License to Defect

Suppose the government makes an announcement saying that you, and only you, will from now on avoid prosecution for stealing. Awesome! You can now get anything that you want from any store whenever you want! You walk into the nearest McDonald’s, ready to go into the kitchen and grab as many burgers as you can fit in your hands.

Whoops, the McDonald’s Security guy refuses to let you in. Whoops, every store seems to be doing this? This sucks!

(Eventually you figure out a workaround by which you hire a guy to privately follow you around, having signed a contract saying that they beat you up if you steal from any store. Stores let you in if they see this guy following you around.)¹

You rue the day that the government gave you this extra option which strictly improves your life. If only you hadn’t been granted this license to defect!

Burgers to Blast Furnaces

Suppose the government, which is run primarily by people with blue hair, makes an announcement saying that crime is legal when committed by people with blue hair against people with red hair. There are protests by people with red hair, but not many – if people with red hair were able to sway government action like that, there’d already have been red-haired people in government. There are protests by people with blue hair, but not many – this license to defect is something that strictly gives them more options, and strictly benefits them, and only a few people with blue hair would go against their hair-colour-based interests to be nice to people with red hair.

An investor, with luscious locks of red hair, receives some promises from a blue-haired community that they’ll be able to establish a factory in a blue-haired municipality.

The investor starts building the factory, contracting with a red-haired construction company that they have close contact with and that they share a cultural background with. Halfway through construction, a blue-haired gang of people starts hitting the red-haired construction workers with sticks - including some of the people who promised to the red-haired community that the factory would be built, because blue-on-red crime is legal and so contract terms that bind blue-haired people’s actions against red-haired people are not enforced.

“What the dusk,” say the people with blue hair. “We’re allowed to do this! The government permits us to do this against people with red hair; people with red hair were not able to stop us; I’m a person with blue hair, so I mostly care about blue-haired people, and don’t care much about the welfare of red-haired people; I don’t consider harms to red-haired people to be very much of a harm to myself or my interests. How come we’re worse-off for this?”

And the red-haired investor says “I’m just personally deciding not to build the factory here any more. It’s not that I’m advocating for any change to the policy, just that, given the current policy, it’s not worth it for me to invest in factories here.”

The blue-haired people are pretty upset, but they don’t actually have the power to coerce the red-haired people into continuing with the factory any more. They looked into seizing the assets of red-haired people, but ran into issues such as many blue-hair-run banks being unwilling to do asset seizures (even though that’s entirely legal for them!) and many red-haired people’s assets - including the investor - being held in other jurisdictions with policies more friendly to red-haired people. For some reason.

They live their lives, absent the products of the factory. Blue-haired society functioned before the factory, and it continues to function; it’s just not as great as it could be. Perhaps, in time, a blue-haired investor contracts with a blue-haired construction company – and then the blue-haired people are without that capital, and without the labours of the blue-haired construction company.

They rue the day their blue-haired compatriots had that license to defect – if only the contract with the red-haired investor had been enforced! It’s not at all that they care about the red-haired people - their friends have blue hair, their kids have blue hair. It’s just - they don’t have a factory.

1. Now, if the government gives a lot of people a license to defect, then what happens is the store locks all of the vegan A5 wagyu steaks inside transparent boxes; whenever someone wants a vegan A5 wagyu steak they ask a member of staff to open a transparent box and give them the vegan steak inside. Alas, transparent boxes are expensive, and this whole process with staff is expensive, so they don’t do this if it’s just you.