Taboo Trades
Taboo Trades
Getting Away with Taboo Trades with Gabriel Rossman, Pt. 2
Welcome to part 2 of my interview with Gabriel Rossman, Associate Professor of Sociology at UCLA, and co-host, UVA Law 3L Autumn Adams-Jack. We continue our discussion of sex, drugs, and Islamic finance, among other taboo trades.
It’s also our final episode of season 2. Please listen to the end of the episode for a special goodbye from America’s favorite law students. Thank you to Gabriel for helping us wrap up this season with a great episode. And thanks to all of you for listening.
And so you could see a pattern very much like we've seen with, say, marijuana, where we saw an increasing number of people who'd smoked weed. We saw kind of the ruse of medical marijuana where they justified as like, oh, you have all these leukemia patients, but then you end up having people going up to a doctor on Venice Beach with a stethoscope and rollerblades saying, oh, doctor, I have back pain. He's like, you know what's perfect for that? Weed.
SPEAKER_10:Hey, hey, everybody. Welcome to the Taboo Trades podcast, a show about stuff we aren't supposed to sell, but do anyway. I'm your host, Kim Kravick. Welcome to part two of my interview with Gabriel Rossman, Associate Professor of Sociology at UCLA. In this episode, we continue our discussion of obfuscating taboo trades, including sex, drugs, and Islamic finance. It's also our final episode of season two. Listen to the end for a special goodbye from America's favorite law students. Thank you to Gabriel for helping us wrap up this season with a great episode. And thanks to all of you for listening. repugnant over time. So I'm going to start with Talia. Talia?
SPEAKER_05:Sure. Thank you. I'm Talia. I'm a 3L at UVA. And my question is about something that you mentioned briefly a little earlier. So there are certain bundled trades or transformed trades that are considered repugnant in and of themselves. You mentioned sugar daddies and escorts. But generally, these trades are also much less repugnant and they're more, I guess, pure form, and in this case would be prostitution. What generally happens to these types of transactions after they have already been bundled? So do they continue to evolve? Do they continue to obfuscate? Do they stay as they are? Or in time, do they become legitimate? I can see sugar daddies or escorts with social media eventually getting on that path of becoming more legitimate and less repugnant, but Is this a trend for all types of transactions that are bundled or is it just with this one?
SPEAKER_08:I'm Caitlin Stallings. I'm a 3L. It's very nice to meet you, Gabriel. So you detailed the four ways that obfuscation can work. And I was wondering, is it because of obfuscation that these methods and these activities sort of remain taboo? What exposing these methods for what they are and how often they occur? um, lead to more widespread recognition that these transactions are not so taboo and really happening all the time. Um, and therefore would that lead to maybe them being more permissible and maybe just regulated?
SPEAKER_03:Yeah. And I see why you put the questions together, right? Cause you're both basically asking what's the long run moral trajectory, um, based on if it's obfuscated or not. And I'm afraid I'm not going to be able to give you a, you know, if X, then Y type answer, because I think a lot of this kind of depends on the agency of the audience or of the culture and in particular of the accusers. So one pattern could be something becomes obfuscated, It's practices obfuscated. People come to realize it's no big deal. Maybe I've done it. Maybe you've done it. And you think like, well, am I really going to be a hypocrite about this given that I've done it? And so Maybe we should just do it openly. And so you could see a pattern very much like we've seen with say marijuana, where, you know, we saw an increasing number of people who'd smoked weed. We saw kind of the ruse of medical marijuana where they justified as like, oh, you have all these leukemia patients, but then you end up having people going up to a doctor on Venice beach with a stethoscope and rollerblades saying, oh, doctor, I have back pain. He's like, you know, what's perfect for that weed. You know, and then eventually we just say like, let's just cut the farce and just openly legalize weed. Right. So that's kind of the pattern one pattern you could see where something and you know saying something is you can smoke a recreational drug but only if you have a flimsy pretext of a medical need for it that that's that's not like a structural obfuscation but it is a form of obfuscation more broadly and that's a case where the obfuscated form becomes ubiquitous And that leads to greater tolerance. And now, I don't know about in Virginia, but in Los Angeles, every 10th billboard is advertising weed delivery. Virginia
SPEAKER_10:still has a gift system, as Madison pointed out in her question. I don't know why. In
SPEAKER_03:20 years, maybe you'll have the California system where there's an enormous amount of capital in trying to basically create weed as a service. I get all these ads, and it's not like I signed up for some mailing list. I've never smoked weed in my life. I imagine they just send it to everybody. But you have you know there's this huge attempt to kind of create corporate weed in california and i imagine also in colorado and maybe in 20 years in virginia um but um so that could be one trajectory right something becomes obfuscated people can become familiar with it they think like yeah it's a big deal and uh and then they just say like you know what what the hell let's just do it openly which more or less what happened with marijuana in California and Colorado. I'm
SPEAKER_10:glad you brought up that example. For some reason, when I was trying to think of examples of once the obfuscation became known, the thing became less taboo. And I, I actually couldn't think of it. I was only remembering examples where we sort of went back to either the no trade rule or a different obfuscation. So I'm glad you actually brought up marijuana. That's a good example.
