Anti-Shoopites The Third: The Revenge of Shake Shake Booty

Is Herbalife a Ponzi scheme? Via @pmarca, Bronte Capital explores the ins and the outs in exhaustive detail. And it appears that there's a great deal to the case, as one might expect with a worldwide operation.

The skinny version: the physical Herbalife product is a nutritional supplement, sort of a meal replacement shake. You drink this once a day in lieu of a meal along with some tea and some aloe water and in a few months, you lose weight. But there's a great deal more to it than the shake mix and the tea. They seem to be in the business of selling local social clubs where like-minded folks gather for a common purpose in a comfortable setting. Participants congregate to share stories, to offer support, and to provide motivation for each other.

Naturally, law enforcement is obliged to intervene. The Federal Trade Commission has some bright-line guidelines for what counts as a Ponzi scheme, including how much of the product is sold for retail purposes and how much is consumed within the distribution network. The stereotypical cases for this are Amway and Koscot. Amway is particularly notable for complying with the letter of the regulations without obeying the spirit (nb, this is an editorial remark: I've known several folks to emerge from the other side of an Amway dalliance severely disillusioned. Still, that's anecdote, useful for filling a parenthetical, nothing more). Herbalife appears to be the converse: it's possible that they've violated the FTC guidelines, but they don't appear to be defrauding anyone. In the terms of the EE conditions, there's no ex post regret.

I think that's the important part from the perspective of the pedestrian moralist. If the shake, the tea, and the aloe water are merely the totems of the enterprise, and what Herbalife is really selling is ersatz ritual, it's silly to launch an inquisition.

Charles Ponzi was a con artist, for sure. But like with many things, so many things, the reaction to his scheming was poorly designed. Madoff was a type II error. Herbalife appears to be a type I error. It can be difficult to know whether or not an investigation is righteous without burning shoe leather. Maybe a centralized bureaucracy like the FTC isn't always the best approach to fraud prevention.

Drop The Internet And Put Your Hands Where I Can See Them

"Revenge" porn is the sort of thing that should offend anyone with even the barest hint of a conscience. But should it be a criminal offense?

The Illinois General Assembly and Governor Quinn think so. Recently signed into statute law, Public Act 098-1138 makes the non-consensual dissemination of private sexual images a crime (h/t E.N. Brown).

Ignore for a moment the vague wording of the statute ("'Intimate parts' means the fully unclothed, partially unclothed or transparently clothed genitals, pubic area, anus, or if the person is female, a partially or fully exposed nipple, including exposure through transparent clothing." [emphasis added]) and consider instead the common-sense jurisprudence.

I don't pretend to understand folks' penchant for taking nude photographs or video. There already exists oceans of pornography cheaply and readily available and let's face it: most amateur photographers don't know the first thing about lighting, framing, mise en scene or the countless other photographic and cinematic tricks to making others look good on film, particularly when disrobed. Still, it is evidently a choice people make, and I have no particular moral authority to gainsay what private people elect to do with their time and talent. Even if it is sending each other grainy, wobbly shots of their grubby buttholes or whatever. What I don't quite grasp is how this sort of thing isn't resolvable in tort. It seems far more akin to a strain of defamation law than to an actual jeopardize-the-community crime.

Whatever the case may be, the Governor's office has held up the statute as a model for the rest of the country. And if it manages to survive First Amendment challenges (I am not willing to bet one way or the other on this, though I confess at least a little skepticism to its robustness), I think it may well have a chance to do just that.

Why? Because BATNA disparity. Though less so than yesteryear, there's still a very large downside to having your nude pictures publicized, a downside that does not exist for the one doing the publicizing. This statute, or ones like it, aim directly at this imbalance. The moral intuition is clear: BATNA parity. If for no reason other than this, it'll be a rousing success.

As for the unintended consequences? Well, I'm sure those will sort themselves out eventually. It's not like America is running short on prison space or anything, nor that public defender offices are desperately overbooked and understaffed. And hey, SWAT raids never go wrong, so why not just criminalize more behavior ordinarily reserved for tort, right? Cops don't accidentally kill or maim non-threatening civilians. This is America, after all.

Freedom or Unity

VT B&B settles discrimination suit. Story goes like this: the owners of a quaint Vermont bed and breakfast object to same sex marriage. They refused to rent their place out for the wedding of two women. They were sued on the grounds of Vermont's Fair Housing and Public Accommodations Act.

ATSRTWT

Whenever the boundaries of conventional ownership are shifted, there will be disruptions, even when the change is just. It's up to careful analysis to determine appropriate actions. To me, this case exposes injustice in the VT statute that holds property owners to popularly-determined moral standards. Yes, all competent adults should have the right to marry, but all competent property owners should also have the right to decide to whom to provide their services. Coercion is a thick club. We must use caution when swinging it.

