Supreme Court Again Makes It Clear: Companies Can Erode Your Legal Rights Via Mouse Print

from the idiotic-precedent dept

Mon, Dec 14th 2015 2:07pm — Karl Bode

For years, AT&T worked tirelessly to erode its customers' legal rights, using mouse print in its terms of service preventing consumers from participating in lawsuits against the company. Instead, customers were forced into binding arbitration, where arbitrators employed by the company unsurprisingly rule in their employer's favor a huge percentage of the time. Initially, the lower courts derided this greasy behavior for what it was: an attempt by AT&T to eliminate customer legal rights and save a buck. And with AT&T's massive history of fraud, you can imagine AT&T was looking to save quite a bit.

But in 2011 the Supreme Court's AT&T Mobility v. Concepcion ruling declared that what AT&T was doing was perfectly ok. While lower courts saw this as an "unconscionable" abuse of consumer rights and the law, the Supreme Court bought into the ongoing myth that binding arbitration is a hyper-efficient, modern alternative to class actions. And again this week, the highest court in the land again proclaimed that this kind of sleazy fine-print is perfectly ok.

For a few years now DirecTV (ironically now owned by AT&T) customers have been trying to sue the satellite provider over its early termination fee (ETF) policies. A California court had invalidated the binding arbitration clause in DirecTV's contract with customers, since DirecTV's contract language stated that such a provision was unenforceable if the "law in your state" contradicted it. Unsurprisingly, this week's 6-3 ruling in DirecTV Inc. v. Imburgia (pdf) reiterated the 2011 federal ruling trumps all:

"No one denies that lower courts must follow this Court’s holding in Concepcion. The fact that Concepcion was a closely divided case, resulting in a decision from which four Justices dissented, has no bearing on that undisputed obligation. Lower court judges are certainly free to note their disagreement with a decision of this Court. But the “Supremacy Clause forbids state courts to dissociate themselves from federal law because of disagreement with its content or a refusal to recognize the superior authority of its source."

If you're solely looking at the precedent set by Concepcion, that of course makes legal sense. Breyer (who dissented on the original ruling) is simply telling lower courts they must adhere to the federal ruling, even if they don't agree with it. Of course that doesn't magically make the original ruling good, nor does it obfuscate the fact that the Supreme Court is just as polluted as Congress when it comes to partisan patty cake and corporate influence.

In short, the Supreme Court bought into the myth that arbitration is a hyper-efficient alternative to the greed of class action lawsuits, even though there's an endless ocean of data highlighting how that's simply not the case. Class action lawsuits are indisputably obnoxious for all the usual reasons (I got $1 and the lawyer got a new boat!). But occasionally class actions do benefit consumers and force change (especially on the telecom front), and until the people complaining construct a better mouse trap, class actions are often the best bad idea we've got.

The Supreme Court's alternate-reality belief that arbitration is a sane alternative is notably worse. Since AT&T's original win, countless companies from banks to video game vendors now foist binding arbitration upon consumers, forcing them into a rigged apparatus where consumers lose the vast majority of the time, companies pay smaller amounts then ever before, and there's less meaningful change than ever. Thanks to the Supreme Court, that's something we'll all get to enjoy for many, many years to come.

Opinion-Arbitration (PDF)Opinion-Arbitration (Text)

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Filed Under: arbitration, binding arbitration, class action, supreme court
Companies: directv

48 Comments

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Anonymous Coward, 14 Dec 2015 @ 2:17pm

Rights? More like terms of service.

Accept them or don't, it's your right.
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Anonymous Coward, 14 Dec 2015 @ 2:22pm

i for one welcome our new corporate overlords.
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Anonymous Coward, 14 Dec 2015 @ 2:29pm

AT&T is an evil company
I had UVerse back when it was $59.00 month and it was great. But then they started pulling channels out of the package and I canceled when they charged $10.00 for HD.

I had AT&T for my landline but switched to ooma.com because they charged too much for a landline.

I had AT&T cellular for my wife and I. We were paying a whooping $30.00/month extra for a data plans on top of what I thought was a sky high phone plan. Got AT&T net10 SIMs and now we are at a very reasonable $90.00 total for phone and 5Gb data.
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Anonymous Coward, 14 Dec 2015 @ 2:30pm

I wonder if we can create new consumer rights through these same shady autoaccept binding agreements large corporations are using.

