The Chronicles of a Capitalist Lawyer

Today is my 28th birthday and I guess it would be nice to start a-once-in-a-year reflection in my blog (started it in 2009, but completely forgot to follow up in 2010, typical). I will not make any reflection about my life (nothing to reflect, it's a damn good life anyway), so for this year, I'll reflect the development of my own legal thoughts.

I started my formal legal education in 2001 without knowing a thing about the law, I didn't know whether I will be interested with it or what I will do after I graduated. My primary reasons at that time? Just following my intuition plus chasing my dream of being admitted at the University of Indonesia (my second choice was UI's Political Science, don't ask me why I picked that, cause I can't answer that even until today). So yes, it's more about getting into UI rather than picking a subject that I really like. Fortunately, I was lucky. By the second semester I knew for sure that I love this subject!

At first, my primary choice of specialization was constitutional law. 2001 was the time where many constitutional law professors secured high positions within Indonesian government. It was a transition era in the Republic and constitutional scholars were needed to guide the process. However, a fated encounter with a really weird lecturer caused me to change my mind entirely. It was so bad that I said to myself, "all the good professors are in the government now and we're stuck with these buffoons. Like hell I will take constitutional laws." So I decided to specialize in other fields: procedural and business laws. Again, I am a lucky guy. Turns out it's a correct decision, as now I work as a corporate lawyer, a profession that I literally enjoy not only professionally, but also academically.

But those things only affect my professional skills. What really affects and shapes my legal thoughts is a whole different subject of law that I accidentally learned during my law school days, i.e. Islamic legal theory. It started with a challenge from my best friend, saying that I will never master Islamic law, because I can't differentiate the type of waters that you could use to purify yourself (wudhu). Of course, knowing how predictable I am, I took that challenge and soon I regularly went to UI's mosque's library. Although I planned to start with the library's classical Islamic law books collection, I ended up with Islamic legal theories first. And I was impressed, by the 9th century, Islamic legal scholars have already developed a concise legal theory that will put common law and civil law scholars at that time to shame.

Granted, the current development of Islamic legal theory is pretty much gloomy (no new development), but I learned something from my personal study, the existence of a theory called Istislah or Maslahah Mursalah, which basically states that legal scholars, in the absence of clear legal rules, should take the welfare maximization of the society as a prime concern in deciding cases. The concept is simple, but the insight is very deep. Such insight helped me to think for the first time about what constitutes a good law.

During my early years, I got an impression that my faculty only taught its students to become technical masters of law. We know the laws, we can easily apply them into concrete cases, and we are proud with that. The famous motto in my faculty, "If you're a law student, always talk with a legal basis." It's nice, but something is missing here. Being a technical master means that you are only acting as a spokesman of the law. You don't care whether it's good or not, heck, that's not even important. This is what I call as an abuse to Hans Kelsen's Pure Theory of Law (See my discussion on Kelsen at here, here, and here).

So for me, this is non sense. This kind of education reduces the profession of lawyers into simple craftsmanship. Lawyers should be able to do more than that, they should be able to work as policy makers, they should analyze the quality of laws and propose a better version if they think that the current ones suck. Istislah theory helped me to see that error earlier and I am thankful for that.

Now, when we're eventually getting into the question of what constitutes a good law, there are various methods to determine the standards. I started with the believe that a good law should reflect the society's sense of justice, local wisdom. But that belief didn't last long. Why? I come to realize that there is no standard for reflecting the society's sense of justice. In the end, it will always be a matter of preference. Suppose the society deems honor killing as a part of their justice system, would we still agree to enforce it in the name of local wisdom?

Logically, I move forward to a standard which seems to be universal and applicable in every situation and condition. So I turned out to legal principles established by religious belief, i.e. Islamic law. Yet, it didn't satisfy me. Years of researches show that other than the agreement among Islamic scholars on the mandatory prayer, fasting, zakat and hajj, there is no unity of opinion in Islamic laws. Cultures or 'urf have a great impact on how scholars interpret the laws and there is a never ending debate on what standards that are deemed applicable for eternity and that are subject to changes. As a result, there isn't any production of worthy new ideas within Islamic law, it's just a repetition of the old ideas and debates that ended in the 15th century. Thus, I concluded that similar to the notion of society's sense of justice, Islamic law is not that reliable for providing a clear standard on what constitutes a good law. FYI, the use of Istislah itself is still controversial within Islamic legal scholars, so that could explain why its development has been halted for a very long time.

Finally, I end up with the law and economics movement. It's ideas of welfare maximization and promotion of efficiency as guidelines for determining a good law really captivate me. First, I see law and economics as the modern interpretation of Istislah theory, its spiritual successor. Second, since it is a combination with economics, it is easier to assess the standards to determine whether they really work or not (empirical research is very encouraged in this field and I think it is very helpful). Furthermore, economics is a science that can be applied to almost every aspect of human life, so applying such science into legal conceptions prove to be an eye opening of things that we have already taken as granted. The notion that incentives matters still amaze me on how we can use different incentives to structure a law that will work efficiently and to explain the behavior of the people in facing the law and legal enforcement.

When I choose law and economics as my primary tool for assessing the quality of laws, I don't close the opportunity of using other helpful methods. No tool is perfect, and maybe in the future, we will develop an even better method for analyzing the law. But until that day comes, I'll stick for a while with law and economics.

A couple of days ago, I received an interesting comment from @tirtasusilo on my latest post. His question is: "How would you persuade someone who is against vote buying because he/she considers voting a duty, not a commodity?" First of all, a rational person should not consider voting as merely a duty as I argue here. But surely, giving that kind of answer would be cheap. So I'll try to answer that question through this post.

What would a person think about his vote if he considers it as a duty? My assumption: he takes voting as a way to do the right thing. He votes because he believes that he does something for the betterment of society. Consequently, voting should never be traded. You don't trade what is right only for money. While his notion might be tempting for a lot of people, I'm afraid I have to say that it is this notion that persuades political parties to use vote buying to get what they want.

First of all, we cannot effectively prevent people from picking their own preferences, whether they want to protect the integrity of their votes or they think that voting is a crap mechanism which means nothing, or that voting is a valuable item that can be traded for a good price, etc. The fact that there are many preferences means that sly politicians can use different methods of persuasion for getting as many support as possible from the voters, including building an image as good politicians in front the media to get votes from the duty oriented guys and using tricky methods (including money and political promises) to gain additional votes from the commodity oriented guys. In this case, we are not maximizing the utility of the duty oriented guys, we're maximizing the utility of politicians and commodity oriented guys.

Now, if duty oriented guys really want to maximize their interest, i.e. preventing politicians from vote buying, they should agree with the system that I proposed, i.e. legalizing vote buying with certain conditions. The reason is simple, such system is created for the sole purpose of reducing vote buying, it is created not to let people trade their votes like crazy but to keep people from buying and selling their votes. Think it as a more efficient solution that basically satisfies the interest of the voters (for getting a better election in term of fairness and quality) and imposes significant additional burden to politicians who dare to use money in getting their support.

Sure, we can always resort to the old school style, such as making vote buying as an illegal act and enforcing heavy punishments against violators of vote buying restriction. The question is: will that be efficient in Indonesia case? How much money do you think that we have spent for the entire national and regional election? These costs include campaign costs, the "hidden" vote buying costs, candidates disputes costs, enforcement costs, etc. Not only that these costs are damn expensive, we still end up with buffoons as our leaders. And being rational, these buffoons will most likely try to do anything to recoup all of their costs during the election. After all, no sane people will go and spend most of his fortunes for securing a position if he don't expect some benefits from getting that position. What could be even worse than that?

So, considering the above argument, if these duty oriented guys really care about doing the right thing, would they pick the "right" method that will produce the "not right" results, or would they pick the seemingly "not right" method that will produce the "right" results?

A week ago, I wrote about using vote buying mechanism to prevent political parties from buying our votes. You can see the article here. Furthermore, there is also an article from Greg Mankiw and Michael Sandel in 2007 on why vote buying should not be allowed. Before I update my proposal, I'll give some comments to Mankiw and Sandel's ideas.

