Why should blackmail be illegal?

David Henderson raises this question in a recent blog post, and here is Robin Hanson from 2011.  I would suggest a few reasons why blackmail should be against the law in traditional ways:

1. The law serves a primary purpose of publicity, and advertising for a polity, and also the law serves symbolic functions.  People still don’t give Singapore a break for making chewing gum illegal and the like, even though this restriction is not in fact a big source of tyranny there.  I don’t see it as good for the United States and its reputation to make blackmail legal, even if the “legalize blackmail” arguments are perfectly sound in a Steve Landsburg kind of way.  It’s just not worth the bad publicity.

2. As Coase pointed out long ago, blackmail typically involves an exchange setting with bilateral monopoly.  And the material in question is often emotionally fraught, such as knowledge of a crime, of an affair, photos of private body parts, and so on.  The process of the trading is painful and stressful for many people.  Limiting that process could produce welfare gains, or at the very least legalizing that process, and thus producing more of it, won’t involve huge benefits.  When the process of trade and bargaining is itself painful, some of the welfare theorems need to be rethought a bit.  Of course the unilateral release of gossip can be terrible too, but perhaps it involves less potential for drawn-out situations and painful bargaining because the transacting it not allowed in the first place.

3. As Scott Sumner points out: “In practice, I suspect that most blackmail involves issues of sex, gender and drugs. (Soon we’ll have to add race to this list.) I don’t expect to convince others of my views here, but let me just say that I believe that our society is unable to think rationally in these areas. Thus I don’t see any great value in legalizing blackmail.”

4. Sometimes the efficient blackmailers are your immediate family, not strangers.  Outlawing blackmail from outsiders gives them a semi-monopoly for an efficient, do-it-yourself at home, low transactions cost Coasean deal (“Darling, someone needs to take out the garbage…”).  Let’s do blackmail right!  And privately, out of the public eye, to avoid the problems discussed under #1.  And as a matter of justice, shouldn’t it be the aggrieved spouse getting the gains here, not the National Enquirer?

Comments

Any rational discussion of whether “blackmail” should be legal or illegal needs to start with a concise definition of the term. I haven’t seen that in any of the posts here or on other “public intellectual” blogs involved in this discussion by economists. So, please give us your draft criminal statute that spells out the elements of the proposed crime, etc. Absent that, any discussion is pretty useless.

Yep, but it is a stretch too far to say that extortion should be legal. The overlap between the two is considerable, as the basic transaction involved is pay me or you will suffer.

German law does not even consider the two separate, as both are considered Erpressung (which, in a certain way, could be translated as 'squeezed').

The problem is that many do not see that saying 'I am going to the press' is not blackmail as long as that statement is unconditional. Which makes accepting an offer of money to keep from going to the press hush money. Such a process is completely legal today - and obviously should remain so.

Which leads to the use of NDAs to avoid having any problems about someone publishing information that is covered by the NDA - well, most the time. A current case - 'Sims is suing Trump in his official capacity. Mark Zaid, a lawyer representing Sims, said the campaign is trying to use a nondisclosure agreement from the campaign to punish Sims for discussing his time in the White House.

Michael Glassner, who leads the Trump campaign, did not immediately respond to a phone call seeking comment.

The lawsuit accuses Trump of having his campaign serve as “an illegitimate cutout and step into the shoes” of the government in an attempt to silence Sims, in violation of his First Amendment rights.

It claims that the U.S. government, “for the first time ever through the use of private surrogates, is seeking to unconstitutionally censor and punish a former federal employee for disclosing unclassified information outlining what he saw and observed during his time in the White House.”' https://www.washingtonpost.com/politics/former-white-house-aide-cliff-sims-sues-trump-after-attack-over-tell-all-book/2019/02/11/2514c286-2e55-11e9-86ab-5d02109aeb01_story.html?utm_term=.a223350e11a7

Vivian, have you read the Coase article Tyler linked in his post? Coase doesn't offer a definition, but he does consider various attempts at definition and explains why blackmail is so difficult to define.

Michael,

My point, in part, is that if one proposes making “blackmail” an actionable offense (especially as a crime, but also as a tort) , it is incumbent on you to propose a workable statutory definition. This even more so because defining it is difficult!