"By advertising to this party you are agreeing to:" etc

The best way to fix the loopholes is for the common people to exploit them against the companies.
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Anonymous Coward, 14 Dec 2015 @ 2:32pm

Re:
The best way to fix the loopholes is to deregulate the industry so we can have cooperatively owned ISP and WISP.
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NeghVar (profile), 14 Dec 2015 @ 2:39pm

hypothetically...
Hypothetically speaking, because of this ruling, could a bank now clean out their customers' accounts and safe deposit boxes without any worry of legal repercussions since the arbitrators would side with the bank.
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PRMan (profile), 14 Dec 2015 @ 2:39pm

Re: AT&T is an evil company
I pay T-Mobile $100 for 4 lines with 2.5gb data.

But all music and movie streaming is free, so you'll never use it.
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PRMan (profile), 14 Dec 2015 @ 2:40pm

Re:
I recently went to a doctor's office to get a prescription and they had mandatory arbitration in the welcome paper stack!

For a doctor?!?

Heck no!
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radix (profile), 14 Dec 2015 @ 2:42pm

Slightly misleading
SCOTUS is not making any moral statements about Arbitration vs Litigation, it's merely pointing out that the US Congress passed the Federal Arbitration Act, which takes priority over State laws.

Your elected representatives (or those of your great-grandparents, in this case) passed an awful law, with numerous unforeseen consequences, but it is not inherently Unconstitutional. As pointed out many times recently, they refuse to be judges of the wisdom of pieces of legislation, merely judges of its legality.

They got this one right, but that doesn't mean the law is just.
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Anonymous Anonymous Coward, 14 Dec 2015 @ 2:42pm

Lousy solutions
But the only ones I can think of. Refuse to or stop doing business with any company that uses binding arbitration. Ask any sales representative if they do not now, nor ever will use binding arbitration, in writing, or no go.

Insist that any House or Senate candidates currently or in the future running for office commit to and sign an absolutely binding contract that they will force congress to either eliminate binding arbitration as a concept or create a consumer oriented version of it that the corporations will refuse to use.

I am not holding my breath for either.
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Glenn, 14 Dec 2015 @ 2:50pm

Class action isn't meant to reward the victims. It's meant to penalize the sleazebag defendants for their lies and bad behavior. (The fact that almost all lawyers are sleazebags is not relevant.)
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Anonymous Coward, 14 Dec 2015 @ 2:57pm

Re: Re:
Um, no. Deregulation leads to the dominant companies just buying out the competition or engaging in anti-competitive practices to make the cost of entering the market too high. Regulatory capture is one example of this, but deregulation accomplishes the same thing. We need proper regulation that isn't captured along with courts and attorneys general that enforce consumer rights.
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Anonymous Coward, 14 Dec 2015 @ 3:00pm

Re: Re: AT&T is an evil company
Negative. We use data because we don't "do" music and movie streaming on our phones.

Besides, T-Mobile coverage sucks where we are at and at $45.00/phone it is much better for us than with AT&T proper but the same signal. On the flip side, Net10's customer service sucks so there's that. Good news is that we don't need our hands held regarding phones since we are Nexus ASOP Android users.

I can only imagine the slogfest Net10 iPhone users have.

:P
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Anonymous Coward, 14 Dec 2015 @ 3:03pm

Re: Re: Re:
deregulation =/= no regulation
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Adrian Lopez, 14 Dec 2015 @ 3:05pm

Binding arbitration means no appeals, which in turn means no binding precedent for new, untested laws. It seems the Supreme Court is perfectly happy to deny itself and lower courts the right to make precedent by reviewing problematic judgments.

Perhaps the time has come to set up a government agency whose job it is to sue corporations on behalf of consumers? Instead of suing the corporation, the class would petition this government agency which (should the claim agree with the letter of the law) would sue the corporation in its own name and, if it should win, distribute appropriate compensation to consumers.
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Jamie, 14 Dec 2015 @ 3:24pm

Choice of arbitrators?
Do these arbitration agreements specifically state that the company gets to choose the arbitrator, or simply that an arbitration process must be used?