The Inherent Problem of Mankiw and Sandel Cases

The main argument of Mankiw is that vote buying can produce externalities to third parties. I guess there's a grain of truth in his idea, but unfortunately, his example does not make any sense at all. I reproduce his case here for ease or reference:

"Suppose three voters are deciding whether to provide a public good that costs $9, which would be financed by a $3 tax on each voter. Andy values the public good at $8, while Ben and Carl do not value it at all. Under majority voting, Ben and Carl vote against, and the public good does not get provided, which is the efficient outcome.

Suppose, however, that Andy could buy Ben's vote for $4. He could then ensure the project gets passed. Andy is better off by $1 (the $8 benefit minus the $3 tax and the $4 price of the vote), Ben is better off by $1 (the $4 price of the vote minus the $3 tax), and Carl is worse off by $3 (the $3 tax). The Andy-Ben vote deal has negative externalities on Carl."

What's the main problem of his case above that can be answered by public choice theory? His case stops at the fact that Carl is worse off by $3. If Carl is a rational person, what would he do? He can also offer to purchase Ben's votes for $2, after all, losing $2 dollar is better than losing $3 and for Ben, receiving $2 is surely more attractive than receiving a net benefit of $1 from Andy.

Then what will Andy do? He can choose to increase his offer to $5 for Ben's vote and therefore receives no benefit from the policy. At this point, Andy's marginal cost equals his marginal benefit, it's the point where he should stop because any further increase on the price of Ben's vote will cause losses to him. What would be the proper response of Carl? He can stop, or he can also choose to offer $3 dollar for Ben's vote. It's the same for him both ways, if he stops, he will lose $3 anyway, so he still has the incentive to offer such $3 (marginal cost equals marginal benefit). Now, if Andy is rational, he will stop, because he knows that proceeding with the vote buying battle will only end up with further losses. How about Carl, should he pay Ben? No, because his offer is basically only valid when Andy still wants to buy Ben's vote. There is no need for him to pay Ben if in the end Carl cancels his plan. Of course you can say that under this circumstance, Andy will come again to offer Ben to sell his votes. True, but then Carl can also do the same and a problem of cycling will be created.

Sandel's argument is more persuasive, he shows that it is possible for Andy to actually persuade Ben to establish a value for the proposal and therefore he will vote in favor of Andy's proposal without having Andy to buy Ben's vote. In this case, Sandel argues that the end result will be the same for both cases (involving vote buying or not), there will be some costs imposed to Carl. However, even in this case, Carl can always offer to buy Ben's vote for a price.

Sandel says that suppose Ben values the proposal for $4 after hearing Andy's persuasion, meaning that he will reap a benefit of $1 if he vote for the proposal. What can Carl do? Of course, he will offer Ben $2. What will then Andy do? He can offer a price of $5 to buy Ben's vote and then Carl will offer Ben a price of $3, and Andy will face the same problem again. Another cycling will be made in Sandel's case.

The simple problems created by Mankiw and Sandel actually resemble the real political life. It's a case of battle between interest groups where benefits will be spread to the majority by imposing costs to a group (wide spread benefit vs narrow cost). Of course, the group will not just sit and wait for the impeding doom. They will fight for their right and if they have to lose something, they will make sure that at least it shouldn't exceed their total expected costs should the problematic policy is promulgated. I'll deal with this issue in another post. Now, let's return to my further elaborated proposal.

The Elaborated Proposal for Vote Buying

Since I'm still in favor of vote buying for Indonesia, I'll try to elaborate more my original proposal in this post. Further comments and questions will be much appreciated.

The basic principle is that in a general election, voting is the commodity, people are the sellers, and political parties are buyers. Now, what's the main reason for political parties to buy our votes? Assuming that these guys are rational, I would say that they buy our votes on the basis that the expected benefits that they will reap after they secure a position are still bigger than the total expected costs that they will incur during the election. The costs can include campaign costs and any penal sanctions that may be imposed to them if they're caught (vote buying is still illegal in Indonesia).

However, as I've said numerous times, you can't separate law from the legal enforcement. In our country, it is safe to assume that the probability of being caught and sentenced for vote buying is quite slim, meaning the costs of getting caught is not that big and therefore there is less incentive for complying with the law. In this case my proposal would be: vote buying should be legalized, any political parties are allowed to actually come to us and offer a price for our vote. This is the basic proposal, but to ensure that it can work, I'll add some additional rules.

1. Minimum Price Cap

There should be a minimum price cap for our votes which reflects the expected benefits of the political parties should they win the election. I would say though that since the number of Indonesian citizens are very huge, increasing a little bit of the price of our votes would have significant financial impact to our political parties in case we can't assess their expected benefits (so at least we impose higher costs to them). Say that the current market price of our vote is around Rp50,000 per vote and then we increase that to Rp55,000 per vote. Assuming that there will be at least 100 million voters, an increase of Rp5,000 per vote is equal to an additional total costs of Rp500,000,000,000 or around US$55,000,000.

2. Bidding System

We can choose two systems to sell our votes. The first is by using the rule of Tullock Auction (Gordon Tullock is a famous public choice theorist), where all political parties can bid for our votes and the highest bidder will win all of our votes, however, the ones who lose the bid will also be required to actually pay the amount that they have offered during the bid process to us.

Second, we can use a system where each political party can bid for our votes by paying us directly, but: (i) they are required to disclose the amount publicly (or we can ask the media to do that), (ii) they are required to deposit a non-refundable minimum amount to us for their offering (say 10-15% of the offer price); (iii) there would be no legal guarantee that the voter will vote in accordance with the bid winner, meaning, the winning political party can't go to the court to enforce their right to be voted by us, and (iv) the political parties can always change their offering to us until the date we walk to the election booth and set our vote.

You may say that the above system is crazy, no one would like to enter into this kind of arrangement where the seller position is absolute. But that is precisely why we need to adapt this kind of system. In the current system, it is very hard to prove that political parties are involved in money politics. Have you ever considered the costs imposed to us for all of these hidden money politics and also the total costs of the national and general elections (all of those disputes in the Constitutional Court and the re-elections)? Not only it's a waste of tax payers money, it also does not provide us with the best candidates to lead our country.

Under my proposed system, there would be less incentives for political parties to buy our votes. Why? First, we eliminate small parties by this system, leaving all the major parties in a competition to rule us all. Second, unless there is a super political party with infinite source of funds, no one will ever win the vote bidding.

Let me tell you how this will work in practice by using an assumption that there are 3 parties, A, B, and C and that each party has more or less the same financial condition. Each of A, B, and C would have the incentives to win the election because they know that they can win the election by money and that the losing party will most likely lose everything. Since they all know the other party prices, they will continuously try to outbid the other party until they exhaust all of their money, creating a cycling problem. Of course in this case, A can make a coalition with B to defeat C in the vote bidding, but C can also offer B to instead cooperate with it and defeat A. Another infinite cycling will also be created here.

Furthermore, since there is no guarantee that people will vote for they who pay the most, there are incentives for these parties to offer things other than money to induce people to vote them and I'm quite certain that there would be no case where we end up with an absolute winner after the vote bidding fight just because it pay the most.

Their only solution is to actually agree to stop using money and induce voters to vote them for other reasons. True that under this regime, there would always be an incentive to betray such agreement, but since it will create another cycling problem, they will be forced to comply. Suppose A, B and C agree that they will not use money to buy our votes. Then, B realizes since it is still legal to buy our votes, they can try to buy our votes behind A and C. A and C, fearing something might happen behind their back, will start to have the same incentives and will also return to money politics. You see where this is going? So the conclusion is clear: stop using money to buy our votes or end up being caught in an infinite vicious cycle.

Of course this is not a bullet proof mechanism, if A, B, and C have a very stable coalition, we would be in big trouble. But I guess that would not happen in Indonesia, after all , no groups of robbers will ever have a stable coalition since each of them would try to maximize their own benefits on the expense of others. For further readings, try searching in Google for Arrow's Impossibility Theorem.