Is tax blackmail? Give us the money or we will hurt you and make you a public criminal.

No, extortion .

And if extortion is legal for the government, keepers of many secrets about you, is blackmail also legal for it?

Given how much information is being collected by corporations and by the government and how centralized the whole thing is, a couple of well placed hacks could cause a big societal disruption. Imagine something like the hacks of Ashley Madison, Equifax, and the Office of Personnel Management but bigger and with their data all collated and analyzed. You could blackmail all the influential decisionmakers of the country at the same time and like an extra creepy episode of Black Mirror (see "Shut Up and Dance") you can command the direction of the whole nation. The coming generations are the easiest to blackmail since so much of what they do is on social media. China and Russia could just capture the data now and in 15-20 years, spring the trap.

Not to go all Msgkings here, but I think your conclusion is the opposite of what will happen.

Less privacy means blackmail is less useful. It changes the norms, and rapidly. Trump vs Clinton is the obvious example for politicians. Or consider homosexuality. That used to be a blackmail goldmine I imagine, now the idea is laughable.

As the norms change blackmail is less and less useful. Did Bezos cave? Not exactly.

It is time to make the National Enquirer go the way of the dodo and by dodo I mean Gawker. Trump will be very, very sad to see his number one agent of blackmail go. These guys are worse than Gawker:

https://www.wsj.com/articles/bezos-is-latest-celebrity-to-experience-national-enquirers-bare-knuckle-tactics-11550247435

All the slick young men shouting "decency!" about Gawker have gone to ground now that Daddy Drumpf's scandal sheet is in question.

Might I hazard that banning blackmail makes it substantially easier to to police other forms of extortion.

After all how should the police determine ex post if Sue paid Bob as part of a legal blackmail exchange, as Bob maintains, or if Sue paid of Bob to avert a threat of physical violence, as Bob maintains? Bob might have once had incriminating material, but have given it to Sue for payment. Bob might have threaten to kill Sue. Perhaps Bob does have incriminating material, are we going to have the law try to authenticate it so fraudulent blackmail does not occur?

When considering laws, we rarely are looking at one concept in isolation nor are we debating only if behaviors toeing the line shall continue or cease. Instead we are debating about where to put the line so that the invariable murkiness of actual criminal conduct is well past the bounds of strict legality.

'Might I hazard that banning blackmail makes it substantially easier to to police other forms of extortion.'

Since German law does not recognize a distinction between blackmail and extortion, it is unlikely that it makes much difference in practical terms.

For example, is there a real distinction between someone saying to a company 'pay me to stop from tampering with your product' and 'pay me to stop from telling people your product has been tampered with'? Apart from one being a direct threat, of course.

Under German laws, both of your examples are illegal. Unless I am misunderstanding Mr. Henderson, he says the second should be legal, at least if the product has undergone tampering.

If allow the second transaction, ever, then it becomes much harder to prove that the first one is what actually happened. The extorting party can claim, in many situations, that they were paid off for the second (now legal) threat.

Currently, in both Germany and the States large transfers of money are prima facie evidence of illegal behavior. Legalizing blackmail means this is not longer the case so you need more evidence to convict threat one type behaviors.

Both examples are illegal under American law, but the second example is not a particularly good example of blackmail, since the tampering is not real.

'in both Germany and the States large transfers of money are prima facie evidence of illegal behavior'

Nope, not in Germany - if by large you mean the amount you would pay for a car. Or for other goods costing in the thousands of euros. Of course, 100,000 euros is something else on the scale of 'large.'

It was my understanding that more than 20,000 Euro per annum required filing the transaction with German authorities. Is that not the case?

I mean I really don't see how legalizing the payment for threat would be anything other than a giant gift to lawyers, criminals, and other nefarious actors. I mean the money laundering potential is just amazing. Mob has dirty cash it wants to clean. Fine, it "blackmails" someone living in non-extradition territory for stupendous sums of money. What is the IRS going to do? Demand they see the suppressed information before allowing it as real revenue? Ignore the fact that there will be no upper limit on reasonable blackmail prices and just roll up the money laundering divisions?

Again, making blackmail legal isn't going to stop at actual blackmail, it will also effectively decriminalize many other criminal acts that are difficult to distinguish from "legitimate" blackmail.

