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Advancing Austrian Economics, Liberty, and Peace

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17. BRIBERY

AS IN THE CASE of blackmail, bribery has received a uniformly bad press, and it is generally assumed that bribery should be outlawed. But is this necessarily true? Let us examine a typical bribe contract. Suppose that Black wants to sell materials to the XYZ Company. In order to gain the sale, he pays a bribe to Green, the purchasing agent of the company. It is difficult to see what Black has done which libertarian law should consider as illegal. In fact, all he has done is to lower the price charged to the XYZ Company by paying a rebate to Green. From Black’s point of view, he would have been just as happy to charge a lower price directly, though presumably he did not do so because the XYZ executives would still not have purchased the materials from him. But the inner workings of the XYZ Company should scarcely be Black’s responsibility. As far as he is concerned, he simply lowered his price to the Company, and thereby gained the contract.

     The illicit action here is, instead, solely the behavior of Green, the taker of the bribe. For Green’s employment contract with his employers implicitly requires him to purchase materials to the best of his ability in the interests of his company. Instead, he violated his contract with the XYZ Company by not performing as their proper agent: for because of the bribe he either bought from a firm which he would not have dealt with otherwise, or he paid a higher price than he need have by the amount of his rebate. In either case, Green violated his contract and invaded the property rights of his employers.

     In the case of bribes, therefore, there is nothing illegitimate about the briber, but there is much that is illegitimate about the bribee, the taker of the bribe. Legally, there should be a property right to pay a bribe, but not to take one. It is only the taker of a bribe who should be prosecuted. In contrast, liberals tend to hold the bribe-giver as somehow more reprehensible, as in some way “corrupting” the taker. In that way they deny the free will and the responsibility of each individual for his own actions.

     Let us now use our theory to analyze the problem of payola, which repeatedly arises on radio programs that play popular records. In a typical payola scandal, a record company bribes a disc jockey to play Record A. Presumably, the disc jockey would either not have played the record at all or would have played Record A fewer times; therefore, Record A is being played at the expense of Records B, C, and D which would have been played more frequently if the disc jockey had evaluated the records purely on the basis of his own and/or the public’s taste. Surely, in a moral sense, the public is being betrayed in its trust in the disc jockey’s sincerity. That trust turns out to have been a foolish one. But the public has no property rights in the radio program, and so they have no legal complaint in the matter. They received the program without cost. The other record companies, the producers of Records B, C, and D, were also injured since their products were not played as frequently, but they too, have no property rights in the program, and they have no right to tell the disc jockey what to play.

     Was anyone’s property rights aggressed against by the disc jockey’s taking of a bribe? Yes, for as in the case of the bribed purchasing agent, the disc jockey violated his contractual obligation to his employer—whether it be the station owner or the sponsor of the program—to play those records which in his view will most suit the public. Hence, the disc jockey violated the property of the station owner or sponsor. Once again, it is the disc jockey who accepts payola who has done something criminal and deserves to be prosecuted, but not the record company who paid the bribe.

     Furthermore, if the record company had bribed the employer directly—whether the station owner or the sponsor—then there would have been no violation of anyone’s property right and therefore properly no question of illegality. Of course, the public could easily feel cheated if the truth came out, and would then be likely to change their listening custom to another station or sponsor.

     What about the case of plugola, where one sponsor pays for the program, and another company pays the producer of the program to plug its own product? Again, the property right being violated is that of the sponsor, who pays for the time and is entitled therefore to have sole advertising rights on the program. The violator of his property is not the maverick company that pays the bribe, but the producer who violates his contract with the sponsor by accepting it.

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