In the past few days, quite a few people asked me to write something about the case of Martin Shkreli, the hedge fund manager who acquired a pharmaceutical company and promptly raised the prices of various lifesaving drugs (which no competitor made) by four to five thousand percent. While there's a lot of interest in the economics of the situation (would a single-payer health care system prevent this?), I don't actually know enough about health care economics to have anything very interesting to say about that. But there's something else about this that I found interesting.
The large majority of people reacted to Shkreli's actions with profound revulsion. (Even before he decided to up the ante by answering a reporter's question about why he did this with "You're a moron.") There was a general sense that there oughta be a law,
and many (I suspect) feel that the fact that there isn't, actually, a law about this points to a fundamental failure in our society.
The hard part about this is figuring out what that law ought to be.
The sense of revulsion is clearly not random. Shkreli's decision to raise prices (since reversed) would have netted him a handsome profit, at the expense of the lives of some patients who could no longer afford it, the health of other patients who would not take enough medicine, and the financial ruin of yet others who would be forced to pay hundreds of thousands of dollars in a year, or as much as they could before their finances gave out completely. It was "conduct that unjustifiably and inexcusably inflicts or threatens substantial harm to individual or public interests."
That last sentence is one that I've always found very interesting. It comes from the Model Penal Code,
a 1962 attempt by a collaboration of jurists around the United States to write a reference standard for what criminal law should be. (No state uses it verbatim, but most states have since based their criminal codes on it) That sentence is an attempt to answer the question of "what is 'crime,' anyway?:" that is, what are the things that there oughta be a law against?
Most of the rest of the MPC is trying to put meat on that one sentence: what is justified? (It answers by starting from the concept of "necessity," and ideas such as self-defense and so on follow from that) What is excusable? (That is, can the person be held responsible for the act?) It's a fascinating discussion, but the key point in this is that the MPC's authors were attempting to capture a very fundamental question about what types of behavior society ought to defend itself against.
I think that most readers would agree that Shkreli's behavior very much fits within the bounds of that concept – the general notion of "what ought to be a crime." However, there's a second layer to making something a crime, which in this case is the hard part.
The problem is that law in general, and criminal law in particular, is absolutely terrible at subtlety. It is possessed of big hammers and bigger hammers, and even a criminal investigation
is a significant harm to someone. (Although our legal system works rather hard to pretend that it isn't, which is an issue for another day) And because we attempt to be "a nation of laws, not judges," we don't want laws (especially criminal laws) which are vague in their definition, and up to the whims of individual judges to interpret. There are very good reasons for that, of course: if law is up to judges, then the law becomes hard to predict, so everyone shies away from being even close to a gray area; it becomes subject to the personalities of judges, so knowing them becomes more important than knowing the law, and thus creates a situation rife for two tiers of justice.
So for a law to be useful, it needs to delineate a fairly clear category of conduct which is against the law, and which can be determined by the procedures of criminal investigation and trial to have happened or not to have happened.
And for this reason, it's fundamentally impossible, and even undesirable, for "what is legal" and "what is ethical" to coincide. The reason is that ethics are always situational: (sorry, Kant) that is, they depend on the totality of the circumstances surrounding the event. To take a simple example, if you say that "killing people is wrong," you're certain to be asked "well, what if someone is coming at you with an axe?," or "well, what if someone is coming at your family with an axe?" There are plenty of possible answers to this question, but each of them highlights that the abstract statement about killing must always be qualified with the possibility of situational modifiers. Laws, on the other hand, need to be specified clearly and crisply, so that they can be enforced, and their boundaries cannot pre-specify every possible situation.
As a result, we expect that there should be things which are both legal and ethical (say, giving people cookies) and things which are both illegal and unethical (say, hacking strangers to death with an axe). There should also be things which, while ethical, are illegal, and for good reason. (My favorite example of this is "killing Nazis," but I recognize that many people will argue the ethics of this with me. However, ethical or not, there's an excellent reason that it isn't legal for ordinary citizens to go around shooting people in the streets, which is that this would lead to utter chaos as everyone decided that they had a good reason to shoot someone different. The meta-purpose of having civil order outweighs the individual ethical value of killing some individual malefactor) And likewise, there are things which will be unethical, but still legal.