If there is only one thing that I can be confident about Indonesia, that must be the notion that most Indonesian citizens hate their legislators. How couldn't we? We rarely (read: never) hear any good news about them, and we oftenly (read: all the time) hear about how irresponsible they are with their job. Remember how they lavishly spend the state budget for their ridiculous comparative study in foreign countries? How they plan to build a new potentially (read: absolutely) useless new building? How they can't meet their yearly target for issuing new laws? (though considering their capabilities, this might be a bless in disguise)

Before you're planning for a bloody revolution, try to think about it again. Aren't these legislators the product of our beloved democracy? After all, it's the people who vote them as our representatives. But why do they betray their own constituents? It seems as if they only think about themselves or the interest of certain minority groups who have the means and funds to purchase these legislators voices in the house of representative. In reality, these interest groups don't have enough voices to put the legislators in their current position. Yet, it's clear that these groups have more control over the legislators compared to the majority of the people, i.e. us. How could that be? Should we say that democracy is a total failure? Will we have a better chance under the rule of a benevolent dictator?

The Problem of Collective Action

Public Choice theory has a very good answer for this problem (by the way, public choice theory is basically the application of economic analysis into political theory). In short, we are facing the problem of collective action, which can be further elaborated into three main issues: (i) high transaction costs, making coordination within a large group almost impossible, (ii) free rider issue within uncoordinated group, keeping people from working together (creating a vicious cycle along the way), and (iii) internalization of the interest groups' costs among a lot of people tends to lower the average costs that must be borne by each individual, giving less incentive for the people to fight back. Let's discuss this one by one.

In general, we, the people, are pretty much diversified. There are too many scattered interests and the costs for coordinating us into a single systematic group where each person knows perfectly other people needs, would be too expensive. Unfortunately, the case is different with interest groups. Because they are smaller in numbers, it is easier for them to coordinate among themselves, meaning less transaction costs to work together in order to satisfy their interests. This might seem obvious and logical but most people tend to underestimate this important factor. Why do you think we embrace the idea of decentralization?

Without any effective mechanism for coordination, surely it would be very difficult for the majority to fight back. Here is where the free rider issue arises. Suppose you really want to fight back the legislators and the interest groups, you want to show them that the people are not toys to play with. To do this, you plan to invest your money in making an awareness campaign, letting people know that their legislators suck and that we can't let that happen anymore in the next election. But just when you're about to cash your check, you start to think, "wait, if I'm putting my money now, will many people agree with me and support my effort, or will they just enjoy the fruit of my efforts by doing nothing?" Unless you're a saint or you have your own interest group, you'll probably reconsider your decision and then you will wait for other people to start the effort. See the vicious cycle here?

Finally, there is a major issue of cost internalization. When interest groups and our legislators are making policies that benefit themselves, they impose additional social costs to the rest of the people. Imagine the wasted tax money that they use for unnecessary spending, or imagine the additional burden that consumers will need to pay when interest groups, say in the form of pollutants, can induce the legislators to let them free from being responsible for the externalities caused by them to the society. Yet, since these additional costs are imposed upon a diversified group, most of the people only bear a fraction of the costs. Not to mention that these costs can also be internalized for a long term, lowering the burden to the each individuals. The end result? Less incentives for the majority to fight back since they don't feel the impact as a whole. If they do, they would have done something to prevent the interest groups and the legislators from doing whatever they want. The above things may explain why we had a "successful" reformation (read: revolution) in 1998, but not nowadays.

One Crazy Solution: Why Don't We Sell Our Votes?

So what can we do? Firstly, we need to understand how the majority of Indonesian people view the voting process and how interest groups and legislators perceive the benefit of their position. Do Indonesian people take voting as an important matter or they consider it as a commodity that they can sell for certain price? Furthermore, how do the majority of our legislators perceive their position? For the greater good of the society or for their own benefit (calculating the benefits of having the position minus the costs of getting appointed).

If the latter is correct, the solution would be to impose an excessive price for people's votes. My main idea is: rather than imposing a sanction for political parties which try to manipulate the vote by using money, give the freedom to them to use their money as they like. Why? In a country where the price of a vote is cheap and the legal authorities are weak, there is no way for a clean political party to win against those who use money in their campaign (money is real, talk is cheap). Having said that, why don't we say to the people that they should vote for whoever can purchase their votes for the highest price (of course there should be a minimum cap for such price reflecting as close as possible the benefit that the legislators might receive from getting the position, e.g payment from interest groups).

The more expensive the vote is, the better. The expected results are: (i) interest groups and political parties will be forced to exhaust their own resources for wasteful acts, i.e. spending a lot of money though there will be only one winner, and (ii) along with the increase in costs of buying votes, less interest groups will join the game since the expected benefits are going down to almost nothing. Through this solution, we're imposing a collective action problem to the political parties. They might work well as a single group, but if we put them in a situation where the most optimal way to reduce their costs is to not paying anyone, they will also face the same problem that larger groups face.

Let's see how my solution work. If parties continue to pay for getting their votes, some of the smaller parties will soon realize that it is not worth it and stop playing. At this stage, it is safe to assume that the remaining players are the major ones. You may think, now we're doomed, we have major players controlling the game and no one can fight it. Not necessarily! These major players have two options: (i) they can continue to compete in spending a lot of money for getting votes or (ii) they can reach a mutual consensus that no one will use money in their campaign. Of course since none of them can trust each other (collective action problem), they will continue to spend their money to the extent that they will have no more resources to spend. In the end, when they have exhausted all of their resources, they will be forced not to use money anymore in their campaign or they will face the risk of having a vicious cycle of unnecessary money spending.

Suggestions and comments are welcomed.

Yesterday morning, I had a nice discussion with one of my juniors in the Faculty of Law, University of Indonesia, @najmulaila, concerning the concept of legal awareness. The basic case is quite simple, she's complaining about the law students' attitude who make a right turn within the faculty, despite knowing that it is clearly prohibited. She further argued that it's useless to talk about legal compliance in Indonesia if these students don't follow the rules themselves. After all, according to her, what's the purpose of knowing the laws, if you don't comply with them? Suffice to say, she is a proponent of legal awareness campaign, i.e. having more awareness of the law should be translated into an increase in legal compliance.

Here where I quickly have a different opinion. Knowing the law does not necessarily mean that you will comply with such law. The reason is simple and can be traced back to the basic assumption of Law and Economics, people are rational being and they respond to incentives. From the fact that most students violate the no-turning-right rule, I can conclude that the Faculty has not imposed any sanctions to the violators. No sanctions means no costs to these students to violate the rule. Hence, what are the incentives for them to comply? Surely we can't assume that these young students are those "righteous people" who will follow the law simply because it is the right thing to do as depicted in legal philosophy course. Plato always dreams of having a philosopher as the king because he exactly knows that it is impossible to have such king in the real world.

Of course, being a diligent law student, she didn't immediately agree with me and instead offered another argument: my line of thinking is the same with corruptors! They corrupt because they know that the benefit of corruption is bigger than the costs (such as going to the prison). I almost shouted "EUREKA" when she actually said that because it is precisely what I have argued before in some of my posts (here and here). This is how Law and Economics explains the behavior of criminals, they calculate the costs and benefits of their criminal acts and whenever they decide that the benefits exceed the costs, they will most likely conduct the crime.

If we think it through, assuming that knowing the law will increase legal compliance is a dangerous assumption, because it is a highly misguided assessment of human behavior, and there are many consequences to such assumption. Take the law students case as an example. You can always say to them how humiliating their act is, but unless the Faculty takes a real action toward the violators or unless making a right turn will cause the students to be involved in a serious accident, I bet that the rate of violations will never decrease significantly. What do you expect? Are these students hypocrites? I don't think so. They are mere human.

Another example: it is possible that the people who understand the law can find a leeway and use such understanding for their own benefits which of course is not in line with our hope that increasing their awareness will induce them to comply with the law. So what should we do? The answer is better legal enforcement! Legal enforcement should never be separated from the law itself.

