Abstract
Some sharing economy firms have adopted a strategy of “regulatory entrepreneurship,” openly violating regulations with the aim of rendering them dead letters. This article argues that in a democracy, regulatory entrepreneurship is a presumptively unethical business strategy. In all but the most corrupt political environments, businesses that seek to change their regulatory environment should do so through the democratic political process, and they should do so without using illegal business practices to build a political constituency. To show this, the article defends a qualified moral obligation for businesspeople to obey the law even in societies that fall short of ideal democracy and that are rife with economic injustice. Owners and managers of successful businesses have strong moral reasons to obey laws concerning resource allocation. Such laws include not only property law, but also tax laws, environmental regulations, and other laws that regulate businesses in competitive markets. The moral reasons to obey such laws apply even to laws that business leaders think unfair or inefficient, provided that the laws in question have reasonable, good faith defenders.
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Notes
Though some make a distinction between duties and obligations, I do not. I shall use the words “duty” and “obligation” interchangeably.
A third way in which my account differs from many accounts is that I defend a subject matter dependent duty to obey the law, rather than a comprehensive or content-independent account. For argument that an ethical obligation to obey the law can be content-dependent, see Klosko (2011) and Marckwick (2003).
As Viehoff acknowledges, “many (perhaps all) existing democratic states fall short” of even a “quite minimal” standard of democratic procedure (2014, p. 342).
As Lyons (1977) points out, Nozick’s theory of natural property rights implies that much land in the United States should be taken from its present legal owners and returned to the Native American tribes from which it was stolen centuries ago. Thus, most current legal rights to land in the United States cannot be natural rights on Nozick’s account.
The owners of shares of stock in a firm have a parallel entitlement.
That property owners have a moral entitlement to compete on terms defined by law does not entail that they have or that they ought to have the power to enforce this entitlement via private lawsuits against competitors who violate public law.
People may also be justified in violating just laws to prevent loss of life or limb. The lack of an exception for cases of necessity may not constitute an injustice if lawmakers could not have anticipated the need for an exception. I do not address such cases in the above discussion, as they necessarily involve extraordinary circumstances, whereas regulatory entrepreneurship challenges laws and regulations in some of their ordinary applications.
For example, in a society whose resource allocation law leaves some people involuntarily dependent on charity to meet their basic needs, it is reasonable to believe that the resource allocation system contains an injustice. Dependence on charity makes people unfree, since it makes people’s continued life (and thus all their activities) subject to the discretionary choices of those who can give or withhold charity. This is the Kantian argument for public support of the poor. For recent discussion and development of the argument, see Gilabert (2010); Essert (2016); Ripstein (2009, pp. 25–26, 267–286); Weinrib (2003).
Thus, a different and more complex argument would be needed to settle the question whether tiny sole proprietorships are ethically required to follow laws their owners regard as unfair. For example, if hair-braiders are legally required to obtain cosmetology licenses, and they think this requirement unfairly burdensome, are they ethically required to get a license before going into practice?
There is disagreement about what counts as civil disobedience, e.g. about whether covert lawbreaking can count as civil disobedience and about whether lawbreakers must accept punishment to count as civilly disobedient. It is generally agreed, however, that civil disobedience involves an attempt to change law or policy through persuasion (Delmas, 2016).
Giving everyone a meaningful say requires more than giving everyone an equal vote. It also requires ensuring that the grievance of minority groups, including political groups, get a fair public hearing, either through a formal deliberative mechanism (such as judicial review) or through the press and public discussion. When laws deliberately target a minority group for grossly unfair treatment, members of this group are often justified in believing that their grievances will not get a fair public hearing. It is thus appropriate to disobey these laws hoping either to bring about legislative change or to render them dead letters.
The correlation was with increased purchase prices, not long-term rents. Franco and Santos suggest that the lack of correlation between increased Airbnb listings and increased rents may be a result of the overlap between the introduction of Airbnb and the liberalization of Portugal’s rent control laws.
I do not mean to imply here that the existence of a legal prohibition entails the existence of a penalty.
Reasonable people might also think that Uber and Lyft should be regulated differently from existing taxi companies, but that Uber and Lyft should not get a “free pass” while new regulations are being crafted. For discussion of the range of possible regulatory responses to “disruptive” new businesses, see Biber et al., (2017, 1603–1607).
For their helpful feedback on previous drafts, I am grateful to David Dick, Thomas Donaldson, R. Edward Freeman, Nien-hê Hsieh, Tobey Scharding, Seana Valentine Shiffrin, Alan Strudler, all the members of the Wharton LGST junior faculty workshop, and audiences at annual meetings of the Association for Social and Political Philosophy, the Legal Philosophy Workshop, the Society for Applied Philosophy, and the Society for Business Ethics.
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Hughes, R.C. Regulatory Entrepreneurship, Fair Competition, and Obeying the Law. J Bus Ethics 181, 249–261 (2022). https://doi.org/10.1007/s10551-021-04932-y
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DOI: https://doi.org/10.1007/s10551-021-04932-y