If it's only that an arbitration process must be used, what's to stop the customer from choosing their own arbitrator? That would certainly sway the balance back to the customer's favour somewhat.
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Anonymous Coward, 14 Dec 2015 @ 3:32pm

gov't regulated arbitration
What we badly need is some sort of dispute resolution system that's halfway between the current system of private arbitration and the civil court system. If the arbitration industry fails to reform itself (and by all indications it won't) then hopefully governments can create some kind of alternative fast-track legal system devoid of all the usual bloat that encourages wars of attrition and scorched-earth legal tactics. Essentially, a system designed for quick and fair justice rather than filling the pockets of the lawyers. Surely there can be something that bridges the gap between the two current systems, one of unrestrained lawsuit abuse favoring litigants, and another of arbitrators favoring the corporate defendants that hire them.
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Anonymous Coward, 14 Dec 2015 @ 4:12pm

guess the Supreme Court is occupied by Conservative minded judges who are fine with businesses making plenty of profit while they get a share themselves and the people get well and truly shafted time after time! and they call this justice? what a friggin' joke!!
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tqk (profile), 14 Dec 2015 @ 4:38pm

Re:
Class action isn't meant to reward the victims. It's meant to penalize the sleazebag defendants ...

Karl did mention that (I got a dollar, and the lawyer got a yacht!). He also mentioned they're a lousy tool, but the best lousy tool we've got.

Read the article next time. You might learn something.
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crade (profile), 14 Dec 2015 @ 4:49pm

Re:
Yeah! Who needs laws! As long as you can be tricked you deserve to get scammed!
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Anonymous Coward, 14 Dec 2015 @ 5:17pm

Re: Re:
"He also mentioned they're a lousy tool, but the best lousy tool we've got."

Honestly, I would disagree with this statement. If everyone involved in a class action filed a local civil lawsuit in their own jurisdiction, the system would collapse. Imagine every DirecTV subscriber filing a local suit against them in the state county legal systems, there's no way they would be able to respond and the whole system would need reworking. This is the reason for Class Action suits in the first place, and I'm sure that many local governments would end up siding with individuals because of lack of response.
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Anonymous Coward, 14 Dec 2015 @ 6:01pm

Re: Re: Re:
The idea of having tens of thousands of people individually sue a single defendant simultaneously has proven to be a very effective strategy.

Such a strategy was how the Church of Scientology won it's tax-exempt status and recognition as a religion by the US government, by burying the IRS in so many lawsuits that the agency had little choice but to surrender.
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Concerned Citizen, 14 Dec 2015 @ 7:52pm

DISCLAIMER : This was several years ago. (tho I'm sure it has only gotten worse)

I used to work in a call center (I'm sorry) working for Qwest, who had a deal with DirecTV for bundling packages, making selling DirecTV one of our responsibilities (I'm REALLY sorry).

Before the hate flies in, no I did not enjoy my time as a telemarketer, no I would not go back to it if it was the only way of feeding myself, and no I never EVER successfully sold a DirecTV package (I don't know how my conscience would have survived). Honestly, I barely even TRIED, dispute pressure from management, because ~I~ didn't agree with DirecTV's terms surrounding early termination.

I got to hear horror stories from customers who called to cancel WITHIN AN HOUR OF THE TECH LEAVING, and being told they would be responsible for several hundred dollars worth of cancellation fees. I also failed a fair number of quality reviews for not pressing these customers harder on DirecTV.

(Yes, when you tell them you will hang up if they mention a product, and they don't mention the product, the sales rep has a good chance of getting in trouble, even if they successfully made a sale off of you.)

Initially, we only had to collect credit card information based on credit checks (which wound up being pretty much every time anyway), but then we were informed that we needed to collect credit card information in all cases, because DirecTV was implimenting a $20 'handling fee', which apparently was to cover the tech, who had to come to install the service anyway, bringing the hardware to the customer.

One of the campaign supervisors, during a 'pep talk' (it was never very peppy), informed us to address this credit card concern by informing customers that they could call DirecTV's loyalty department to contest the fee under threat of cancellation.

I asked 'Isn't the customer liable for over $300 of early termination fees the moment the tech leaves the property?'

His response?

"It's not our problem at that point.".

I had to go over his head to the floor supervisor to get this 'policy' corrected before new, impressionable agents (I was new, but thankfully not impressionable) seriously screwed over a bunch of people! This was also when I learned no... seriously... this is ACTUAL DirecTV policy. (The early termination fees, not his suggestion of directing new customers to DirecTV's loyalty department.)