Per annum sounds like a strange measure, unless you are talking about income. In which case, sure, income needs to be reported, and cash is a way to get around such reporting.

But paying 10,000 euros cash for a used car is still common enough here, and no one is keeping particular track of the means of payment.

And there are still a lot of businesses that do not handle credit/debit cards at all, something which tends to disconcert Americans accustomed to using cards for all transactions. (Though part of this is due to the German Überweisung system, which has no real American equivalent.)

Even Lidl and Aldi only started routinely accepting debit/credit cards around 5 years ago.

'Soon we’ll have to add race to this list.'

Soon? Here is an example of the potential for blackmail in the case of a senator - 'Six months after Thurmond died at the age of 100 in 2003, his mixed-race, then 78-year-old daughter Essie Mae Washington-Williams (1925–2013) revealed he was her father. Her mother Carrie Butler (1909–1948) had been working as his family's maid, and was either 15 or 16 years old when a 22-year-old Thurmond impregnated her in early 1925.' https://en.wikipedia.org/wiki/Strom_Thurmond

Obviously sex is involved, but Thurmond had clearly violated the miscegenation laws of his state. And as can be seen in various political campaigns over the last few decades, knowledge of such events is worth keeping quiet if at all possible (as demonstrated by McCain's 2000 campaign, and its loss in South Carolina seemingly based on a rumor) . Race is not a new factor for blackmail in the U.S.

Blackmail libertarians when they attempt to prohibit the practice.

After reading Henderson, this looks like a new opportunity for the next unicorn startup: blackmail markets. To maximize profit, go after billionaires first since by definition they have the most money.

They also have more money to lawyer up with, and their total numbers aren't all that high, so market volume is limited. For unicorny growth figures, you'd have to go after a much more numerous demographic.

Isn’t the simple answer that Blackmail is a simple transfer of resources and legalization would devert more capital towards redistribution and away from production?

Blackmail creates value by preventing the spread of information we don't want to spread similar to NDAs, patents, copyrights, and other intellectual property. Because it creates value it deserves proper remuneration. Think of all the value and innovation that could be unlocked in a society where this is an option. Some lenders in China already use nude pictures as collateral for loans. Blackmail is good for capitalism.

@john d - you get points for mentioning "intellectual property". CNTRL + F + "intellectual" give only one hit, this one. Not surprised none of the other cited authors mention this, only one comment like yours even suggests IP. Below is what I just posted at Henderson's blog post, assuming it doesn't get taken down by the censors there (I've been banned in the past, since my views are so provocative, only TC can tolerate my brilliant mind)

...blackmail is theft of privacy or technically intellectual property (the right of publicity). It's well recognized in places like California. In fact, in California even the publication of a true but embarrassing fact of a celebrity is banned (but rarely sued upon, since the caselaw is so thin, most people prefer traditional grounds like defamation). If you favor IP (which I think most libertarians do not) you should favor laws against blackmail.

Never surprises me that libertarians favor strong physical property rights, which is enforced by the state, but when intellectual property is mentioned they go wobbly and cave. Such inconsistency. And the Solow equation of growth says long-term steady state growth is only possible due to technology (intellectual property), not 'fee simple absolute' or other such property rights.

In a static state yes. My comment was regarding dynamic equilibrium. I.e. More resources are diverted toward the appropriation of private information and away from production.

One issue: consideration.

If I give someone money and they agree to remain silent, then later renege on that deal by going public or asking for more money, I have received no value from the initial deal. This should have an enforcement mechanism that is easy to access, understand, and afford (as opposed to a legally-drafted gag order, e.g. Stormy Daniels, which is expensive and arcane).

I think this the correct answer. There's no way for the blackmailed to ensure the blackmailer doesn't renege on the agreement between them without resorting to force or letting the information get out by telling the police. If the stakes are high enough, people will choose force.

This was Agatha Christie's position in a couple dozen novels.

RIght.

Blackmail is essentially an unenforceable contract.

How hard is it to pass the information on to someone else without being discovered? Now there is a new blackmailer.

For the amount of time Singapore gets lauded on this site, maybe that chewing gum is illegal nonsense could die? You can buy chewing gum in Singapore (even if only in pharmacy upon showing passport) and no one is fining or arresting you for chewing ot, either.