SPEAKER_03:Well, and by the way, if you're thinking of guests for next year, next season, however you want to think of it, Greta Sue, HSU at UC Davis Business School, or maybe she moved, but anyway, she was at Davis for a long time, is doing really interesting work on the commercialization of weed. Oh, great. how the kind of old school medicalized versions distinguish themselves from the new, more openly commercial, more openly recreational, you know, market entrance with further deregulation. Anyway, but then the other pattern, as you just alluded to, is what, you know, Goffman has this line in stigma that good accounts get a bad name, right? So that basically if you have, if you have a stock excuse or a stock pretext, or in this case, a stock obfuscation, and it becomes highly routinized to the point where everybody realizes that this is just a new name for the taboo transaction, then this is very vulnerable to some moral entrepreneur coming in and saying, hey, this thing you're all doing, it's the same thing as something that we all agree in principle is wrong. And that's effectively what happened with Islamic finance, where for centuries and centuries and centuries, Islamic scholars said, well, if I sell you a chair, then you buy back the chair, then you pay me back next year. That's not the same thing as fixed interest on the principal. And it just became routine to the point where you could go to a bank and you could say, I'd like to borrow some money. And they're like, well, would you like to borrow some money or would you like to have a non-riba way to borrow the money. And then, you know, in the 1950s, by the way, largely for, at least in Timur Kuran's account, largely for political reasons having to do with like dependency theory and international relations, that sort of thing. You know, fundamentalists came along and said, who are you kidding? This is obviously fixed rates on the principle. And we all know fixed rates on the principle is taboo. So we're going to say that this workaround for this is taboo. And you've actually seen that gain certain amount of traction in countries like Pakistan, not so much like Iran. Shia tends to be more forgiving of obfuscation in various ways. But in, you know, with kind of the rise of fundamentalist Islam, you've seen this pushback against what are very traditional forms of Islamic jurisprudence that allow these kind of stock answers. And then I also think, you know, in the theory piece that you guys read, you know, I argue that one way that if you have a kind of a loosely enforced taboo, because you allow routine violations of the taboo, or at least routine evasions of the taboo via obfuscation, that allows people to affirm the taboo in principle, which means it's still sitting there on the shelf, ready for somebody to point to it and say, Hey, this thing that we all theoretically agree to it, let's do it for real this time. And, you know, that's effectively what happened at the difference between, um, the interest taboo in, uh, Christianity versus Islam, where Christianity never really developed, uh, Christianity developed pawning right there. And we know that like monasteries would have pawn shops in the middle ages, that sort of thing. But with the exception of pawning, um, Christianity didn't really have a lot of workarounds for the interest tab. Well, they had pawning and they had brokerage because pawning in the form of monasteries would run pawn shops and brokerage in the form that very often you'd have market minorities, especially Jews, you know, operating as money lenders. But, you know, I think it's fair to say that in the Middle Ages, Christianity had a more overt interest taboo. than islam where islam had a theoretical taboo on reba but it also had very well institutionalized uh obfuscations to get around the interest taboo and then um you know what happened is in the protestant reformation people said let's just get rid of this you know they basically you know and both the protestants and the catholics did it and now plenty of people who don't think of themselves as bad christians have credit cards um you know whereas you In Islam, they had this workaround and, you know, it's still sitting there on the shelf in theory saying you can't do this. And then, you know, in the 50s, people were able to come and point to it and say, let's do it for real this time. So I just basically think it's very contingent. And in part, it depends on what people want to happen. And so I think the moral entrepreneurs and the process of accusation is key in all this.
SPEAKER_10:This is a good place actually for the pawning questions of which there were a couple. So I'm going to start with Alex on that.