You can make the best law in the world, but if you have no one to enforce it, such law would be meaningless. This is especially true when you are trying to regulate people's behavior. Oliver Wendell Holmes correctly pointed out that people are only interested with what judges will do with the law. In other words, people are more interested to know what legal authorities will decide against them in certain cases and not only what the law say.

By this, I'm not talking only about criminal law, this is applicable for any subject of law. Suppose there is a law saying that certain contracts are prohibited and will be deemed void by operation of law if people entered into such contracts. If people know that the judges will declare these contracts null and void whenever the parties bring them to the court, they will most likely not sign these contracts in the first place.

So there we have it, a short discussion on how we should take a look at the law. One important thing that I learn from Law and Economics: some of the concepts are so obvious that people tend to disregard them entirely. At least that's the experience of Ronald Coase and his concept of Transaction Cost. The concept was made when he's still in his 20s and yet, he received his Nobel Prize in his 80s. It took 60 years for people to realize a concept that is so obvious to everyone if they think it through. Ain't that crazy?

This is too important to be not posted in my blog, a series of important essays by law professors of the University of Chicago Law School on the future of law and economics program. Enjoy!

I have received several comments for my previous post, and I thank all of the commentators for the effort. I must say though, if only I set a prize for giving these comments, I would definitely give such prize to my brother, Prasetya Dwicahya, for his excellent comments (no family bias involved here). So if you have not read his comments, you better check it out before going further with this post.

Anyway, most of what I will say has already been covered by Prasetya's comments. Thus, I'll focus instead in analyzing his proposed policy to find out whether such policy can be the best option to be pursued by the government. Prasetya's proposed policy is something that we call as the freedom of choice policy which is in line with the concept of free market and pareto efficiency (a condition where as a result of the policy, some individuals are made "better off" without making any individual to be "worse off"). People is free to choose whether they want to use the car without the safety device or bear an additional costs in order to install the safety device. The company is free to produce its products (even if there is a defect) provided that it discloses all material information to the public so that people can make an informed decision and the company can reduce its marginal costs. And the Government has the role to enforce the law to ensure that the company will pay the expected compensation to any victim of the car due to the unavailability of the safety device .

Theoretically, this can be a win-win solution that promotes efficiency to the maximum. With this kind of policy, the costs of legal enforcement by the government would not be too expensive (assuming that the rate of accident is low in accordance with the probability that has been set out by the company), the company will not be burdened with huge additional costs, and the people will have many options to choose in order to maximize their utility and preference (i.e. getting an absolutely safe car or playing with the laws of probabilities for a huge jackpot). But it seems this is too good to be true. Or isn't it? Or do you think this idea disgusts you, that it is a morally reprehensible choice? I mean, how do you even sure about letting people take a bet with their life in the line, even though the probability is very small?

In practice, we let people take this kind of risk all the time. We know smoking is dangerous, yet we are not able to prohibit people from doing it. And suppose you say that there is a huge interest group behind smoking activities, there is even a better example which is more similar to the above car case. We know overeating and poor exercise are a good recipe for health problems and they also increase the probability of getting caught by various diseases, including heart attack. Yet, I bet that the government will not issue any law that prohibits people from overeating and force them to exercise routinely. My main question, if we care about our people (like in the case of the automobile company), why don't we just choose the path of regulating people's daily life? There are many answers to that: the enforcement costs will be too big, it's an invasion to people's privacy, it's another form of "big brother"/dictatorship, etc. Now, if we can give those lines of arguments to the overeating problem, shouldn't we take the same position for the problematic car?

What I would further argue is this, the above proposed policy that respects the element of freedom can potentially be the best option for the automobile case in any possible way. Let us tweak the case a little bit. Suppose now the probability of having an accident due to the unavailability of safety device is 80%, meaning that from 2,500,000 cars, 2,000,000 cars will go haywire. Will our proposed policy save the problem? Or should the government forces the automobile company to install the device? I would say there is no need for the government to do that. Using a simple costs and benefit analysis, the company will definitely realize that the costs of not having such safety device will be too big to be borne by the company. In this case, their best option is to install the safety device.

Now, another tweak. Suppose the costs of installing the safety device is not US$10 per car, but US$100,000 dollar. Will our proposed policy work? I bet yes. In this case, the marginal costs of producing the car (i.e. the costs of producing an additional unit of the car) will defeat its marginal benefits. Simply saying, the automobile company will never produce the car in the first place.

Having said the above, I need to put a caveat. Our world is very complex and a solution for a problem may not work for another problem. What I want to show here is how economics can be used as a handy tool in formulating our laws and policy. I'll continue to use this theme for my next articles and hopefully we can try to apply it in different cases with different policies. One thing for sure, this exercise should be fun.

Suppose one day a major automobile publicly listed company announces that it is selling a new cheap product that will allow people to have car more easily (for the sake of discussion, we will not discuss the externalities that people will face with more cars in the road). The car is a huge success for the company, generating a huge profit, and the stocks' value of the company has also increased several times in a year. But then, an accident happens, a gruesome one. Further independent investigation shows that while the probability of the accident is very low, around 1:100,000 per year, it can be avoided if only the company install a safety device.

Facing this result, the company announces to the public that to cut the costs of the car, it did not install the safety device required for preventing such accident. Why? Apparently, the cost for installing the safety device is around US$10 per car and since they produce 2,500,000 car a year, the total additional costs that the company will bear for a year is US$25,000,000. Meanwhile, by attaching a value of at least US$100,000 per person as a compensation for each accident and with the assumption that the car will be purchased entirely, the company estimates that the total costs of the accident per year wouldn't be more than US$2,500,000. So, by a simple cost and benefit analysis, the best option of the company would be not to install such safety device.

Soon this controversial information fills all the major newspapers. The enraged citizens are calling this company as an evil car company, and politicians demand the company to be responsible for such matter. Assuming that you are a policy maker, what will you do with this case? What kind of policy that you will formulate against the fact that the company has chosen not to install such safety device?

This is the first part of my post that deals with the basic question. I'll post my proposed policy but I would like to see first how my readers will respond to this kind of question. Your comments will be much appreciated.

All first year law students in any part of the world should know this principle: ignorantia legis neminem excusat or simply saying, you will not be able to defense your illegal act in front of the court on the basis that you don't know the law. This might be a simple principle, but there is a deep meaning here and I had a very nice discussion with Prof. Anup Malani this morning regarding this matter.

Try to consider this. Suppose you're attending a class of a "killer" professor. Most of the time, he only mumblings aimlessly. Then, on the final examination day, you suddenly realize that the questions presented do not contain a single thing that has been taught in the class. It's completely different and you stare blankly at the exam paper. What do you feel? That it isn't fair? That it seems like the professor is cheating the student? Well if you think so, I would completely agree. This is not fair at all. In fact, if I were you, I will definitely report the professor to the higher ups and ask him to be removed since this is so unprofessional.

But if you think it through, wouldn't you find the similarities between the case above and the legal principle that we are now discussing? With so many regulations issued each year, in reality we've already drowned in regulations (and the parliament is still thinking about issuing new regulations each year?). No human being, even the best lawyer in the world, can know and fully understand the entire law in a single country. And yet, with all of these facts, there would be no excuses for all citizens to say that since they don't know the law, they should be exempted from legal liabilities in case they mistakenly violate a law. How can that even be possible?

Apparently, there is a good economic reasoning for this certain principle and that is the fact that the cost of faking your ignorance of the law is so cheap (as easy as I say: "I don't know") that opening the possibilities of exempting people out of ignorance would be a major disaster for legal enforcement. Of course, this is not a perfect solution. When the laws aren't as many as nowadays and when the laws are usually still in line with basic common sense, adhering the non ignorance principle would be a good choice. But the case would be different with the current development in legal system.

One of the issues that was discussed today is the fact that there are a lot of new laws in the United States that criminalize acts without any mens rea element. Mens rea basically means the intent to violate the law or the "guilty mind". In other words, you can be criminalized for doing certain acts even when you do not have any intention to conduct such act. Let us take an example, suppose that there is a local law that restricts people to put their cars on the road sideways in certain hours. Say that the regional parliament members have their own reasoning and it is common for the people there to put their car on the road sideways. Wouldn't you be surprised when one day you are being fined for putting your car in the sideways without any warning whatsoever and you can't defense yourself on the basis that you don't know about that law?

