The Chronicles of a Capitalist Lawyer

Recently, I found an excellent paper from Ronald Coase which summarizes the basic concept of Adam Smith on human nature. I would urge my readers to read the whole paper (first published in The University of Chicago's Journal of Law and Economics) as I think it provides a correct summary and a strong insight on how economists and also lawyers should think about human nature. The final paragraph of Coase's paper is very important that I will just copy it here for ease of reading. Enjoy! " It is wrong to believe, as is commonly done, that Adam Smith had as his view of man an abstraction, an “economic man,” rationally pursuing his self-interest in a single-minded way. Adam Smith would not have thought it sensible to treat man as a rational utility-maximizer. He thinks of man as he actually is-dominated, it is true, by self-love but not without some concern for others, able to reason but not necessarily in such a way as to reach the right conclusion, seeing the outcomes of

As the title says, this article is a reply to a very interesting post from Imam Nasima on Legal Positivism Trend in Indonesian Legal System. As interesting as it may be, personally, the article raised a fundamental question, i.e. did Imam and the people he mentioned in his article discuss Legal Positivism as a legal theory or as a method of legal interpretation? If they talked about the second, I'm afraid that there is a misunderstanding here and my gut feeling says that this is a mistake similarly made by the majority of Indonesian legal scholars who deal with progressive legal theory. Legal Positivism as explained by HLA Hart does not specifically deal with method of legal interpretation. After all, it is a theory about the law, on why law exists and has authority upon the people. In Hart's view, a rule existing in the society shall be treated as a law when the majority of the people in such society accept the authority of such rule from an internal point of view and the l

I attended a national conference on the rule of law last week. At the conference, I presented my paper on the application of public choice theory into legislation system in Indonesia. (Those interested to learn more about the subject can go to my website and search for the 'public choice' tags by clicking here ) It was a nice experience and a good chance to see how Indonesian legal scholars perceive the law and its normative values. Having a quick reading on various papers, it seemed that abstract normative analysis still conquers the Indonesian legal scholarship, at least from the conference attendees. In this context, abstract means vague principles or values that are difficult, if not impossible, to quantify. For instance: the idea that law should promote the interests and happiness of the people, that law should promote justice and national interest etc. There is nothing wrong with promoting such ideas in terms of freedom of expression, but the problem is

The National Police Deputy Chief Nanan Sukarna on Thursday admits that there are corruption practices in his organization, as quoted by tempo.co . One of the many factors he cited was inadequate salary for police officers. "How should we ask them to not stay clear of corruption if their salary is not enough to pay for their children's school?" he said. From an economics perspective, this is an interesting topic. It is widely known by the public that being a police officer who only depends on salary will not make them rich or even survive day-to-day living. But despite such truth, why are there still many people apply to be one? If the job and payment are that bad, why do they pursue such career? A case like this offers several explanations. First, it might be possible that the majority of people who apply to become a police officer put more value on the authority attached to their position. This means that for these people, the fact that they gain such po

Suppose you believe in Religion X and A is your God, and someone comes to tell you that your belief is false — A is a mere human and therefore he is not worthy to be worshiped. Would you call the scenario as a blasphemy to your religion? If the answer is yes, then we have a problem because in reality, most religions — if not all — claim other religions are false or misleading. As you can probably tell, the above scenario is about Jesus. In Christianity, Jesus is God. In Islam, Jesus is not God: He is a human, one of the prophets sent by the almighty God. In my previous post, ' The Law and Economics of 'Innocence of Muslims ,' I argued that defining religious blasphemy is very difficult from the perspective of freedom of speech. Now I would like to emphasize the logical problem of having anti-blasphemy laws when we have so many religions in this planet. Thus, another reason why we should not support the existence of such law. Why do we have so many religion

I'll admit it: I have not watched "Innocence of Muslims," the anti-Islam film that has been blamed for causing ruckus around the world. Why? Well, I have more important things to do, one of them involves an amateur cooking competition with my friends. Personally, in terms of importance, such movie sits in the category of "absolutely not important that even staring at the wall for 2 hours would still be better." The problem is, not everyone shares the same view. But before we discuss why Muslims are against the film, we should first study why some people are still trying to make a movie like this. From economics perspective, the reason might be very simple: because with such a minimum cost, the movie can maximize the damages caused to the world, which I assume will also maximize the makers' own pleasure or benefit. Why are the costs so low? Based on the comments of those who have seen it, "Innocence of Muslims" was a low-budget mo