SPEAKER_00:Yeah, I think pawning to me seems different from the other three examples of obfuscation. And maybe it's just, I mean, pawning, it wasn't in the paper that we read, but it was in the book manuscript. And the examples that are in the manuscript are the, was it the migration debt? and sex trafficking, that kind of thing. And it seemed to me like that was different because for the other examples, you have two people who want the same thing and they engage in an obfuscated transaction for a mutually beneficial exchange, which is sort of what we think of as a market exchange. And then for pawning, it seemed like we had people who were sort of getting baited and switched or defrauded into something that they weren't agreeing to in the first place and wouldn't have. And in that way, the obfuscation doesn't really work because you're turning a repugnant transaction into an even more repugnant transaction. And it's not a mutually beneficial exchange. So how do those examples, at least, of pawning fit in with the other stuff?
SPEAKER_03:Yeah, so I think you're correctly pointing out that I chose a bad example. No, no. And a way that I could salvage that example is that not necessarily in the case of the Valenzuela gang, but it may be in other cases, it could be the case that kind of everybody knows that you're being promised a job at the jewelry shop, but really you're going to be forced to work as a prostitute. And, and I don't think that's necessarily true in this particular case, but I think it's very clearly the case in the, unauthorized or asylum seeking Nigerian migration to Italy, where there's kind of a very strong understanding that you're going to be coerced to do some type of work once you get there. And even if they tell you this, so I think it is fair to treat that as pawning where the migrant is kind of willingly, you know, taking on a migration debt to the migration broker or the migration facilitator. with the understanding that they're probably going to have their contracts sold to a pimp.
SPEAKER_10:I see. So in this example, the migrant herself probably understands the terms of the exchange. Okay.
SPEAKER_03:Yeah. And that's also the case in like rural urban migration in Thailand, where if a Thai peasant goes into debt to the village money lender and stakes their daughter as collateral, they know perfectly well what's going to happen. That's... I mean, it's not necessarily overt, but it's kind of well understood that this is the way the transaction works. But I can give you better examples that are much more clear, and maybe I should have made these more front and center. So my favorite one is, you remember a few years ago, the Cathedral of Notre Dame burned down in Paris. And one of the iconic images from that is that the chaplain of the Parisian fire department ran into the burning building to retrieve the reliquary with the crown of thorns. And those of you who didn't attend Easter services and aren't very familiar with your Bible, I'll just give you a spoiler that Jesus was not crucified in Paris. He was crucified in Jerusalem. And so the question is, how did the crown of thorns end up in Paris? And And you have to start with the mother of Constantine, Helena, went on a big pilgrimage slash shopping spree to the Holy Land after the conversion of Constantine and saying, ooh, you know, people and people came out of the woodwork saying, like, I got the true cross. I got the crown of thorns. I got this. I got that. And they sold it to her. And then she took all that stuff to Constantinople. And it was in Constantinople for a very long time. And. But that still leads the question. So that tells us how it got from Jerusalem to Constantinople. But then how did it get from Constantinople to Paris? And the answer is that the Latin emperors of the Byzantine Empire, right, because at a certain point, Venice basically conquered the Byzantine Empire and put in puppet kings. The Latin emperors, which, by the way, has its own pawning story. Everything about the Fourth Crusade and the history that comes thereafter involves pawning. Fourth Crusade. And the Fourth Crusade is the one where a bunch of crusaders thought they were going to go attack Egypt in order to establish a beachhead for the reconquest of the Holy Land by Christians. But then they got so badly into debt to Venice that Venice said, yeah, we're not really interested in conquering Egypt. We're much more interested in sacking Croatia and conquering Constantinople. which was not what the crusaders originally had in mind and was not what the Pope wanted them to do. But what were they going to do? They owed all this debt. They chartered all these boats and they couldn't afford to pay for the boats. So obviously they had to sack Croatia. So that's one example, right? Where these crusaders didn't intend to become a mercenary army for the Venetian imperial ambitions, right? But they were in debt, and so they had no choice. They got to do it. And then also, and it's not like the Venetians deceived them. If they could come up with the money, the Venetians would have taken them to Egypt. But they just weren't good for the money, and so they implicitly had to become a mercenary army. And then fast forward 100 years or whatever, and the Byzantines had lost most of their Anatolian tax base to the Turks. And they wanted to reconquer Anatolia, but because they'd already lost their Anatolian tax base, they couldn't finance it out of tax revenue. So they go to the Venetians and say, well, you give us some money so that we can reconquer Anatolia. And once we conquer Anatolia, we'll have our tax base back and we can pay off the debt. And the Venetians are like, yeah, we're not really sure you're going to win this war. And the Byzantines are like, well, what if we give you some collateral? And the Venetians are like, well, it's got to be something pretty good. How about the crown of thorns? And so, you know, the crown of thorns is not something you would sell, right? This is, you know, from the medieval mentality, this is the crown that was, you know, this is an object directly related to the single most important event in history and a sacred object. You're not going to just sell that, but you might use it as collateral. And then you lose your, you lose the next word of the Turks. You can't pay back the loan. And then the Venetians are, you know, put it up on, you know, late medieval eBay and Paris, you know, the French monarchy buys it, you know? So the way that the crown of thorns ended up in Paris to be rescued by the Parisian fire chaplain, that's a story about pawning. And it's one where, and I don't think there was any fraud involved there. you know, there was no deception involved there. That's just a case of, you know, the first, the fourth crusade was very desperate for money to charter. And then their desperation for money led them to take on debts to the Venetians who, you know, made them do things that in their own morality, they thought was really bad. In fact, the Pope excommunicated them the fourth crusade at one point. And then, you know, a little bit later, this puppet King that the fourth crusade installed ended up, not selling the crown of thorns, but pawning the crown of thorns.