What was considered as a good legal principle can be turned into a giant mess. Try the regional regulations in Indonesia. It's very hard to access any information about these laws, there are plenty of them, and each person, including companies, are expected to comply with all of the requirements set out under these regional laws. It does not work that way and a legal system that works like that is no different than legalized burglary.

Having said that, I have to admit that finding the right balance is difficult. On one side, we do not want to provide huge incentives to people to violate the law. On the other hand, we can't let government officials do as they please without proper restriction or we will end up with high cost economy in many part of our lives. Some suggestions would be: (i) with respect to criminalization, the government should be careful in not creating too many new criminal acts, it sends the wrong signal and it increases inefficiency in state management; (ii) even if we need to criminalize, adding the element of mens rea would be helpful in reducing unnecessary violation; and (iii) socialization of new laws is imperative and it would be better if the Government can introduce those kind of laws gradually. Remember the introduction of seat belt rule?

It's been a while since the controversial discussion on whether mini skirts induce men to rape women. Various debates have occurred but I would say that most of the times they miss the important points. You see, criminals are human being and to some extent they will calculate the costs and benefits of doing their criminal activities. It does not even have to be a sophisticated analysis, it can be in the form of a quick analysis that anyone can do by himself.

Let us use corruption as an example. The benefit? A huge amount of money to be used by yourself and maybe your family. The costs? Going to prison and/or losing your corruption assets. Then do a simple calculation on the probability of you getting caught by the authority and how severe the punishment will be. If you think that the probability of enforcement is low and that you can buy your freedom later on, then the benefits of corruption outweigh the costs. The result? People will have strong incentives to corrupt.

The same analysis goes with rape. Why do men rape? Is it because the urge of their hormones? Because they can't withstand the sexiness of a hot girl in front of them and thus they must channel their sexual needs by raping such girl? Well, those might be added to the equation, say the benefits of rape. But there are more important factors and those are timing and situation for the rape itself. A rational human being, even the stupidest one will never conduct a disgusting activity such as rape at the middle of the day in front of many people. The costs will be too big to bear by any rapist existing in this world. And there would be other ways that are far cheaper and less risky to channel your sexual needs in the above case, such as masturbation or even looking out for a prostitute (yes there are other costs associated with having sexual activities with a prostitute, but we can safely assume that the costs should be lower than raping a woman in front of the public).

Going back to timing and situation. Why do I say that these are the main factors in determining whether a rapist will conduct his evil deed? Timing and situation affect greatly the success rate of a rape! And each rapist who have minimum thinking capacity knows that if he has a good chance to rape someone and a small chance of getting caught, the benefits of the rape outweigh the costs. You know the rest of the story. Furthermore, I would assume that in the mind of the rational rapist, whether the victim wears a mini skirt or a long dress is simply a small factor in the equation. In the end, a rapist will do something to let the victim out of her dress, longer dress takes longer time, but that's it. If the timing and situation do not permit, I dare to say that no one will rape even an almost naked woman.

Even worse, rape is not a criminal activity that can be easily proofed in the court. Usually the crime is conducted behind the scene and the longer the crime is reported to the authorities the harder it would be to find any supporting evidence for bringing the rapist to justice. All of these facts minimize the cost of rape crimes! The fact that the public normally blame the victim does not help at all. To certain extent, it induces the authorities to think that the victims have a role in the crime and you may say this is as a baseless claim, but I would assume that such kind of thinking will slow them down in doing their job. Imagine this: a friend comes to you saying that he lost his wallet because he put it carelessly in a public park. Would you quickly help him, or will you say: "dude, that's stupid and is your own fault, and now you ask me to help you?".

Will all of the above things, how can we effectively prevent rape crimes? By not working together in creating a safer environment and instead blaming the victim, the general public are actually responsible for supporting the crime itself! Honestly, I don't even want to be a part of it. Would you want to be a part of such bad act? I hope not.

Note: For follow up readings on the economic analysis of criminal activities, I would suggest you to read the articles of Gary Becker (Crime and Punishment: An Economic Approach and The Economic Approach to Human Behavior can be a good start), a Nobel laureate from the University of Chicago. He writes a lot and has a very nice blog with Judge Richard Posner here.

Imagine that you are a voter in a general election for the newest legislative members. Suppose that you dedicate your own time to know each particular candidates in order to vote as an informed voter. You further realize that individually, your voting will be pretty much insignificant, you can't and will never know whether your voting will be a decisive one in case there are a lot of voters (let us just say that in the context of Indonesia, there are around 60 million voters). Calculating all the costs for doing your personal research and doing the act of vote itself plus your understanding of how insignificant your vote is, would you still call yourself as a rational being if in the end, you still vote? (To shed some light, the typical definition of rationality used in this discussion is the definition used by economist, rational person means a person who act for his own best interest)

This is the basic premise of the Voting Paradox's concept, at least the first part of it (I'll deal with the second part later). It genuinely asks why rational people vote even though the circumstances show that it's an useless act and costly. Is this a solid evidence that people are irrational? Or is there something else that we miss? From what I have read, there are a lot of explanations for this behavior, but no solid answers. Nevertheless, for the sake of discussion, I guess it would not be a problem if I share some of these theories to my readers. Maybe one of you can provide a better explanation.

Voting as a Way to Express Your Voice

The first theory argues that people vote because it is a way to express their voice. It might not be effective, but hey, people have not found a better way anyway, so why don't with stick with voting? Under this theory the act of voting is considered as a type of consumption. The satisfaction of voting comes from the act of voting itself, i.e. shouting your opinion and hoping that somehow your voice matters. At first, I consider this as a ridiculous theory, but then I realize, I'm doing the same with my blog :p

What can we conclude from this theory? Since the rationality is derived from the satisfaction of doing the act of voting, such satisfaction comes with certain expectation, there is an inherent cost and benefit analysis here. If you know the probability of your vote being significant is small, and thus the benefits of voting are uncertain, you would be less likely to vote if the costs of doing so are increased. A simple conclusion but apparently this is supported by some empirical findings. Some good examples, people are less likely to vote in a rainy day or if the voting location is too far from their home or if the registration process is too complicated.

Voting as a Strategic Act

The second theory argues that people vote when they think it is a strategic one. I would guess that the applicability of this theory is limited. First, there are not many occasions where voting can be a strategic one, such as in a election where the results will be close. Second, while this might work in smaller groups, it is difficult to asses when your voting will be a strategic one in terms of big elections.

Voting Due To Group Mobilization

The third theory's basic argument is simple, people vote due to group "pressures". I can agree with this. Sometimes, group pressures is the best way to encourage people to vote, whatever the platform of the group is. And I have a very good example of this behavior. In my university days, I saw how the University's Islamic student organization encouraged their members to vote for their candidates for student senates and they were quite persuasive in doing this (although persuasive might be an understatement). And these guys have won the election for many times. How can they win the election even though they are not the majority? Well it seems, being "rational people," the other students chose not to participate in the voting process, thus, giving a major benefit to the groups who vote militantly. This end result actually has a strong connection with our last theory.

Voting as A Game of Cat and Mouse

Suppose that we know that most people are rational and there is a huge probability that they will not vote since it's an useless act. In this kind of situation, what will you think? If you vote now, you voice will absolutely matter! You will be the determinant of the voting result. But then again, when all the people think the same, we'll back to square one, i.e. people are returning to the voting chambers, meaning your voice becomes worthless again. See how this resembles a game of cat and mouse?

It should be noted, however, that while this game can be cyclical in theory, in practice it can actually alter the end results. My case of the Islamic student organization is a good example. Other students didn't vote, they were skeptical with the election. Now, as a rational person, what would you do in the place of the Islamic student organization? Of course the answer is: gathering all the like minded people to vote for your interest and beat the majority that have chosen not to vote.