Sharp business practices will inevitably fall into this category, because it's impossible to enumerate ahead of time all of the ways in which people will attempt to cheat or rob one another. No matter where your laws are, so long as business is possible, someone
will find a way to do something malicious. (And this is hardly specific to business; even if you ban that outright, extreme Bolshevik style, people will misuse one another in plenty of other ways)
I should note that this fourfold division is simply for the case where the law attempts to mimic justice as closely as possible; it's not even counting the fact that law is by no means constrained to do that, and can just as easily be a tool of injustice as of justice. (Its history is quite full of that)
Justice as an aim of law is a nontrivial statement: it implies that the purpose of having a rule of law, beyond the establishment of predictable civil order and predictable consequences for action, is to legitimize and stabilize the state monopoly on force by having the law act as a fair arbiter of disputes, so that people will be willing to accede to its decisions rather than take matters into their own hands. This is far from a universal concept: when those in power are secure enough in their power, they do not necessarily need any legitimization of their monopoly on force, and so law becomes simply an instrument of civil order, which includes the maintenance of their power. And conversely, we often see cases where this power is not universal but the law nonetheless fails at those aims, and indeed in those cases the result is a collapse of the state monopoly on force. It's no coincidence that criminal gangs, run by powerful warlords, tend to be powerful precisely in the places where people have good reason not to turn to the police for help.
But returning to the ideal case, where the law attempts to embody justice as closely as it can while still being equally predictable by all, we see that there will always be differences between the two concepts. And I strongly suspect that Shkreli's conduct is in one of those areas where the difference is most significant and will always be hardest to minimize.
The challenge would be to draft a law against what Shkreli did which doesn't either rely on knowledge of his mental state ("in order to make money at people's expense" – it seems exceptionally likely to all concerned that this is why he did it, but how would you go about defining that in a way that could be proven in a court?) or also bar practices which are rather important. (e.g., we probably don't want to say that it's illegal to have any business relating to a lifesaving good, or that any business which touches on such a thing is required to have its prices set by popular vote, because then we will have a sudden and significant lack of such businesses)
I haven't thought through the particulars of whether this case could be legislated against in depth, but I suspect most strongly that even if it could, a Shkreli2.0 would promptly show up and find some way around that, as well. The fact is that it is not possible for criminal law to defend against all ills, and we shouldn't expect it to.
So what should be done in such a case? Well, I'm tempted to suggest that an appropriate response would have been for him to get a good, swift kick in the nuts – another one of those actions which likely falls under "ethical, but illegal for good reason." (Although this may also raise the question of the category of "... but worth it anyway")
What did end up happening, a public outcry which forced him to reverse his decision, is sort of a model of what you would like to happen in general: because while the law is constrained to be very black-and-white, social pressure is not.
However, this is far from a reliable mechanism. First, it's not always effective: I'm still not certain why he decided to fold to public pressure in this case, as he doesn't seem overly concerned with being considered harmful. Second, it's often misaimed: how often does public pressure go against things which are simply unpopular? We should remember that one of the main reasons we have a Constitution and a judicial branch (and a rule of laws, rather than judges) is to try to prevent the rule of the majority from becoming the oppression of the minority – and even with all these mechanisms, our record on that is spotty to say the least. Essentially, a trust in social mechanisms alone is trust in a system which is as dangerous as the law itself; more flexible, but also far more unpredictable.
The only real answer, I think, is defense in depth: a combination of laws and social pressures which regulate one another, each understanding that the other will frequently fail, and each responsible for holding the other in check when they do.
The system worked in this case, as it fails in many others. It is nowhere near perfect. But it's at least a start.
Those who wish to read more about the Model Penal Code may find a good place to start in Markus Dubber's Criminal Law: Model Penal Code,
) one-third of which is the MPC itself, and the rest of which is a discussion of the whats and whys of the MPC, and a study of its reasoning. It's an invaluable tool in helping to understand the ideas underlying many theories of law and justice.
Those who like the "there are four kinds of..." approach to things in general may find a good place to continue in Pirkei Avot,
a chapter of the Mishnah which consists of discussions of wisdom and ethics, and which heavily uses this style. It's available both online and in printed form at many places (e.g. http://www.chabad.org/library/article_cdo/aid/680274/jewish/Ethics-of-the-Fathers-Pirkei-Avot.htm
), and there's an excellent introduction to it – really, a discussion of the underlying concepts of ethics and why we have them – by the Rambam. (https://books.google.com/books?id=xnW-moSXSrgC