Someone said on Twitter that corruption will never be effectively banished if people are still violating traffic regulations, including the three-in-one rule by using the jockeys service. Three-in-one policy requires vehicles to have at least three passengers on busy roads at peak hours. The jockeys are hitchhikers who are paid to ride in a car when passing the main roads. I won't discuss whether such rule is valid under the current hierarchy of laws, but or the sake of this discussion, let's just assume the three-in-one rule is legally valid and binding.  What I mainly disagree with the above statement is that using the service of jockeys is a violation of law that will somehow induce the people to corrupt - using a logic that if you can't be trusted for small matters, you can't be trusted for huge and important matters. First of all, the rule only says that people who want to travel within the restricted roads must have at least 3 passengers insi

The verdict for drunk driver Afriani Susanti has been issued earlier this week: 15 years in prison for killing nine pedestrians in an infamous traffic accident. She was deemed guilty not of intentional murder, but of reckless and fatal driving.   I won't discuss the verdict from legal perspective here. 15 years in prison is the maximum sanction she can get if she is deemed guilty of intentional murder. What I am more curious about is the way to find the proper penal sanctions for various criminal activities. In my January 2012 article about Afriani, I argued she must receive higher penalty — by categorizing her crime as an intentional murder — in order to reduce the incentives for other drivers to drive recklessly. At that time however, I did not think deeply about the most efficient sanction for her crime. I only followed standard Law and Economics doctrine that a sanction of multiple crimes should always be clearly differentiated with a single crime, simply be

Don't you just hate the fact that many politicians seem very inconsistent in making their political choices? Supporting candidate A today, B the next day. I still vividly remember a politician who was criticizing one of the independent candidates in July's Jakarta gubernatorial election for the candidate's lack of experience, and then changed his position to be a firm supporter of that candidate once his own candidate failed to join the election process. We see similar things happening now when some political parties, who previously attacked the incumbent candidate, decided to support the incumbent after tragically losing the first round of the election. Is this really a bad behavior? Should we condemn such act? I don’t think so. Far from being a reckless act, the change in political choices made by these politicians is simply rational. They would be stupid if they did otherwise. Why?   Surviving in the business of politics requires similar skills th

Here is my latest post (in Indonesian language) at ILUNI-FHUI site: Revisiting the Function of Penal Sanctions . The post discusses the use of Law and Economics tool in analyzing the role and use of penal sanctions and how we can shape our penal sanctions to meet their primary purposes.

For a couple of weeks, we have been bombarded by news on the use — or misuse — of religion as a part of Jakarta's gubernatorial election campaign. Even the Islamic Council of Ulema's (MUI) Jakarta branch joined the fray by issuing a fatwa that people have the obligation to choose their leaders based on their religion. This, of course, attracts a lot of comments. Some view such attempt as stupid or hypocrite, others view it as acceptable and necessary in accordance with their religious practice. From political and economics point of view, using this strategy seems rational. Like it or not, this is a sensitive issue where opinions might be fairly distributed between the pros and cons. If you can use it to gain more voters from certain side, why not?    But, from legal point of view, should we prohibit the use of this strategy? I don't think so. Not only that it would be a very paternalistic policy, there are hundreds of other reasons that can be used by a

The recent Olympics badminton scandal is very interesting. From a legal perspective, the answer is quite clear. The players deliberately tried to lose against each other, so they breached the Olympic rule of doing their best in each competition. Case closed.    But surely we can’t stop there. Why should we have that kind of rule in the first place? Why should we prohibit the players from choosing a rational strategy when the competition rules allow that possibility? Is this all about sportsmanship? Like in that various martial arts stories where the fighters are always trying to fight fair and square in order to gain the sweetest victory? Or is it something else? As a spectator, I don’t mind if the players deliberately tried to lose in order to gain victory later. The problem is, it seems that I am in the minority group. Like it or not, the idea that sport competitions should be held in accordance with the highest moral principles still lives on until today. And

This is an era where people can spread information anonymously and are able to gain trust from a lot of other people. The million dollar question is: Is this a good thing or a bad thing? I know that some people do not like the fact that these anonymous informants can get many viewers in such an easy way and fear that these viewers will be fooled by distribution of false information. This, however, is an exaggeration.  Like it or not, having anonymous informants is a normal thing in the modern market of information, especially with our telecommunication technological advances.   And in such market, there will be high quality information and low quality information. Trying to have a paternalistic central body to analyze and differentiate each type of information would be very costly. So it would be better to let the people themselves decide whether the information is worth to know or not. Furthermore, it would also be too late to say that anonymous informants are u