Chewing it and then spitting it, Chinese style, is the issue.

Bonus trivia: it's said that Asians suffer slightly less forms of stomach cancer since the spit rather an swallow unpleasant things, not sure if there's robust data on this however.

Blackmail is free speech. Next ....

Blackmail is a form of emotional violence. I do not see any state willing to weaken their monopoly on violence and giving this to everyone.

If blackmail (BM) is illegal and unlawful and criminal, then BMers will not declare their income to the IRS, hence the Govt. will not have the benefit of the funds from taxes on income derived from BM hence will not be able to redistribute it for worthy social programs such as support for Puppetry and Queer Studies in state universities (to be clear, I'm not against either Puppetry or Queer Studies). If BM is legal, then BMers should be required to declare the income (or face the usual penalties).
BM can be combated (if that is the desire) by ferreting out BMers who do not declare their income from their BM work.
That could be facilitated by allowing a (tax) deduction for "victims" of BM. Or I should say, folks who value their privacy enough to pay for it.
Folks should be free to choose. Folks should also be free to earn a living somehow. If not, they will be an expense to the Public, one way or another. Prisons ain't cheap. Removing corpses from city streets ain't free. There's no free lunch, as Milton F. truly taught.

2. Bilateral monopoly! Funny to see the contortions around the fact that Coase theorem is in general false. Szabo's argument applies just as well to blackmail as to railroads and spark suppressors.

It is usually the case with coercion, as here, that it is far cheaper for the coercer to cause harm than for the victim to prevent it. ... Since there are substantial ex post benefits to one party from extorting payments from the other, the party that can threaten the most harm at the least cost to itself has, if the ex ante rules allow, a strong economic incentive to engage in such coercion. These negative-sum games of coercion and extortion lead to highly inefficient outcomes, and they can only be avoided by carefully crafting the ex ante rules to avoid such coercion and extortion. These coercive threats that make negative-sum games possible, and that decrease the payoffs of positive-sum games, cannot be neatly distinguished in practice from innocent externalities: any act or omission of one party that harms another, i.e. any externality, doubles as a threat, whether a tiny threat or a large threat, from which an extortion premium, its size depending on the size of the threat, can be extracted.

I think the author misunderstand the Coase theorem, at least how it was taught to us in law school. The Coase theorm says the value to society (not to the railroad or farmer per se) is optimal if bargaining and zero transaction costs are present. The railroad or farmers per se will either benefit or be burden depending on how the legislature initially allocates the property rights (either to favor railroad or farmer). Kind of like debtor and creditor (one reason monetarism is sterile, and money is largely short term neutral, since no net society benefit if money is loose or tight).

Is it blackmail if the request is not for money, but to correct a wrong---i.e. compensate a victim for damages, stop an unfair business practice, or fix a dangerous condition?

Is it blackmail if I say "if you don't refund my money, I will tell the world how bad your product is?"

@Jonathan - no blackmail, since most blackmail laws are written so the 'embarrassing news' has to be based on something outside the transaction in question. Hence, it's blackmail to say: "if you don't refund my money for buying your widget, I will tell the world how bad your wife is in bed" but not "...how bad your widget is".

Charles Murray's point about legalizing blackmail is that it would both discourage illegal or immoral behavior and encourage truth telling. After all, the blackmailer is merely threatening to expose the truth. Why should there be a criminal law whose purpose is to conceal the truth? If blackmail isn't a crime, should the person who would be offended by exposure of the truth have a civil claim against the person threatening to expose the truth? Invasion of privacy is the usual remedy. But "public figures" (Thiel, Bezos) don't have the same expectation of privacy as ordinary people and often don't have a civil remedy for exposure of the truth. Is that fair? Indeed, in this Facebook era, in this era when hardly any conduct is deemed "immoral", does anyone have an expectation of privacy? Besides Murray, Lawrence Friedman is the legal academic who has written extensively on this subject.

You forgot the second part of your sentence - 'After all, the blackmailer is merely threatening to expose the truth' for direct personal (monetary or other benefit) gain at the expense of the person being blackmailed.