SPEAKER_10:I am going to turn to Neva, who had a question about self-deception and obfuscation.
SPEAKER_07:Hi, I'm Neva Jones. I'm also 3L here at UVA. Reading the article, I question whether self-deception is a genuine element of any of these transactions. While obfuscation might give you plausible deniability, I think the actor has to, at heart, understand the true nature of the transaction in order to appropriately play their part. So can you speak to how you see the effectiveness of self-deception in transactions, particularly for or as an insulation from self-reproach?
UNKNOWN:Mm-hmm.
SPEAKER_03:Let me give you a weaker version that I think you'll agree with, and then let me make an argument that you may not agree with based on your question as to how I'm still right. The weaker version is obfuscation can definitely lower the salience. It can make it less overt. One example of this would be, and I think this is in the article, where if you go to a a hostess bar. And, you know, so a hostess bar is basically a, you know, an economic forum where men go to bars, they pay for wildly overpriced drinks, and there just happen to be beautiful women who like to flirt with men at these bars, especially when they're for about 10 minutes while they're holding one of these overpriced drinks. Now, the only reason, you wouldn't go there because they have good beer. You would go there because you know that there's these beautiful women who flirt with men as long as they're paying for the overpriced drinks. Anybody who's going to this bar knows what the deal is, right? They know at some level that they're implicitly paying for the flirtation by paying for the overpriced drinks. And so in that element, you could say, okay, well, there's not really self-deception, but at a minimum, it makes it wildly less salient. And so If I were to say, I'm going to hand you$20 and then you're going to tell me how handsome and charming I am, it wouldn't work. I wouldn't feel flattered. I wouldn't feel like I'd gotten attention. It would just be too obvious what was going on if I just directly handed you$20 and say, here's$20, tell me how handsome and charming I am. But it might very well work if I hand$30 to the bartender, get a$10 beer, God knows what the other$20 is for. I mean, I know, you know, the bartender knows, but we don't have to know and it definitely doesn't have to be salient. And then after I buy that$30 beer, you take the stool next to me and start flirting with me. And so it's much less salient in the version where there's kind of a brokered exchange via the bartender and that I can at least pretend for that 10 minutes that I'm not paying you to flirt with me. Whereas if I just handed you the money it would be too obvious and the flirting wouldn't work, right? Because in order for flirting to be flattering and enjoyable, it can't be too obvious that I just paid for this flirting. So that's kind of the weak version where it's not, you know, where basically everybody knows, but it's made less overt in the course of the interaction. In terms of... you know, well, like are people really doing self-deception? And it's like, I don't know. I think there's plenty of things that people do that involve self-deception and people, I might have more faith in people's self-deception than you. You know, I mean, think of like all the cases where people have a religious taboo on something and then they find some workaround for the religious taboo. And yeah, And then they're convinced by that. And it's not, you know, these things aren't necessarily against the law. I mean, they might be against religious law, but not against like an enforceable law that's enforceable in courts where you can be fined and put in jail. So like, you know, is anybody really convinced that having a Shabbos elevator that just stops and opens at every floor, but you don't have to push the buttons, which means technically you're not starting a fire on Shabbat. Is anybody really convinced by that? Well, you know, Hundreds of thousands of Orthodox Jews are. I think she's still skeptical.
SPEAKER_10:Yeah, yeah, yeah. We had this discussion in class and I think it's the same. I mean, I do think there's a tension here that Navar has highlighted. I also have a lot of faith in people's ability to deceive themselves, but
SPEAKER_07:yeah, Navar. So I'm not convinced. I don't see how you can say in one breath, everybody knows, I know, they know, we all know. And then also use the phrase or the term self-deception. I mean, pretense, is not deception just because something is less salient or it's more palatable. That doesn't mean that you don't know what's going on. So maybe I'm just hung up on the term.