Conclusion

So, in the end, can we say that voting is an irrational act? Is there any Voting Paradox? I still don't have an exact answer. But my gut feeling says that voting is a rational act. My reason is simple, as long as the costs of doing so is not that significant, you should always vote and even better, encourage other people to vote too. And when calculating the cost of voting, you must also calculate the costs of not voting, such as getting people that you hate to lead you, or even worse, getting incompetent people that will ruin your life as your leader and you don't have any mechanism to put them down other than a bloody revolution (yeah, I'm talking about our honorable members of legislative board). I guess this is something that missing from the equation. There are costs and benefits of voting, but on the other side, there are also costs and benefits of not voting. To be an informed voter, we need to calculate both, or else, you'll end up thinking that you a are rational person, though in reality, you're just an ignorant fool.

Note: Most of my materials are derived from Stearns & Zywicki's Public Choice - Concepts and Applications in Law. A highly recommended book for the student of Public Choice Theory and anyone interested with Public Policy.

I can still clearly remember how I learn the law during my days at the University of Indonesia. I seldom took any notes, usually I preferred to copy my friends' notes which were available for a cheap price at our beloved copy center, Barel. Most of the time, I sat at the back of the class since I'd already known that I can found most, if not all, of what the lecturers said in the learning materials provided by them in the copy center. And lastly, I usually learned for my exams during the trip from my home to the faculty (which took around 2 hours). As I said in my previous post, life is pretty simple and easy in the faculty of law. I even once declared my faculty as the most relaxed faculty in the South East Asia (that's during my trip for an international student meeting in Korea in 2004 and it is based on comparison with what other students doing in South East Asia, Japan, China and Korea).

I must say though that the above system is not entirely bad. Since the students were not that busy, I had plenty of time to do other activities, including joining student organizations, doing personal research (this is how I can have the time to learn Islamic legal theories), reading other legal materials that were interesting to me, taking as many classes as I want (I once took 8 classes in a semester without any difficulties), and of course, dating my girlfriend who later on became my wife :p.

But I guess I can no longer maintain that learning style in the University of Chicago. Last Thursday, I took a simulation test for a criminal law course concerning criminal attempt (percobaan tindak pidana). Although my quick answers are correct, I can't finished the exam in time! The problem? I used too much time to read the cases which serve as the background for the exam's answers. The cases have been provided two weeks ago to the LLM students, but I only have the chance to read it once and I already forgot everything by the day I arrived at Chicago (just coming out straight from a 19 hours flight). Facing this dreaded fact, I quickly realized that having the ability to correctly analyze legal issues is one thing, but you can't trick the pages that you need to read in order to complete your analysis and make it as a correct one.

So while reading the materials for my corporate law course, I start to understand little by little how the US law schools shape their legal education. This Cases and Materials book is designed so that the reader can't get a full understanding of the legal issues without reading the cases and materials completely. There are no simple summarized issues that can be easily grasped and memorized like in Indonesian law text books. You have to walk through a maze of judges opinions and excerpts of law review articles, and analyze the arguments within before you can reach any conclusion on what you have learned from those materials. Like it or not, you are being forced to read and think it through. But by the end of the day, the concept will stay with you forever.

While I consider this as a good method for studying the law, I also realize that this method requires a lot of preparation and therefore, it's time consuming. I can understand now why people do not recommend us to take more than 4 courses. Heck, I've already spent much of my time just for one course, what about the other 4 courses that I'm also taking? Wish me luck.

You can read the post here. Enjoy.

I've spent the last three weeks collecting law journal articles for my personal research and I was very surprised when I realized that I had obtained around 900 articles from only 20 or so US law professors. I note that Richard Posner and Cass Sunstein are probably the most productive ones. Posner himself has written more than 290 articles for law journals (that's what I've gotten from Hein-Online) and I know that he also write countless books and opinions as a federal judge. So yes, saying that he is a prolific writer would be an understatement.

My first reaction to this fact is making a comparison with Indonesian law professors. Honestly, it is very rare to find Indonesian law professors who actively write their thoughts in Indonesian law journals or books. Heck, it is even harder to find law journals which can survive their first publication. To the best of my knowledge, most professors spend their times writing newspapers op-ed or acting as expert witnesses. It's a pity, but I cannot blame them entirely.

The Problem of Compensation and Lack of Funding

There are two key issues relating to the poor performance of our professors and journals. First, it's the lack of compensation . It's just too small compared to their US counterparts! A US law professor in a prestigious law school can obtain around US$150,000 dollar per year. By Indonesian standards, this is ridiculously huge. Even the salary of a senior lawyer in a first class Indonesian law firm does not reach that amount. The last time I heard about the salary plan for a professor in University of Indonesia, it's around Rp10 million per months or around US$14,000 per year (not clear though whether this is a gross or net amount). For junior or mid term lecturer, the salary is even lower.

The fact that the legal status of some state universities is in turmoil does not help solving the above problem. Not only that it is not clear how universities should be able to procure their own internal funds, the employment status of their lecturers are confusing. What are the incentives then for them to focus on doing useful research and producing high quality academic products?

A major source of this compensation problem is lack of university funding. I must admit, there is a huge discrepancy of school fees between Indonesia and United States and it affects the overall compensation for the professors and lecturers. Imagine this, between 2001 and 2005, my yearly tuition fee for studying at the Faculty of Law, University of Indonesia is around US$250 (assuming that US$1 is equal to Rp9,000). That is 1/192 of my current tuition fee at the University of Chicago. I know that University of Indonesia's tuition fee has increased considerably within the last 6 years, but I am quite certain, it is still far away from our US counterparts.

Tuition fee is the primary source of university funding, other than sponsors and donors. That's the hard fact. Asking universities to cut down their fees while requiring them to maintain or even improve their quality is absurd. Asking the government to finance the entire education costs is also difficult, especially in a period where we don't know whether having a government is worse than having no government at all. Two basic principles that should be adhered: (i) great education does not necessarily have to be cheap and (ii) people should not be discriminated from getting high quality education based on their poor financial condition. The solution? Cross subsidy between the rich and the poor.

Another way for getting fresh money for the University is by finding a sponsor. I applause University of Indonesia's decision to bring Starbucks to the campus. If these shops can attract more money from the rich kids and they are being used to foster the University, why not? Unfortunately, instead of having realistic and pragmatic debates such as does the University get a good deal from this transaction and does the University put the money for good use, we have some ridiculous debates on whether this decision brings the University of Indonesia toward consumerism or whether it is appropriate for the University to bring Starbucks, which is owned by a "villain" (by the way, the said villain's company owns countless major products and brands across Indonesia and I wonder whether people know that they might actually use the products without knowing who own the company, but that's for another discussion on liability of shareholders and their companies), to the campus area.

As long as this funding issues cannot be solved, I do not expect that the life quality of the professors and lecturers can be significantly improved and the incentives for them to perform better are getting smaller. Why do you think that professors choose to write for op-eds instead of journals? It's a gate for becoming famous, and once you're famous, Indonesian people will mostly hear what you said. Then you can become an expert witness or a speaker in seminars and workshops. The payment is quite good. Why bother doing research that produces almost nothing?

Another people may argue that being a lecturer means devoting yourself for the betterment of the society. True, but it is hard to find those kind of people, and even if you find them, how many of them will stay the same for a long time if they can't properly feed themselves and their family. In the end, incentives matter. Compensation means a lot, and you can't expect to have a better compensation with lack of funding.

Lack of Research Culture

This might sound like a broken record, by the second key issue is very typical, there is a lack of research culture in Indonesia. I don't have a solid empirical data to back up my claim, but at least for the subject of law, I have not found any legal groundbreaking ideas for the past 10 years, either in the form of books or journal articles. The days where professors wrote countless books, such as the legendary Subekti and Wirjono Prodjodikoro, are over. I think the only remaining productive legal writer is J. Satrio and that's it. Most professors only publish unedited anthology of their articles and therefore it's difficult to find a coherent and systematic thinking within the book.

