After having already lost a great deal of money, (by virtue of an obligor’s default on contract) you’re suggesting that it would be profitable to expend even more money to wage a private war against the other party? Cuckoo. Violence as a means of “dispute resolution” is really only profitable when the costs can be distributed largely among parties which have no claim to the profits.
I do not mean to suggest that all conflicts will be resolved peacefully, only that the incentive for violence as a means to resolution is severely diminished.
The simplest example is party A lends money to party B to build a house with the house as collateral. Party B refuses to pay but wants to keep the house. Per the contract Party A sends his enforcers to evict Party B. This isn’t that expensive as oppose to say Party A losing $100,000. party B will be hard pressed to find much support for his apparent theft. So enforcement in this case is not likely to be very expensive. In some cases the costs of enforcement outweighs the benefit. This happens all the time in small disputes where the dollar is so small it is easier for people to write off the loss. Again, my point is that to universally rule out any particular option in a free society is pointless. Why shouldn’t a free market have more than one way of dealing with contracts, including enforcement. What principle is violated by having an enforceable contract?
I’m not sure what you mean by “entities”… Unsuspecting third parties would quickly find themselves in financial distress (i.e., without doing due-diligence)
There is a strong disincentive, in a free market, towards anonymous transctions, because (as you note) the risk is generally higher. Insofar as anonymous transactions occur, they will probably command a premium. It’s more difficult, for instance, for a brand new eBayer to sell something for top-dollar compared to an established seller.
I notice that social ostracism works quite well for enforcing compliance with norms in the orthodox Jewish community. If I do something uncalled for in New York, and move to the Jewish community in Denver, I’ll hear about it there.
So why is it a violation of some principle to have contracts that are enforced? I think that I have already stated that the options you mentioned would most likely be available and many others we haven’t even discussed. Your arguements imply that enforceable contracts will not happen or that they are a violation of some unstated principle.
What you have here is a condition where “ownership” of the house is in question. Perhaps a free market doesn’t tolerate this sort of arrangement? I haven’t given it too much thought, but it seems to me that in your example, like the present, when you buy a house on loan, you’re not actually the owner of the house; the lender is. So,the question is, who owns the house? You can easily solve the problem by maintaining ownership of the house until and unless a predetermined sum is paid.
There are ways around this, I believe, that don’t involve the outright use of force, only the exercise of ownership rights. A person who is publicly accused of such theft, should find it very difficult to interact with other people, assuming their protection/insurance agencies frown (severely) on dealing with people who refuse to submit to judgments or to lawfully contest accusations. In this sense, it’s possible to besiege the thief, in a figurative (or, literal) sense. He can’t leave, because when he’s on someone else’s property, that person or their agent can certainly apprehend him. He will have a hard time buying things because he’s a known liability. Service providers might, in sympathy and for posteriority’s sake, shut off his utilities, etc…
I have a flight to catch, shortly. Don’t dismiss brevity of my response with unwillingness to continue dialogue.
The underlying question is why am I not allowed to have a contract that has an enforcement clause? As far as the ownership question well that is the prupose of the contract regarding the house, it’s the enforcement that is a problem from your point of view.
Not everyone is concerned with ostracism. Imagine the whole world is a free society, do you think a person who has a bad reputation in one place can’t simply go somewhere else with a new identity and start again or if he makes enough money he lives like a king off his scam. Plenty of people will associate with him just because he has money irregardless of what his reputation might be.
This is a lot more complicated than me sending five guys over to throw him out of the house. So why wouldn’t people adopt the more economical solution?
You can have a contract that says I’m your slave. That doesn’t make it tolerable. One of the risks inherent in doing business is default risk, and it can certainly be insured against especially in tandem with some other mechanisms, like ostracism, blacklisting, etc. If the party in question has debtors, himself, the injured party can certainly subrogate the offendors claims to these receipts. If he’s truly as black-and-white guilty as your argument presumes, his debtors shouldn’t have any problem diverting their payments to the subrogor, after all, why continue paying money to a known criminal? If the offendor then challenges this subrogation, well, he has to either initiate the violence, himself, (at which point its clearly appropriate to resist with force) or he can take it back to the court that initially ruled against him where he will likely lose.
They are, when it works. Ever hear of Law Merchant. Quite effective in dealing with scofflaws, until it was co-opted by the Crown.
Asked, and answered. Re-read the thread.
if he makes enough money. He’d need to scam an awful lot of people, all at once, for an awful lot of money. Moreover, it’s likely that interactions with “outlaw” status would be to an extent, prohibited by whatever agencies you’re using to protect your own assets.
It becomes far less economical the second he decides to fight back. a BAR is a very effective weapon. If he’s cunning enough to con a lot of people in this manner, he’s probably wise enough to think about the repercussions of his actions, and take measures to protect himself from enforcement.
Just try specifically addressing the question. Are contracts that allow enforcement clauses allowed or do they violate some prinicple that you are trying to articulate.
If your arguement is solely that you think other options will be more economical then the market can decide. I am not trying to guess what the optimal form of contract is just if you think that enforcement of contracts is wrong.