SPEAKER_03:Maybe, maybe, uh, self-deception. I think true self-deception does sometimes occur, but I think, uh, there's a, there's a zone that we can probably agree on, which is compartmentalization, you know, where I think people definitely compartmentalize. And in an extreme case, uh, one compartment can be much bigger than the other. And in the extreme form, compartmentalization can shade into self-deception. But I think compartmentalization might be a better way to put it.
SPEAKER_10:We had a couple of questions about sort of the costs and benefits to society more broadly of this type of obfuscation. And I'm going to go to Jackson, who asked about maintaining ignorance in society.
SPEAKER_01:Hi, I'm Jackson Bailey. I'm also a 3L at UVA. And my question was, is there value to obfuscation in that it maintains the ignorance in society of what might otherwise be unsavory transactions rather than those transactions becoming strictly what they are? Seems that there might be a useful barrier to entry with obfuscation. I can't say that Those savvy enough to use such techniques can engage in certain transactions or is there a reason to seek to get rid of these sorts of systems?
SPEAKER_03:Yeah. So I think obfuscation, when you're thinking about like, is it good or bad? I think that it's very often compared to what, and, and, and in part of this also depends on a question of enforcement costs where I think it's almost always the case that there would be higher enforcement costs in, in, truly suppressing obfuscation than there would be in suppressing overt quid pro quos. Overt quid pro quos are relatively easy to detect and relatively easy to suppress, whereas obfuscation is intrinsically fuzzy and is going to involve some false positives. And, you know, and so it's just very hard to suppress obfuscation. That's kind of the point. Right. So the enforcement costs might be prohibitive and not just in the sense of like we have to hire more police officers, but also in the sense of it would be very intrusive. Right. It would be a big violation of people's privacy and it would involve, you know, there's going to be gray areas where you end up, you know, harassing and maybe even punishing people who, you you know, very sincerely think of themselves as being on the bright side of the line, right? I mean, you know, I mentioned the Mann Act earlier. The number one form of prosecution of the Mann Act is a man takes his girlfriend on vacation, right? I mean, if you look at the cases from the early 20th century, that was the typical pattern, right? I mean, it was passed based on the white slavery moral panic, which is basically what Victorians call, we call sex trafficking, they called white slavery, right? But there were actually relatively few cases of some pimp buys somebody's contract, moves them across state lines, and then keeps them chained up in a brothel. The vast majority of prosecutions were for a guy takes his girlfriend on vacation from New York City to Atlantic City. They cross the Jersey state line. And then when they get back, they get arrested. And do you really want to have... To me, that's a gray area, right? Maybe that's me not being sufficiently... maybe that's me being presentist in, you know, looking at my, you know, contemporary morality where, you know, I like presumably all of you think that there's nothing wrong with, you know, a man having a girlfriend and taking her on vacation. But it's definitely, you know, creating that attempt to kind of suppress of what, you know, to the Victorian mind would be obfuscation of prostitution. That's very kind of intrusive. So so there's this question of enforcement costs where I think suppressing obfuscation is just really hard. And obviously, sometimes we think it's worth it. Right. I mean, the FBI considers political corruption to be one of its main priorities and almost all political corruption is obfuscated. You know, so sometimes we think it's worth it to do that. Other cases in the case of pharma detailing. Right. I mean, obviously, I can't remember if this I think actually a state government and Again, if you want recommendations for next season, Marissa King at Yale is fantastic on pharma
SPEAKER_10:detailing. If we're cynics about the political process, is there anything to Jackson's point about that? I found his barrier to entry possibility to be quite interesting. It purposely sets up a system in which the elites can kind of have their way because they know how the system works and everybody else doesn't. And that could be because the elites don't agree with the fundamental majority of the population about sort of what is moral and what should be permitted. But it might be that too much of this would be problematic or undermining to the social fabric, but some small amounts of it wouldn't be, and we might as well keep that among ourselves.
SPEAKER_03:Yeah, maybe I think it might actually be easier from my perspective as a sociologist rather than like somebody who's thinking like, oh, what could the draft be? legislation be, you know, if I go work for some Congressman's office, uh, just not to say, is it good or bad or in what ways is good or bad, but just like, what are the effects? So that might
SPEAKER_10:be good or bad, right? Exactly.