They Go Together Like a Horse and Carriage

It seems like all voluntary domestic living arrangements should also be euvoluntary. It seems like the only EE condition we might butt up against is ex post regret, and it also seems like the way around regret is to preserve no-fault divorce as the default common law dissolution arrangement. It seems like the role of the state should extend no further than ensuring folks aren't being coerced or defrauded into entering into a marriage contract. It seems like as far as the government is concerned, there isn't ten cents' difference between a nuptial contract and, say, an insurance policy.

It seems like it should be that way, but that way it sure ain't.

I make a big deal out of political kayfabe, but I don't mean by this to claim that there isn't religious and corporate kayfabe as well. The reason I focus so closely on the bloviations of elected officials is that they enjoy an unchecked monopoly not found in either the pulpit or the boardroom. Well, at least in the US. Here though is an interesting example where religious kayfabe may well mask an underlying aesthetic objection to alternative forms of marriage. I think there's pretty good Biblical evidence to allow Christians to support a clear division between the roles of Leviathan and Pontiff (Matthew 22:21, eg.). I see no necessary tension between believing that (a) Leviticus 20:13 has something interesting to say and (b) the state should act as an impersonal arbiter of contract terms. When this division goes unobserved, when folks strive to resurrect collusion between the first and second estates, I find myself puzzled about the moral intuitions underpinning this urge. It seems possible that the moral dimension is Haidt's sanctity/degradation, which always struck me as girded by atavistic aesthetics rather than deliberate moral or ethical calculus.

If there's an issue of fiscal externalities, where a baker or a photographer can be sued in court for refusing to provide wedding services for a ceremony they find offensive, this highlights a flaw in civil law. If the problem is with children being raised in unorthodox households, we've got a reasonable empirical question that must be answered with good empirical analysis (instead of evidence-free appeals to imagination as seems commonplace). If the problem is a weakening of the national moral fiber or something, I think I'd like to see a better explanation of how it is that the boundaries of an optimal moral zone are simultaneously determined with political borders. In what sense did the Louisiana Purchase extend the particular sphere in which the median American voter was granted legitimate authority to impose moral calculus on others?

Look, there are reasons to debate the form and function of the relationship between contract arrangements and state enforcement. But let's not kid ourselves when it comes to the source of our disagreements. De gustibus non est disputandum, sed de gubernum fortitori est*. The scope of government is applied inappropriately when it's granted the authority to determine winners and losers in the game of matrimony just as surely as it's misapplied when determining winners and losers in mineral exploration or agricultural production. I can sort of understand some sort of (extremely cautious) state intervention in non-euvoluntary exchange, but intervention when the arrangement is, but for other existing public policy, entirely euvoluntary seems an untoward usurpation of the common presumption of liberty.



* My Latin is terrible, so that's probably grammatically incorrect. Apologies.

Conversion Therapy: California SB 1172

Governor Brown recently signed Senate Bill 1172, banning therapies that supposedly cure homosexuality*. If I'm reading the peanut gallery correctly, the concern is over coercion: aggrieved parents sign their gay kids up for ex-gay conversion therapy, in which the kids are subjected to treatments of questionable efficacy that could be described as harassment in, say, a workplace context. I am insufficiently familiar with the therapy to comment on it in much detail; the little I know about it is from clearly biased sources, but I believe the presumed coercion is relevant to the conditions of EE and worth considering.

So, I imagine the legitimate problem is the coercion, yes? Parents shouldn't force their kids to alter a fundamental part of their innate personality just to suit their misguided moral proclivities, right? What if a kid wanted to opt in to the treatment? What if a rational adult wanted to? Would there be a EE condition still violated? Is there an expectation of regret? A BATNA disparity? Is there some presumption that personality traits aren't up for auction?

I suspect that the moral intuition behind this ban is aesthetic and probably tied to atavistic teamsmanship. People with forager moral norms think attempts to subvert human nature is abhorrent. However, this argument won't fly with those who hold farmer norms, so the arguments are easily couched in anti-coercion terms. Note that the therapy itself was banned rather than the coercion. Recall that the medical profession has oodles of experience in detecting coercion (viz. living wills, euthanasia, cool-down periods et al).

So what do you think? Under what conditions is ex-gay therapy euvoluntary? Even when it is euvoluntary, would you still be comfortable banning it anyway on other deontological grounds? How about aesthetic grounds? Is there an intermediate solution? How can the state protect folks against private coercion without preventing consenting adults from engaging in mutual acts of commerce?




*For the purposes of editorial clarity, I have elected to refrain from peppering today's comments with quotation marks. I hope you will appreciate my restraint and will understand that my failure to clearly and forcefully comment on the nature of the therapy itself is not meant to either endorse or condemn the practice.