Our new hero Elizabeth Warren (we had always liked her posts at Credit Slips, and it’s to see her kicking ass and taking names) pointed to a paper “,” by Curtis Bridgeman and Karen Sandrik. It looks at the concept of “bullshit” as defined by philosopher Harry Frankfurt and discusses the implications for contract law.
For those not familiar with Frankfurt’s construct, (and I wasn’t), bullshit is different than lying. Lying takes place when an individual says something he knows to be untrue. Bullshit is when the speaker is indifferent to the truth. Frankfurt’s example is when a politician goes on about how “our great and blessed country….created a new beginning for mankind.” The candidate may or may not believe it, and in this case, he isn’t saying it to be believed, he is saying it to curry favor with voters.
The authors explain:
The defining characteristic of bullshit, for Frankfurt, is that it is speech that holds itself out as describing reality, but fails to live up to the accepted standards of how we go about making such descriptions. It is not its actual truth or falsity that determines whether a statement is bullshit, but rather whether it is made with or without regard for its truth or falsity.
I have a particularly keen interest in topics like this because I am distressed with the many and varied forms of dishonest that take place routinely in our culture. Not only is there resigned acceptance of much of it, but even worse, people don’t even seem to notice when it happens.
I don’t mean the sort of white lies that will be with us ever and always to smooth over interpersonal relations (although research has found that they are amazingly common, with study subjects telling 20 to 30 lies a day). It’s the skirting the edge of truth in business and public life that sets my teeth on edge.
Maybe I am just showing myself to be old-fashioned, but when I started out for myself nearly 20 years ago, pretty much everything was on a handshake basis, even though I would always paper it up. I’ve seen a decline in those sorts of situations over the years, and my colleagues have had similar experiences. In recent years, I’ve had a few situations where people have attempted to retrade deals radically at the 11th hour, even with a paper trail and authorizations, almost for sport, just to see what they could get away with.
As an aside, maybe that’s why Clint Eastwood remains so popular. He has come to play anachronistic, cranky (most recently, in Gran Torino, bigoted) old men, who are nevertheless appealing because they adhere rigidly to antique, unabashedly masculine notions of honor, in particular, living up to one’s word.
I wonder how the decay started. Politicians have always been famous for exaggerating, but Lyndon Banes Johnson took discourse down a notch (he lied so unabashedly that reporters, historically loath to say anything bad about a sitting President, started openly about a “credibility gap”). But I believe that it is commercial speech that has fostered a willingness to cut corners with the truth.
I could go on at length, but I will stop with a couple of examples. One of the mainstays of commercials is to show smiling, sometimes ecstatic or giddy, people using the product. Is a better cake mix or floor cleaner really going to make you feel all that good? No, but the images say they will. And because the distortion/overpromise is non-verbal, it’s harder to parse it out and look at it clinically. That is why TV is so remarkably effective.
Another is the pervasiveness of “gotcha” practices, which are particularly popular in financial services. Rebates that have such elaborate protocols that it is clear that the company went to some length to come up with ways to reject completed forms. “Free” checking accounts that are anything but (say, a minimum balance, or only a few month no-fee period). As we discussed earlier this evening, revocable “fixed interest rate for the life of the balance” credit card offers. And then we just have good old fashioned bad faith dealing. I have taken to recording the dates and details of medical claims I submit to my insurer, Cigna, because they routinely throw them out. Two years ago, every single item I sent to them wound up in the system. Now, anywhere from 20% to 35% go missing. But I can’t prove that they are systematically and deliberately “losing” claims, even though that is clearly what they are up to.
Now the list above could all be called lies, made with an intent to deceive. But we have related bullshit. I once went to a focus group (I do so out of professional curiosity) which was to test consumer reactions to a proposed advertising message for a health insurance company. I cannot recall the exact wording, but all the messages said explicitly that the insurer would put the patient’s interest first, be proactive, caring, etc. I took issue, saying the ad themes were rubbish, no insurer acted that way and they would have to turn their business model on its head to do so (ironically, the insurer was CIgna).
The person running the session kept trying to force me into agreement: “But if a company were to do this, how would you feel about it?” The session leader refused to hear that if I saw an advertisement so wildly at variance with the truth, it would annoy me rather than make we think better of the company. So we have bullshit market research leading to dishonest ad campaigns.
Back to the paper for some legal highlights:
Most courts require an actual intent to deceive the promisee rather than just a lack of an intention to perform. A paradigm case would be Max Bialystock from the musical The Producers, who sold 1,000% interest in a musical, planning to make sure the musical was so bad that there would be no profits to divide so that no one would discover his fraud….
In a world of standard-form contracts, however, consumers are faced with what is arguably a much more widespread problem than lying promises. Parties with great bargaining power who deal primarily in standard-form contracts need not lie in order to get the benefits of lying. Instead, what parties can do – as we will see, what they often actually do – is to avoid making a lying promise simply by making more nuanced promises that fall short of committing them to any particular course of conduct. To be sure, these parties use the words of promising, but then they elsewhere reserve the right to cancel the contract at any time or to change its terms unilaterally.
The paper then has a very informative discussion of some of the many tricks that credit card companies play (did you know that it takes PhD level reading skills to parse the interest rate language in credit card agreements?). Cell phone companies are also devious:
….every major cell phone company has been careful not to commit itself to a particular course of performance by reserving broad rights for itself in the terms and conditions.61 For example, Verizon states that the consumer’s service is “subject” to its business practices, procedures and policies, which may be changed at any time without notice.62 Verizon then proceeds to state that “we can also change prices and any other conditions in this agreement.”63 Likewise, AT&T’s has a similar clause: “We many change any terms, conditions, rates, fees, expenses, or charges regarding your service at any time.” Again, like the credit card companies, cell phone companies are not making outright lies so long as they do not have a plan in place to increase the rates at the time of advertising the plan. But they are also not subjecting themselves to the norms of promising even as they use words that would suggest otherwise. While the consumer is committed, the cellphone company can do what it likes.
While these two industries are arguably the worst offenders, similar bad practices are common elsewhere.
The authors content that the protections under current law against such practices are too weak and suggest some modest reforms that could rein them in a great deal.