SPEAKER_03:Exactly. So, so, and, and then you have to say, what are the effects compared to what? Right. And so, but, but, so what are the effects of having, uh, obfuscation as compared to just having open quid pro quo? So one is Um, if there is a moral taboo and or a law against it, obfuscation is going to let it happen more often. It's going to let it happen more often among people who think of themselves as basically good people or basically respectable people. Um, I had the example in the article of how a widespread practice of transactional sex is going to draw in far more people than would, uh, a practice of overt prostitution. Um, Precisely because it's less taboo, and that's going to have implications for the sex graph, the social network of sexuality. As Kimberly was suggesting, it's going to reward the people who are skillful enough to practice obfuscation. which is going to create barriers to entry. Again, I highly recommend Kimberly Huang's ethnography of bribery in Vietnam, where one of the advantages that domestic investors, Vietnamese investors had, is that they knew how to do obfuscation well as compared to the foreign investors who had clumsier ways to do it and got lower rates of return. And she's very explicit that a Vietnamese investor is taking on more risk and has a longer timeframe to get paid off, but gets a higher return than does the foreign investor. And there's gradations of this where Koreans and Singaporeans and Taiwanese will come in a little earlier and do a little bit more, they'll do a different form of obfuscated bribery than will Americans and Canadians and Japanese who tend to be at the last stage and get the lowest returns. But you get different rates of returns for different investors. And so that's a barrier. And closely related to that is there's just going to be more friction in the economy. I mean, one way to think of it from a law and economics or an economics perspective, obfuscation is basically transaction costs, right? It's much higher transaction costs for you to... buy something through an obfuscated means than it would be for you to buy something on Amazon. And so, you know, if you think about what transaction costs imply, I mean, you're going to have more price dispersion. So, you know, I'm going to pay a different price than you are. And as you know, you and Kimberly were suggesting, this may be connected to like how well connected we are. And so in that way, it could be kind of a inequality reinforcing or crony type issue. And it's also just going to be that the price version will be higher. The friction will be higher. Transaction costs lower consumer surplus. They lower producer surplus. And in a way, they make the market inefficient. Now, If you're coming from the perspective of saying, I don't like this market, then transaction costs are good. So the late Mark Kleinman would argue that when you don't like a market, when you don't like a good, when you think a good is selling poison, you actually want that market to have high transaction costs. And that basically market failure is a policy success if you consider the market or the good to be immoral. But on the other hand, if you consider the market to be moral, You know, and you think like, oh, if only we didn't have this outdated law against selling kidneys, which I know was your last episode, because, you know, a longtime listener, first time caller, you know, the... in that case, you might think obfuscation is great, right? You might say like, well, in a perfect world, we'd just be able to openly buy and sell kidneys or maybe Medicare or Medicaid would be able to openly buy and sell kidneys, but we don't live in that world. So we have to have this rigmarole with, you know, kidney chains. And in fact, we'll give somebody the Nobel prize for inventing it. So, you know, this is, There's definitely effects, and whether you think those effects are good or bad, the first approximation comes down to whether you like the good and you like the market or you don't.
SPEAKER_10:Yeah, totally understood. This is overall a fairly pro-markets group, but I think our main interest is actually in trying to understand the effects, right? Because to the extent that some of these effects are… in and of themselves damaging or unintentional, we need to at least be aware of them, right? Because that's a separate problem that the law might or might not be in a position to address, which brings me actually to Courtney's point or question. And she was concerned, I think, about some of the obfuscated transactions, not just obfuscating that the transaction is taking place, but obfuscating perhaps, including to the participants to the marketplace, the harms that may be present. So Courtney, I'll let you go from there.
SPEAKER_09:Hi, I'm Courtney Inman. I'm also a 3L at UVA. And so my question was, if something is taboo based in part on concerns of potential harms or dangers, then shouldn't we be really concerned about instances of obvious obfuscations of the trade? So in some instances, obfuscation may be a way to get around outdated moral beliefs for certain behaviors and that would actually be commendable or okay. If someone genuinely wants to be a sugar baby and be paid in kind through gifts, college tuition, or traveling in exchange for a friendly or romantic relationship, then they should be able to do that. But just because the relationship structure has changed and it's not an explicit cash or sex transaction doesn't mean the potential for harm is not still present. And to clarify, the sorts of harms I'm concerned about are safety concerns with an increased risk of sexual assault, sex trafficking, those sorts of harms. So to me, it just feels like a little bit of a scary gray area where, like I was thinking about the case that you mentioned in your article where the government basically said, you know, this relationship's okay because it's different from prostitution. But then at the same time, it feels like the government's turning a blind eye to dangers that such a transactional relationship might present. And this is not to say, I think that These relationships should be outlawed, but it's just strange to have, you know, these very public platforms or websites that facilitate relationships. And there's no regulations or laws requiring them to have basic safety measures in place. And sure, we can't regulate, you know, all the details and aspects of a relationship. But since we know there are these heightened risks, yeah. It just is weird that there's no requirement that, you know, sugar daddies have a background check, like a bare minimum just to ensure they don't have a history of sexual assault crimes or charges. And so what kind of brought this to mind is like a comparative situation was I was thinking about how like in the early wild west of social media, influencers would get sent things from brands and would kind of inconspicuously sort of make posts and advertise about them, but wouldn't have to disclose that it was an advertisement or that they got any gifts or PR packages. And then the government caught on and was like, you can't be doing this. It's a danger to consumers. There's a potential for false advertising. And so now, you know, bare minimum, they have to put hashtag ad in their posts. So it just, it feels like a weird kind of dichotomy of, oh, sugar daddy relationships, which are different in definition from prostitution, have these real big safety harms. Government's not going to step in and do anything really to regulate these websites. Yet FTC, I think it was FTC, one government agency was really concerned about- It was the FTC. It was the FTC. Yeah. So really concerned about these social media posts. So I guess that's what I was getting at is like if it's obvious, if we know the harms are there, should we be concerned and should the government be stepping in more often to regulate?