And there is no law forbidding someone from telling the truth. It is the coupling of telling the truth with a direct offer to not tell the truth for in exchange for payment (or other benefits) that is blackmail.

This is a rare case where I mostly agree with what you're saying, though I'd reformulate as "the blackmailer is offering to conceal truth for direct personal gain" which makes the idiocy of Murray's alleged statement that legalizing blackmail will encourage truth telling even more obvious.

The blackmailer is offering a benefit to the person being blackmailed: concealment of the truth in return for a payment. It's a business transaction. If the person being blackmailed doesn't wish to enter the business transaction, that's her choice, in which case the blackmailer can reveal the truth, or not. If the blackmailer's conduct is a crime, then it would both discourage truth telling and encourage illegal or immoral behavior. If the blackmailer's conduct is not a crime, it would discourage people from engaging in illegal or immoral behavior for fear that the truth will be exposed. Maybe it would discourage adultery or taking dick pix and sending them over the internet.

If the blackmailer obtained the truth via illegal conduct (e.g., hacking), then the blackmailer can be punished for that crime.

It strikes me that the National Enquirer could be charged with possession of stolen goods. Also, if the pictures were published, copyright infringement. The penalties are too low to deter anyone or to encourage a prosecutor to bring a charge. The NYT was never charged for possessing the Pentagon papers, for example, though I think they could have been even though the charges against Ellsberg were dropped.

The blackmailer is offering to lie, if only by silence, and this is somehow supposed to encourage truth-telling? Pfui.

pfui indeed. Pfui also on the idea that making it legal will discourage improper behavior. What a weak argument.

There are plenty of reasons to not do things you don't want publicized. What does legal blackmail add? Incentives for would-be blackmailers to pry into others business? No thanks. That's not something that should be encouraged.

This conversation makes a whole lot more sense in terms of "some people believe in a fundamental implied right of privacy and others do not."

What about not fully understanding all moving parts in society when changing one set of laws? Also, unintended consequences such as changes in laws resulting in changes in social norms? Also Chestertons fence: Do we know why even advocating for legalizing blackmailing became such a taboo?

Agatha Christie might be concerned that widespread blackmail would lead to widespread murder.

Not really joking. A criticism I read recently of economics was that it treats too many problems as isolated and not set in a broader behavioral or social context.

This is probably a case in point.

Isn't most information bargained over in a blackmail market acquired through illegal means?

But the bigger point is that you would have a ton of unscrupulous activity being incentivized if you made this behavior legal. Most of things that we can agree are ok to blackmail over are illegal anyway, like child pornography. But you have to be one autistic individual to think it is good for society to blackmail someone over a penis pic.

You would think that the way to go about analyzing the legal concept of blackmail would be first state the law of blackmail and then how the courts have analyzed the issues, over the years rather than getting in to this stuff, where there is no context. No doubt courts in the US and Britain have thought about this issue for hundreds of years.

What if the blackmail price is an agreement to inaction? i.e. stop investigating wall street, or we will release your prostitute records.

Or what if the price is simply to make a statement? i.e. issue a statement saying that the investigation wasn't motivated by politics.

Isn't the blue code of silence effectively extortion. Never rat on a fellow police officer, or you will find yourself marginalized and hazed?

The Hoover files? Do people no longer talk about those? Or similarly the story I once heard about how in trying negotiate large construction contracts with some countries they try to get you drunk and set you up with romeos and honeypots with blackmail as their aim, because the only rules they're playing by is whatever gives them an advantage. Pointing out the obvious perhaps- Don't countries that run on moral outrage, either religious or political ideology, have a greater advantage for the blackmailers? How did the rise to power of Caligula, to the levels of the old god-kings of the eastern provinces, benefit from his years at Tiberius's decadent island retreat, learning about the vices of the visitors to Emperor Tiberius? (Sorry. Rambling.)

One criteria in English criminal law is whether the threatened action is directly connected to a legitimate activity of the threatener. Case around 1910 of a London casino that posted on a wall the name of a gambler who did not pay his debts, was ruled not to be blackmail (like NYC bodegas that post bounced checks in window). But another case where woman threatened to spread negative stories about a man if he did not pay her money was ruled blackmail. In the first case the action, if carried out, may directly benefit the threatener (debt gets paid). In the latter case, carrying out threatened action would bring no benefit (other than revenge) to the threatener.