I contacted DirecTV's loyalty department later, independently, to verify whether or not customers would be told to either 'Pay the $20, or the termination fees' and as informed that yes, customers who call in to Loyalty to cancel are told they are bound to these fees, regardless of how few minutes they have had the service.

I always thought I would be good at sales because I'm good at giving people what they want. I quickly learned sales is not about giving people what they want. It's about tricking people into accepting what they don't want. I now annoy sales agents to no end by picking apart terms, conditions and contracts.

I have made cell phone agents very uncomfortable by diving into their 'unlimited' plans and exposing (loudly, in the store) exactly what people are signing up for.

I also go out of my way to praise sales agents who take the time to actually address these things when I ask about them, without desperately trying to change the conversation. To their managers and supervisors.

As an unrelated note... I honestly think everyone who messes with, cusses out or lectures a telemarketer should be required to try BEING one for two months.

You think it's frustrating being called? Trying being the one getting your head chewed off for trying to do your damn job while the people in charge of motivating you constantly reinforce that you are not doing enough to MAKE angry people buy things.

Never in my life have I more wanted to hurt someone than when I hear demands for my personal home phone number, or mocking retorts to 'go find a real job'.

Had a contest with a teacher once to see who makes less money.

They were MUCH nicer after learning just how little I got paid for the abuse I suffered. Some campaigns even got away with paying less than minimum wage because they had a 'commission structure' that most agents were consistently JUST failing to meet, while being told 'We have the highest commission revenue potential of all the campaigns in the call center'.
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That One Guy (profile), 14 Dec 2015 @ 8:19pm

Re: Choice of arbitrators?
Do these arbitration agreements specifically state that the company gets to choose the arbitrator, or simply that an arbitration process must be used?

Don't know for sure offhand, but if I had to guess most arbitration clauses probably state that the company is the one that chooses.

If it's only that an arbitration process must be used, what's to stop the customer from choosing their own arbitrator? That would certainly sway the balance back to the customer's favour somewhat.

No, it wouldn't. The arbitrators are going to see you once, whereas they might be seeing a given company multiple times. Given the arbitrators aren't in it for the good of their hearts, but for money, they have a very real interest in being known for ruling for companies, because if they don't, then companies will just go elsewhere.
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Anonymous Coward, 14 Dec 2015 @ 9:21pm

Re:
The only people more annoying (perhaps even deserving of death) than telemarketers are debt collectors and private investigators. It needs to be made illegal for them to harrass the neighbors of the parents of a wanted deadbeat, but that's how far they're willing to go.
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Anonymous Coward, 14 Dec 2015 @ 9:44pm

Re: Lousy solutions
Refuse to or stop doing business with any company that uses binding arbitration.

Good luck finding a phone company, cell or otherwise, that doesn't have this in their contracts.

Forced arbitration should go the way of forced gag orders like the ones from Roca Labs - an attempted invasion of the rights of every single customer of the business should not be tolerated. If class actions are a problem, I'd rather see specific legislation targeting those problems. But making a two-tiered justice system where those businesses with enough leverage can simply opt out makes no sense.
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Concerned Citizen, 14 Dec 2015 @ 10:51pm

Re: Re:
I sure as hell hope you are never desperate for a job, because I sure got my fair share of death threats for trying to put food in my mouth.

I'd love to see what you'd choose to do if faced with inconveniencing people for a living, or starving to death.
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Anonymous Coward, 15 Dec 2015 @ 3:37am

The sitting court went rogue some time ago. Anyone doing business with corporate America obviously hasn't learned their lesson, yet.
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That Anonymous Coward (profile), 15 Dec 2015 @ 5:19am

Perhaps if those in the robes were less detached from reality and had to deal with any of the nightmare scenarios regular people have to face they might have different opinions. But then we let them stay in perfect little ideological bubbles unaffected by the concerns of mere mortals only rubbing shoulders with corporate americans who can afford to stand before them and explain how those little people are being uppity.
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nasch (profile), 15 Dec 2015 @ 8:23am

Re: Re: Re: Re:

Such a strategy was how the Church of Scientology won it's tax-exempt status and recognition as a religion by the US government, by burying the IRS in so many lawsuits that the agency had little choice but to surrender.