I can also tell my experience during my law undergraduate study days. Most of the time, the lecturers have already summarized the reading materials to be read by the students and they instruct to student to purchase those summarized reading materials. Yes, learning is easier by this way, but it also discourage our reading and writing culture which is essential for creating a culture of research! I can tell you that living as a law student, at least in my time, was not that hard. In fact, I had plenty of leisure time during my study. If you really want to advance your own thoughts, there are no other ways than investing your own time to read materials and write by yourself. For some people this is good, meaning that they will have additional time to learn new things without having to cope with too many tasks from the school. The ultimate question is, how many people actually choose this way?

Since the professors and lecturers don't have enough time to maintain their student (i.e. too busy to do other additional jobs), they usually don't give the students plenty of reading materials or ask the students to make papers. Even if they do, papers are usually made in group. Furthermore, since they won't have much time to read too many papers, grades are usually determined by a mid test and a final test. If you have read the summarized reading materials, I can assure you that you should be able to obtain good grades. Thus the vicious circle of our legal education is created. The lecturers have little incentives to conduct academic researches nor to encourage students to do their own research and the students also have little incentives to give extra effort in their study since in the end of the day, they can always survive the test by only reading the summarized reading materials. Life is easier, of course, but it's a dull one.

To solve this vicious circle, there is no way other than giving the correct incentives and I say the first priority should be given to the academics since they are the life and blood of the university. Without them, there would be no one to educate the students. So compensation should be the start.

To close this post I want to show the irony in Indonesia with respect to the quality of the University outputs. The admission test in Indonesian Universities is extremely competitive. I bet that getting admitted at the University of Indonesia is harder than getting admitted at Harvard (in terms of the amount of people submitting their application and the percentage of those who are eventually admitted). Yet, with such rigorous application process, we are not yet able to produce the quality of output as good as Harvard. Isn't that a waste of time? Collecting the best of the best of Indonesian young students but fail to nurture their maximum potential. Let us do what we can to contribute for the betterment of our legal education system.

As previously mentioned in my post, I've been doing a research on the validity of slavery under Islamic Law as a part of establishing a general theory of Islamic Law. While I have collected many new books and law journal articles on this issue, trying to find empirical evidence of how classical Islamic legal scholars took it, I've just realized that I missed one of my important sources that has stayed with me for years, Bidayatul Mujtahid, a superb comparative fiqh book written by Ibn Rusyd, a prolific and famous Islamic legal scholar (though most western people know him as a philosopher rather than a jurist). The book is considered as a masterpiece and is still used in various Shari'a faculties around the world as teaching materials, even though it was written around 800 years ago (or around 600 years after the birth of Islam).

So a couple of days ago, I read again the Indonesian and English versions of Bidayatul Mujtahid and I found out in the Jinayat (penal offenses) section, Zina (unlawful intercourse) sub section, that having an intercourse with your own slave (whether you're marrying or not marrying the slave) is not considered as a penal offense. In fact, Ibn Rusyd states in such sub section that this has been agreed by all of the Islamic legal scholars (as of his time). The sub section also discusses certain other issues such as the legality of having a sexual intercourse with other person's slave (with the master's consent), or whether a father is free to have a sexual intercourse with his son's slaves or a man to have a sexual intercourse with his wife's slaves. Although Ibn Rusyd recorded that Islamic legal scholars were still in debates on the validity of these actions, several of them have already considered those acts as permissible without the necessity of imposing any penal sanctions.

Upon reading this, I quickly understand that slavery is indeed not prohibited under classical Islamic Law. The legal logic is simple: you can't validly have a sexual intercourse with your slave if slavery is legally prohibited. This is also supported with the fact that some scholars allow a person to enjoy other person's slaves with prior approval on the basis of asset's transfer! On technical legal issues, I salute these classical scholars for being innovative, but isn't that mean that slavery still existed even 600 years after the birth of Islam and people still think it as an ordinary legal action?

Now I wonder, if we know that slavery is valid and permissible under Islamic Law, and the Koran never says that it is prohibited, nor condemns the act, can we now prohibits slavery? Under what basis? That this is a law that should be changed in accordance with the situations and conditions? Why can't we do the same with other Islamic law subjects? If we prohibit slavery, can we be considered as breaching God's rules by prohibiting things that have been declared as permissible?

As a separate note, you might be interested to know that modern scholar like Wahbah Az-Zuhaili still allows slavery of women and children in terms of war prisoner to the extent that they can be distributed as war's spoil (ghanimah). You can refer to his discussion in Fiqih Islam Wa Adillatuhu, General Fiqh Section, Jihad - War Prisoner sub section (it's in the 8th book of his book's Indonesian version).

Interesting issues to be followed up. Let's see whether I can finish my research during my study at University of Chicago.

On 12 August 2011, the Indonesian Constitutional Court issued its decision concerning judicial review of Law No. 8 of 1981 on Criminal Procedural Law ("Criminal Procedural Law"). You can download the decision here. Under the decision, the Constitutional Court deemed that the definition of a Witness should be amended from "a person who can give testimony for the purpose of investigation, prosecution, and trial on a criminal case which is heard, seen and experienced by him/herself" to become "a person who can give testimony for the purpose of investigation, prosecution, and trial on a criminal case which is not always heard, seen and experienced by him/herself".

According to the Constitutional Court judges, the definition should be amended since based on grammatical interpretation, the term "is heard, seen and experienced by him/herself" refers specifically to the criminal case itself. As such, such definition will violate the rights of the defendant to bring witnesses that might support him in the trial process such as alibi witnesses that probably do not see, hear or experience the relevant criminal case (because the criminal case does not occur).

I have to say that this is an issue of simple grammatical misunderstanding and the solution provided by the Constitutional Court creates another problem. Grammatically, there are two ways to read the above clause: (i) the term "is heard, seen and experienced by him/herself" refers specifically to the actual criminal conduct; or (ii) the term "is heard, seen and experienced by him/herself" refers to the testimony/information given by the witness in relation to the case at hand. In cases where we use plain meaning technique to interpret the text of law, we must also rely in the principle that plain meaning approach can only be used when it would not lead to an absurd result. Surely, using the first interpretation will bring significant trouble in practice.

As a comparison, under the US Federal Code of Evidence, a witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of such matter. This is common sense, a witness can only testify about things that he/she really knows. In line with that, I am certain that the second interpretation would fit better in interpreting the definition of witness under the Indonesian Criminal Procedural Law.

In my opinion, the solution of the Constitutional Court might create an issue concerning the competency of the witnesses. First, the fact that they don't see, hear or experience the criminal conduct by themselves does not necessarily mean that their testimony is always relevant to the case. This will open a chance for the defendant to bring any witnesses that can support him even when there is no merit of such testimony to the case, such as testimony on the character of the defendant. Trial process involves emotion and judges are not robots, and thus a good framing of the defendant is always helpful. Is this good or not? Further evaluation is needed but surely this will depend on our taste of morality and human rights.

Second, in worst case scenario, the generality of the wording used by the Constitutional Court may also be used by prosecutors and polices for using witnesses that do not see, hear or experience the criminal case against the defendant. This is surely absurd, but judging from the absurdity of the solution, I am not surprised if polices and prosecutors exploit this loophole. Time will tell.

I find this tragedy as a case with a very interesting legal feature. Basically, a boy who was driving recklessly caused the death of two of his classmates last saturday morning. How do we know about his reckless driving? Prior to their death, one of the victim shared her experience through Twitter, saying that the boy was entering a drag race with his friends as passengers! Then another victim re-tweeted the tweet, confirming the information about the boy's involvement in the drag race (I have to put a caveat here though, re-tweeting a tweet does not necessarily means that the re-tweeted tweet is true). From the news, I understand that there are two other survivors from this accident, which would be helpful as witnesses in the court. However, let us assume in this case that there is no evidence who can confirm the boy's reckless driving that night. Can we then use the written testimony of his dead friends in Twitter as the basis to punish him in the court?