The best reason against blackmail is that it encourages the costly economic activity of digging up dirt, and when the blackmail is successful, the blackmailer buries the dirt. This information is of no use to the person being blackmailed as the person already knows that he/she undertook the activity. So a successful blackmail is only a rent-seeking transfer that involves a social cost. In this way it is somewhat akin to armed robbery, your money or your life. The victim would have been bette off if not subjected to the threat in the first place. The best that can be said for blackmail is that it discourages” backmailable” activity.

I believe that our society is unable to think rationally in these areas.

The man who wrote hyperanimated columns contending Donald Trump was Mussolini on Day 1 and then wrote responses on Day 3 denying he'd ever said any such thing is going to instruct us all on how to think rationally. I luhhhv it.

Here is the US Statute against blackmail: "Whoever, under a threat of informing, or as a consideration for not informing, against any violation of any law of the United States, demands or receives any money or other valuable thing, shall be fined under this title or imprisoned not more than one year, or both."

Against perjury: "having taken an oath...that any written testimony ...by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true"

Against subornation of perjury: "Whoever procures another to commit any perjury is guilty of subornation of perjury."

The blackmailer is essentially soliciting the blackmailee to suborn the blackmailer's perjury about the blackmailee.

When thought of as suborning perjury it is easier to identify the cost. In our judicial system the government acts in place of the victims of a crime. We give our government this power to avoid the feuds and abuses of power that occur in judicial systems where a killer can pay a victim's family as punishment for murder, etc.. But thinking about those systems that our system replaces makes it easier to understand what happens when a perjurer accepts a bribe. When he does so he steals the payment owed the victims of the crime. Thus the reason we make blackmail a crime is to punish the blackmailer for attempted theft from the victims of the crime that the blackmailee committed.

You at least did some homework which is a novel thing here. But, In the cases you cite, the “victim” is the United States and not some private person. (e.g., demanding money for refraining from reporting a crime). They have very little, if anything, to do with the types of cases Cowen is concerned about. Again, he needs to give us a proposed law that would address the evils he perceives in the examples he cites.

@Vivian: that’s not how i see it. the crimes are not against the government. The crimes are against the victims; the government acts as an intermediary between perpetrators and victims.

There appears to me to be a very simple reason. Imagine blackmail is legal and you pay a blackmailer $1000. Then, 6 months later, the blackmailer comes back and, in violation of your initial agreement, asks for another $1000. What is your recourse? If you sue the blackmailer, the information becomes public anyway. So it seems reasonable for the law to prohibit contracts that are inherently impossible to enforce through the legal system.

Note that this argument works against NDAs as well, but in practice the signers of NDAs usually have fewer resources to dedicate to a protracted legal battle than their counterparties. So they have more to lose by being sued than their counterparties have by their secrets being released.

On the other hand, one could imagine a "secret-escrow" service that stakes its reputation on upholding blackmail bargains...

There is an easy answer to you problem. Ask for X dollars a month for the rest of the person's life. The blackmailer is only silenced for a month, but the present value is equivalent to a lump-sum one-time credible commitment to not come back for more.

This scheme defeats the purpose of a payoff because a regular monthly payment drastically increases the probability of detection.

Drastically? As I recall a politician was caught paying off a blackmailer because of the sizable withdrawal. Nice try though.

I don't see how that changes anything...renegotiating the deal is always open to the blackmailer (say you come in to money or get a promotion!)

Let me help you.

We evolved laws to prevent retaliation cycles between men in clans the majority of whom were farmers and at least part time warriors.

In western law. We prohibit blackmail because people will kill you for it.

It has only been a few generations since a man could end your life for sleights made licensed by the state since the enfranchisement of women. A study of cases settled and laws questioned rapidly dispels the libertarian mythos.
Liberty meant keeping your local customary law.
Freedom meant you could be trusted not to harm the community.
Man is not fallen angel or risen beast but base animal domesticated by violence.

Cowen is implying it in his last sentence, but let's get it out there - was the National Enquirer's approach to Jeff Bezos better or worse than the way Stormy Daniels broke her NDA with Donald Trump?

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