, which might be understood as a device to avoid moral hazard. What about forcing us to have skin in the game? To the extent that laws are applied generally, we all bear the costs of a bad law or one that just imposes significant burdens. When laws are not applied generally, though, only some people bear the costs of those decisions. In that respect, the Equal Protection Clause (as Robert Jackson once famously explained) prevents invasive laws simply by requiring general application much of the time. It is the moral hazard remedy, to the extent that we have one. But is there moral hazard in relying upon that part of the Constitution? And how do we deal with that? 

Posted by Gerard Magliocca on April 17, 2020 at 09:19 AM | Permalink


I should follow up and clarify: relying on Equal Protection and the promise of "general applicability" in written constitutions, in which sovereignty is endowed in the people (which is true of any democracy), presents a moral hazard in that if the general public is subjected to invasive, harsh, strict, etc laws, like the TSA example, because of a small group of bad actors, it can lead to a feeling amongst the general public that equal protection is placing burdens which *should* be placed disproportionately (i.e., not generally) on suspected bad actors instead onto the general public. This frustration, that the constitutional guarantee of equal protection is improperly imposing costs and burdens on the law-abiding public citizenry because imperfect laws must be generally applied, can exacerbate the all-too-human practice of scapegoating groups that bear some social relationship to the wrongdoers, and to the extent that the constitution tries to prevent political or legal manifestations of such scapegoating through equal protection, the desire to scrap constitutional protections (or the constitution itself) grows stronger and stronger.

Posted by: RComing | Apr 23, 2020 11:22:16 AM

The moral hazard in relying on the Equal Protection Clause and its supposed promise of "general applicability" is that the laws are imperfect, and "generally applying" imperfectly written laws will frequently lead to absurd, unforeseen, inappropriate, or even (that ever-slippery term) "unjust" results. The security theater of the TSA is a pretty good example: all those pictures in 2002 and 2003 of elementary school children, with stuffed animal in hand, being forced to take their kiddie shoes off and put their hands up at the airport scanner, with captions like "Is this who we are now?" But the laws prescribing airport surveillance are generally applicable; surely it would be wrong to exempt some people from the requirements, or to rely on the "instincts" of airport screening agents as to who requires a scan and who can walk right on through.

Posted by: RComing | Apr 23, 2020 11:08:38 AM

“Self-enforcing” seems too strong: I don’t think the moral hazard problem is that people conceive of the Constitution as “a machine that would go of itself.” The problem, I think, is the assumption of a constitutional design in which enforcement responsibility always rests with others (the judiciary, mostly). That assumption reduces—maybe eliminates—the burden on most actors to determine the constitutionality of particular policies. Worse, it may actually promote endorsement of unconstitutional policies because for many political actors such statements are pure gestures.

Posted by: RQA | Apr 19, 2020 12:07:57 PM

The idea is that many people believe that the Constitution is self-enforcing. As a result, they may feel that they can take more risks (in terms of who they vote for, or what they feel that can do or not do) than they would in a system without a written Constitution.

Posted by: Gerard | Apr 18, 2020 8:02:43 PM

At the institutional level, we could be talking about a legislator who votes for a bill knowing it’s probably unconstitutional but secure in the expectation that if the legislation is enacted it will be thrown out by a court. But what would be the equivalent moral hazard for a citizen? Maybe failing to hold the legislator accountable at the ballot box?

Posted by: RQA | Apr 18, 2020 3:14:29 PM

"The Constitution helps secure our freedom and well-being. In a sense, you could say that it's a kind of insurance that we rely upon."

I don't think I follow this step. Why a group having a legal rule to help itself "a kind of insurance"?

Posted by: Orin Kerr | Apr 18, 2020 3:03:42 PM

The Constitution helps secure our freedom and well-being.

Provided the culture of the legal profession is such that black letters trump the modal attitudes of professional-managerial types in our time (especially those employed in higher education). That can dissipate in short order. Ordinary people have no interest in harassing cultural dissenters and the like. The professoriate does.

Posted by: Art Deco | Apr 18, 2020 10:32:34 AM


Posted by: Anna | Apr 17, 2020 11:36:04 AM

Interesting, many arguments can be raised here, but one right now:

The author of the post, ignores one "negligible" element, and it is the laws. Laws reigning all over the land. The Fourth amendment for example dictates, I quote:

"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."

So, people rely on it ? Yes, but only if they are not offenders. If they are, then, it is prescribed: Warrants of arrests shall be issued then. One needs probable cause, yet, if we deal with a suspect, he shall be arrested then.

So, the constitution, dictates principles, abstract as such, but, one can't transgress the laws. The constitution, dictates typically, the way things shall be executed, but, how one offender shall get away with it ? The constitution, meant also, for offenders not only innocent persons. The right to rapid trial, meant for offenders, not for innocent persons.

So, fear the law, and rely on the constitution. That is the right formula or composite.


Posted by: El roam | Apr 17, 2020 10:40:48 AM

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