We all know the familiar phrase “may the best candidate win” in an election process. Obviously, we really hope that we can get the best leader through such process. Yet in reality, we often fall into a situation where the entire candidates suck and we are forced to vote for the best among the worst, which is still bad. Have you ever wondered why most of the time, getting the best from the bests as our leader is very difficult? Is it actually possible for us to use a meritocratic system where leaders are chosen solely based on their capabilities? The answer might be disappointing. The main problem? We tend to forget that in the modern world, leadership is neither simply a right nor a privilege; it is a job with certain responsibilities. There are costs and benefits involved. Thus, the law of supply and demand will govern the process.     Those who want to be leaders do not necessarily have the needed capabilities. Most of them, if not all, are people who believe that

I always want to do a survey on how Indonesian people perceive the implementation of Shari’a as a part of positive laws. Many surveys have been done on this issue. The problem is, either the questions are too general or only deal with the “famous” provisions of Islamic law. By general, I mean that the question only asks whether a person accepts the implementation of Shari’a without knowing whether he would agree entirely with any kind of implementation or only to a certain degree. By famous, I mean that the question only deals with classical provisions that are well known by many people such as hand cutting for thievery, stoning for adultery, etc. I believe that this kind of survey cannot be used to know precisely whether the respondent fully understand his answer, that he gives his responses based on a good understanding of Shari’a and not just because he doesn’t want to be considered as a religious blasphemer. In this article, I will provide certain guidelines

The title of this article is the main question generated by people who believe that there are certain laws which are derived from God or basic moral principles. Thus, these laws would have a holy status and will be perfect and remain unchanged for eternity.    Unfortunately for them, the answer is no. There is no such thing as a holy law and there is no record that a law can be applied without any changes within the past 2,000 years. Law is a social fact and is always evolving. That’s the reality.   By social fact, I mean that the basic validity of the law is solely determined by social acceptance, namely that the people within a territory, including their legal officials, accept from their internal point of view that a norm has valid authoritative power as a law. How can we know that such acceptance exists? First, we can see such acceptance from how legal officials (such as judges) express the normative aspect of such rules within their opinions/statements. For exa

The argument that moral violations invite God’s punishment (such as in the form of natural disaster) is a famous one. In a way, this argument is usually used by its proponents to support moral enforcement. Since God’s punishment will be very costly to all of us, it would be better if we spend our resources to maintain the good morality of society. The question is: Is this a plausible argument? The quick answer would be no. Some of the arguments against moral enforcement have already been set out in my previous article. This time around, we will try to take a look at this famous religious foundation of moral enforcement.    Saying that God might punish the people for misbehavior and moral violations is not necessarily incorrect. There are certain instances in the Holy Book that give us examples of God’s harsh punishment to those who oppose God’s rules. So we have some precedents here. But we need to dig deeper and try to understand the major aspects of those precedent

Around two weeks ago, I had an opportunity to attend a debate on Neoliberalism Thought at the University of Chicago between Gary Becker (Professor of Economics at the University of Chicago), Bernard Harcourt (Professor of Law and Chair of the Political Science Department at the University of Chicago) and François Ewald (former assistant to Michael Foucault and Professor of Insurance at Conservatoire National des Arts et Métiers, Paris). I think the quality of the debate is very good and it would be a pity if I don't share the ideas raised in such debate in this blog. First of all, the debate spins on the idea of Homo Economicus or the Economic Rational Men by Gary Becker. Michael Foucault, a famous French philosopher and historians, believe that Gary Becker's idea on economics rationality provides the necessary theoretical foundation of Neoliberalism. This is interesting because usually Neoliberalism is more associated with political economic thoughts rather than pure theoret

Let me start this post with the claim that I am a legal positivist, meaning that philosophically, I believe that the existence of law is based solely on social facts and that a legal system can validly exist without any moral basis. Note this, it doesn’t mean that the law cannot contain any moral values, it simply means that law can be separated from morality issues in order to exist. This separation is crucial to understand why I take the position that pure moral enforcement would be an impossible attempt. I will also use the concept of separation of moral and legal issues in Islamic law to support my argument in this post. As you may be aware, this world is full with people who believe that the morality of a society must be upheld and enforced even when there is no legal rules relating to such matter. Take the example of Lady Gaga’s concert in Jakarta. I am not talking about the thugs who demand the concert to be cancelled since based on the facts on their usual p