Legally, this would be a challenge. Under Article 162 of Law No. 8 of 1981 on Criminal Procedural Law ("Criminal Procedural Law"), in case a witness who has provided his/her testimony to the investigator dies before attending the trial, his/her testimony can still be read in the court. If the testimony has been given under an oath, such testimony will be treated equally with a testimony given by a witness who attend the trial. If not, I would say that Article 161 (2) of the Criminal Procedural Law will be applicable, i.e. the testimony will not be considered as a valid evidence although the judge can use it as a supporting information in rendering his decision. In any case, if the minimum rule of two items of evidence cannot be satisfied in the court, such information will be useless.

In our case, however, the victims were already dead before they can say anything to the investigator. Thus, I doubt that their testimony can be considered at all. I also doubt that tweets can be treated as as a Letter Evidence (alat bukti surat), since it must be supported with or made under an oath. And even if it can, it will only work if it is used in conjunction with the information found from other evidence (which is none in our hypothetical case).

As much as I am sympathetic with the victims, I must say that I'm in agreement with the law and I would not support using informal written testimony of dead people as a valid evidence even though it might contain a grain of truth. Why? Simply because you cannot cross examine that kind of testimony and therefore it would be impossible to determine its accuracy. After all, everyone can say anything in their writings, including through Twitter, and we can't verify whether they are telling the truth without further examination.

I can only hope that justice will prevail in this case. Remember, under Indonesian Penal Code, causing death of other people due to negligence is a criminal act punishable by maximum 5 years prison. This is not something that you can get off by simply saying that you're sorry.

Oh dear, it seems that I almost forgot the second anniversary of this beloved blog! I've been busy with the preparation for my post graduate study at the University of Chicago Law School, e.g. completing all of my remaining corporate lawyer work prior to leave (so that I won't have any additional homework during my study), preparing my travel to and living needs in Chicago (getting US visa and securing an apartment lease), and pulling together the learning materials (the law school database was opened already in June and I must say that I am overwhelmed with the enormous data, very exciting!).

I hope that I can be more productive in this blog as soon as I have settled my live at Chicago. Stay tune folks.

Welcome to the second episode of Legal Analysis Tool Kit Series! Our today's discussion will focus on the concept of Baseline or to put it in a simple way: where should we start before we can impose a law or policy? The concept of Baseline is an interesting one because it deals with the fundamental issue of the original position of certain rights or obligations. Let me give you an example:

In Indonesia, we have regulations on minimum wage for workers. Suppose that someone goes to the Constitutional Court and demand that such law should be annulled on the basis that it contravenes his constitutional rights of freedom to work (Article 28 D (2) of the Constitution). The basis of the claim? A company rejects him from a working position because it isn't able to pay him the minimum wage and therefore the company refuses to accept him. This is a hypothetical case since I haven't done or read any research on the actual relationship of minimum wages and the companies' willingness to recruit new workers. For the sake of this post, let us assume that: (i) there is a big fine for companies who do not follow the minimum wage law, (ii) we are dealing with small and medium enterprises where salary of their workers is a major factor, (iii) the administrative costs for getting an exemption for the minimum wage is too high and taking a long time, and (iv) they tend to reduce their recruitment activities rather than paying new workers with the stipulated minimum wage.

Question 1: Can we say that this minimum wage law contravenes the constitutional right of the unfortunate potential worker?

Question 2: To what extent can the Government actively limits the rights of freedom of contract of its people? Should the Government leave them alone and deal with this issue by themselves, i.e employers are free to pay their workers provided that the parties mutually agree such arrangement?

Question 3: What would be the position of the Government in this case? If the policy brings problem to certain members of the society but also good things to other members of the society (such as the current worker which will enjoy the minimum wage), should the Government revise such policy? On what basis? Can it say that since more people enjoy the benefit of the policy then the policy should be maintained? Is it fair for the unfortunate ones?

The basic problem of all of the questions above is the issue of Baseline, i.e what's the original position of the Government with respect to its citizen rights to obtain work? Should the Government interfere in the first place or not? Dealing with Baseline is difficult since here we are trying to determine the original position of something to which our next actions will be greatly influenced.

Anyway, let us try to answer the above questions:

1. Minimum Wage and Constitutional Rights

Some people will argue that in general, employers' position are stronger than the workers. Thus, the Government should intervene and provide protection to the weaker party. This should be the intention of the Constitution, fairness and equality for all. But will that argument work for our case? A man losing his job opportunity because the company does not want to pay its additional worker with the current minimum salary. Doesn't this fact contradict the original intention of the Constitution to protect the weaker party (if such intention exists)?

However, with this kind of fact, do you think that we have enough basis to say that the constitutional right of the worker has been jeopardized by the existence of such minimum wage policy? Does the fact that he is actually willing to receive lower wages in order to secure a job but the current law does not permit that and therefore he loses his opportunity to get that job can be considered as a violation to his constitutional rights? In this case we need to go to the second question.

2. The Limits of Government's Intervention

To what extent can the government limits private mutual arrangements between the parties? I would say that we are now dealing with a Baseline, i.e. should Government leave us alone in our private arrangements? Or should Government intervene whenever there is a possibility that a weaker party can face unfair treatment?

To answer the above question, I will tell you another case: A man is really in need for money to pay the medical bills for his wife and to get the money he is willing to enter into a contract which he would never enter into if he is not in dire need. Currently, he doesn't have many choices. He has asked for loans from his friends and family members and no one can provide him with the amount. At last, he found a loan shark that is able and willing to provide the loan. The loan shark believes that this man capacity to pay is rather weak and he is out of option, so he imposes an extremely high rate of interest. The man agrees with the condition, and so he receives the money to pay the medical bills.

If we believe that our basic rule is to always protect the weaker party, should the Government impose a law prohibiting any person to take advantages from this situation or to impose certain conditions that seem unfair in the loan agreement, whereas, as a result of which, the loan must be renegotiated to reduce the interest rate and to give better payment options for the man? Do you agree with this approach?

Now, let us change the case a little bit. The above troubled man has a very beautiful house. He also tries to sell his house to raise some funds, but since the market is busted, no one is willing to take the offer. Suddenly, a person comes and knowing that the man is in dire needs, he offers to buy the house for just 10% of the original price. The actual economic effect of accepting this offer would be similar with receiving the highly interest loan from the loan shark. Eventually, the man chooses this option and sell his house with such terrible price. Question, should the Government forces them to renegotiate the price of the house to find a better and fair price under the rule that we must protect the weaker party? Would you support the Government's act to force these consenting parties to renegotiate the house transaction?

Intriguing isn't it? I would like to know whether your opinion would differ for these 2 cases. To be consistent, the answers for these cases should be the same. Why? Because the economic effects are just the same and both deals are made within an unfair condition, i.e. the man doesn't have many options, is willing to enter into bizarre contracts, the necessity for paying the medical bills is high and he doesn't have much time. But I bet that most of you will say yes for the first case and no for the second case. I would happy to hear other opinion in this matter.

Anyway, the thing that I want to show you here is the fact that it is really difficult to determine the Baseline for Government intervention. Deciding the case on a case by case basis would most likely costly, and avoiding such cost is one of the reasons for stipulating a general law that could be applicable for any cases. And speaking of that, it's the right time for us to move on to Question 3.

3. The Government Option

For the last question, we understand from the above case that some people will receive benefits from the minimum wage policy (current workers) and some won't (potential workers). If we say that the protection for weaker party is necessary for the sake of fairness and equality, how could we justify the fact that this policy may also hurt the parties that we're supposed to protect?

More interestingly, if in the end the Government chooses to maintain the policy on the basis that more people are being protected, do you think we can still justify this act under the name of equality and fairness? To be honest, this would be another form of implementing cost and benefit analysis in designing public policy, i.e.: if the overall costs are higher than the overall benefits, the Government should not pursue such policy. Some philosophers attack this approach as something that against the concepts of fairness and equality. If we calculate that the costs of protecting minorities are higher than the benefits, why bother making policies that protect them?

I would stop at this point as my main purpose with this article is to conduct a training of thought. In public policy and law designing, there are no easy answers and determining the Baseline would always be something that we have to analyze carefully. Hope this is useful.