SPEAKER_03:Yeah. Yeah. So first of all, it's interesting that you're bringing up the influencers thing. Cause my other big line of research, which is, you know, only very indirectly connected to this line is I'm interested in how ideas and behaviors and products spread through social networks. And so as part of that, I've been thinking a lot about like, what is the role of influencers, but yeah, I get what you're saying. I think the way I'd reframe your question slightly, and I think this was implicit in the way you asked it, is that once we make something an overt market, we can regulate it.
SPEAKER_10:We at least know that we might need to,
SPEAKER_03:right? Yeah, exactly. We won't necessarily regulate it, but at least in theory, you can. Yeah. And this is one of the classic arguments for legalizing sex work is the idea that if you legalize sex work, you can create legal oversight for it. What you typically see, by the way, is that you have a dual system and that when you have legalized sex work, there's also underground sex work alongside it. And similarly, it's the kind of classic issue that you can have legal products, but there's still tax evasion of legal products, et cetera. But at least in theory, you could have... regulation and oversight on a legalized market, whereas I think that's basically impossible for obfuscation. You know, so, I mean, if we take the transactional sex example, like, I mean, what would it look like to regulate and oversee transactional sex? Well, it's like the whole point of transactional sex is that it shades into regular dating. And so in order to effectively regulate, you know, transactional sex, you know, every time you went on a date, like a regular date, not like date as a euphemism for something. You'd have to register it with the police, which would be wildly intrusive. I mean, kind of like a weird dystopian thought experiment, right? But I take what you're saying. I think kind of implicit in your question, or maybe explicit in your question, is that if we just legalize prostitution, this would decrease the demand for sugar babyism. And we would effectively be shifting something into... out of the obfuscated sector into the openly transactional sector. And then once it's in the openly transactional sector, we could regulate it. And Yeah, I think, again, I guess that the abstract way, the way I would think about that is how concerned are you about the good itself and how concerned are you about the externalities or the potential for harms that come alongside with a poorly functioning version of that market? So basically, how much is the harm intrinsic in the nature of the transaction and how much is the harm kind of incidental but fairly predictable? along with that transaction. And if you're mostly thinking of the latter, then that might be a good candidate for moving it to overt but regulated, assuming, and there's a big assumption there, assuming that the regulation would be effective, which it might not. And also, I'm also not convinced, this is something, it's kind of an empirical question, but I'm not convinced that creating, say, prostitution would eliminate sugar babyism.
SPEAKER_10:And just to fill you, we actually discussed this quite a bit in class. Like you, I was skeptical. They disagree with me. I think that they are probably more comfortable than I am and perhaps you are with being more intrusive, at least of internet hookups more generally, regardless of the presence of money. in them. Whereas I tend to think of the internet as just being a replacement for people hooking up at bars and parties and whatever they did before. I mean, in their defense, one is harder to regulate than the other. And so I think that they would say, It's low cost to screen people with a basic background check before they get to use a web app and we should do it. So I think that was what much of the discussion was in class.
SPEAKER_03:Yeah. I mean, I don't know what that would look like in practice, right? I mean, the fact is that most of these apps work on a freemium business model where the vast majority of users use it for free and then a tiny minority of users pay a relatively small fee, like 20 bucks a month. And If you build in any transaction costs at all, that's going to radically change the business model. But that's a practical question. That's not really a...