That might be effective, but it's not necessarily just. I would rather have the case decided on its merits, not because one side can't afford to defend itself against the lawsuits.
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nasch (profile), 15 Dec 2015 @ 8:25am

Re:
It seems the Supreme Court is perfectly happy to deny itself and lower courts the right to make precedent by reviewing problematic judgments.

The Supreme Court seems to be going out of its way to make its decisions as narrow and meaningless as possible, so maybe they would be happy to have fewer problematic cases to decide. They keep to keep the nice job without having to actually do difficult things.
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Anonymous Coward, 15 Dec 2015 @ 9:16am

Re: Slightly misleading
I think we'll have to agree to disagree on how "unforeseen" those consequences really were.
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tqk (profile), 15 Dec 2015 @ 10:12am

Re:
Perhaps if those in the robes were less detached from reality and had to deal with any of the nightmare scenarios regular people have to face they might have different opinions.

It makes you feel sympathetic towards Marie Antoinette. She too lived in a bubble, never seeing the outside of Versaille. So, when she heard the peasants were starving for lack of bread, it was perfectly sensible for her to suggest, "Let them eat cake." Just imagine that woman being forced to submit to the guillotine. It must have seemed a horrible travesty to her.
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Anonymous Coward, 15 Dec 2015 @ 11:50am

I wonder how much these judges sell their ruling for? a few million per ruling or is it a few hundred grand?
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Anonymous Coward, 15 Dec 2015 @ 1:08pm

Re: Re: AT&T is an evil company
All music and movie streaming, or SELECT SERVICES of music and movie streaming offering a fraction of the content people may well be least interested in seeing/hearing?
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Rekrul, 15 Dec 2015 @ 2:28pm

Re: Slightly misleading
Your elected representatives (or those of your great-grandparents, in this case) passed an awful law, with numerous unforeseen consequences, but it is not inherently Unconstitutional.

It is if it takes away your right to due process.
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Rekrul, 15 Dec 2015 @ 2:34pm

I was going to ask about impeaching the judges and replacing them with better choices, but then I realized that it's a lost cause. The corporations own this country and nothing we do, short of outright revolution is going to change that.

A free and democratic America was a nice idea while it lasted, but it's done now. Stick a fork in it.
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Wendy Cockcroft, 16 Dec 2015 @ 5:59am

Re: Re:
You've just explained capitalism as it was explained to me by a right-wing "free market" enthusiast. I think they mean "free-for-all" market in which you get screwed till you decide to do without.
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Wendy Cockcroft, 16 Dec 2015 @ 6:01am

Re: gov't regulated arbitration
Beware the corrupting influence of the profit motive.
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Wendy Cockcroft, 16 Dec 2015 @ 6:04am

Re:
That's not conservatism. Not really. If the judges we're thinking of actually believed in traditional values they'd have rejected this nonsense without a second thought since one of the most important traditional value is that of sane and sober stewardship in office.

This ruling is neither sane nor sober. It's a sellout.

So what do we call these judges, then? I'm thinking "Neoreactionary" might be a good fit given their pro-corporate authoritarian tendencies.
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Wendy Cockcroft, 16 Dec 2015 @ 6:09am

Re:
I may as well stop trying to convince people that violence is likely to bring about the opposite of the freedom you crave by ushering in an era of greater repression and surveillance to "protect the nation from terrorists." I've warned you often enough. /Cassandra

Seriously: if you can't build enough consensus via the democratic system to effect change, what do you think will happen if you go nuts with a gun at some public authority building or other? Have you got a plan for managing the aftermath if you should succeed?

Yeah, that's what I thought. Work within the democratic system to get enough people on side to build consensus. If they won't join you when you're all decent and law-abiding, they're not going to if you get all rowdy and violent.
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Rekrul, 16 Dec 2015 @ 12:00pm

Re: Re:
Work within the democratic system to get enough people on side to build consensus. If they won't join you when you're all decent and law-abiding, they're not going to if you get all rowdy and violent.

Except that the democratic system is an illusion. The people will never be allowed to have a say in truly important issues. Those in power pretend to listen to the little people and then they do whatever the hell they want, usually at the behest of those with money.

The system is rigged. It's like the chickens getting together and telling the fox that they don't want to be eaten. Even if all of them agree, it's not going to change anything.

If everyone in the country demanded that the government abolish the IRS, how likely do you think that is to happen?

Even if you could get enough people together peacefully demanding change, if those in power didn't like what they were asking for, they would label them a domestic terrorist group looking to overthrow the government.
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tqk (profile), 16 Dec 2015 @ 3:17pm

Free market capitalism.
You've just explained capitalism as it was explained to me by a right-wing "free market" enthusiast.

"Right-wing" (or "left-wing") is a meaningless phrase to me, however you could call me a "free market enthusiast" (I'm pretty much a "Randroid"). I've always believed if you act a la P. T. Barnum ("there's a sucker born every minute") you're very quickly going to run out of repeat customers, and previous customers are going to spread the word to your potential customers not to trust you. Barnum's strategy should buy you early bankruptcy, in a perfect world.

It's very frustrating to those like me who think this way that it no longer appears to work. It astonishes me that Walmart is still in business. They sell crap that after one use is fit only for recycling or a landfill, yet people keep shopping there anyway.

Adam Smith's "invisible hand" (free market forces) appears to have lost a wrist-wrestling match with the "mailed fist in a velvet glove" (gov't directed mixed market planned economy).
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tqk (profile), 16 Dec 2015 @ 3:58pm

Re: Re: gov't regulated arbitration
Beware the corrupting influence of the profit motive.

Oh yeah! It might make you want to make your customers even happier than they already are with you. You might be tempted to improve your products/services or shave down the cost of producing them so they want or can afford more of them or, gawd forbid, they might tell their friends that you do good work. Aiiiiieeee! You might even (Pthoooo!) get rich! Mein Gott!?!

Or, was there another corrupting influence that you were thinking of? The only other ones I can think of involve bribing politicians for preferential regulations and laws that lock out competition.

Or, can the simplistic, moldy old Marxist epithets which never made a lick of sense the first time some envious twit propounded them.
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tqk (profile), 16 Dec 2015 @ 4:07pm

Re: Re:
So what do we call these judges, then? I'm thinking "Neoreactionary" might be a good fit ...

We called them part of "The Establishment" (or "existing order", or even "The Man" :-) back in the '60s. Their job as they see it is to uphold the status quo. It's the social societal version of the "stasis field" from Sci-Fi.

Ignorant fools can't accept that the only constant is change.
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tqk (profile), 16 Dec 2015 @ 4:22pm

Re: Re:
Work within the democratic system to get enough people on side to build consensus. If they won't join you when you're all decent and law-abiding, they're not going to if you get all rowdy and violent.

There were a few British loyalists who were saying pretty much the same thing back in 1776. There were a lot of Jews in the 1930s who said the same thing about the Nazis.

I've been saying for years that the Jews should've been shivving every Nazi they could find or potting them with a sniper rifle, or fighting back like the Jews in Sobibor, instead of passively marching into the showers in Auschwitz et al, but too many still believe negotiation and patience is the only course open to the civilized.

I don't have a lot of nice things to say about Zionists, but at least they learned the folly of passivism in the face of murderous predators.
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The Wanderer (profile), 23 Jan 2016 @ 7:30am

Re: Re: Re: gov't regulated arbitration
The "corrupting influence of the profit motive" in this case manifests in the arbitration industry. The arbitrator might have the following line of reasoning:

* In the case before me, there are two parties: the company and the customer.

* The company will be involved in many arbitration cases in the future.

* If I decide in favor of the company, the company will be more likely to hire me again for those future arbitration cases.

* If I decide against the company, the company will be less likely to hire me again for those future arbitration cases.

* The customer will very likely never be involved in another arbitration case, no matter how I decide this case. Therefore, the customer is unlikely to hire me again, no matter how I decide this case.

* Therefore, if I decide against the company, I am likely to make less money in the future.

* Therefore, in order to make the most profit, I should decide in favor of the company - regardless of what the actual merits of the case may be.

This is an example of what is known as a "perverse incentive", where what is in the best interest of one of the parties to a transaction is in conflict with the design goals of the system which the transaction is a part.
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Anonymous Coward, 25 Jan 2016 @ 2:45pm

Re: Free market capitalism.
It never worked that way, you just chose to ignore real life. Grats on coming around.
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