SPEAKER_10:Yeah, we'll move on from this. But as they pointed out to me, my conception of the way these apps work is wrong because I know... old people paying money to use them. And they know young people who are using them for free. And the amount of screening that is done in those cases, as you would expect, is very different. And so we just kind of had a different perspective on that. It was an interesting conversation, but it's probably beyond the scope of this. But in any event, I want to get to the last set of questions before we have to let you go. And let me start with Madison.
SPEAKER_06:Hi, I'm Madison. I'm also a 3L at UVA. So I had a question sort of about when the law sets up a blueprint that kind of overtly leads to these gifting regimes. So in Virginia, the way that marijuana is legalized is through a gifting regime. So you cannot buy and sell it. You can gift it. And so you end up with a market where people will go in and pay$25 for a pack of gum or whatever. And then they also get marijuana with that. Another thing after class that I started looking into was actually fortune telling laws. And there's a lot of states that outlaw fortune telling for payment, but you can do it through this gifting regime, and that's how a lot of it is set up. And so I'm just curious if you think that these types of laws that set up this gifting regime are beneficial in the sense that they set up some way to sort of open up the market, or do you think it's just a way for people to sort of kind of delude themselves with what is actually going on, and it would be more beneficial and potentially just more effective to go ahead and outright legalize the market.
SPEAKER_03:You might know more about the details of this, but I have a very strong hunch that the laws in general don't say it's legal as obfuscated gift exchange. They might say it's legal. They basically might say you can't do it for sale and kind of implicit in that is that like, if you want to do tarot deck for your roommate, that's cool. But, um, they're probably not saying that if you buy a stick of gum for a hundred dollars, you know, and I, and I think that this is probably an issue of enforcement discretion. Um, cause I, I know there have been cases where people have done this kind of thing of like, you go to the head shop, you buy a hacky sack for a hundred dollars and they give you, you know, an ounce of, I don't know what the price of weed is, but they give you whatever the appropriate amount of weed would be for buying this overpriced hacky sack at the head shop. Um, But in theory, you're just buying the hacky sack. And in theory, the weed is just a log now. In most cases, if the DA wants to prosecute that, the courts would let them do it. And if the DA is passing on doing that, that's kind of just an enforcement discretion thing. I mean, maybe the specific cases you have in mind, it actually is the case that even if the DA wanted to bring a case, they couldn't. But... This seems to me, and again, I think a really critical thing here is just the audience. The audience to the exchange, in this case, the district attorney, has to make an evaluation of how much do I care? And very often it will be the case that somebody kind of realizes what's going on, but they figure life's too short. Let's just let this go.
SPEAKER_10:And Jackson had an example actually from our recent podcast on sports.
SPEAKER_01:Yeah. When I read your... paper and the brokerage example, it made me immediately think about what we talked about in our previous podcast about the new implementation of college collectives, specifically in football recruiting. Now that name image and likeness is legal and athletes can receive these sorts of payments, boosters that Universities have set up collectives where they can pool money together to give to athletes, whereas the coach can't give it to the athlete directly. These coaches are acknowledging that these collectives are giving money to the players they're recruiting. So it seems like the rules are set up. to encourage this sort of setup. And there's,
SPEAKER_03:so that seems like it's implicitly broke. I'm not familiar with this. I'm not like a sports fan, but it seems like implicit implicitly, this is bundling and brokerage where in theory, the collective isn't just giving a cash payment for an athlete being recruited by UVA. They're giving in theory, they're buying the athlete's name and likeness to put on a coffee mug. And then, um, but implicit in that is that they're only doing it because this athlete goes to UVA. So that'd be bundling. And then it's brokerage because it's not the athletics department or the football team or whatever doing it. It's the booster club.
SPEAKER_10:I think that sounds right to me. It sounds like both a bundling and a brokerage. One thing that we found interesting is that it's not particularly obfuscated because, and Jackson is more the expert on this particular question than I am, but the coaches are open about this. Unlike the perhaps examples that Madison said, where there's a little bit of obfuscation going on, it's just a question of how much prosecutorial resources you want. This seems to be something that coaches are going around saying, come to UVA because we have a booster collective. And it doesn't really seem, you know, and maybe it's just an interim step toward a non-market to a market, but we found it interesting and how it would fit in with your examples.
SPEAKER_03:Well, you know, I mean, I think there are plenty of examples of this where people can basically say, come to my obfuscated economic institution, right? And they have a big flashing sign on it, you know? So, I mean, you can go to an Islamic bank and you can say, I'd like a Sharia compliant loan And everybody knows what you're asking for. You can get, you know, if one of you were to Google, probably you want to use incognito mode, but if you were to Google right now, sugar daddy, I guarantee you, you're going to see, you know, a dozen websites that are set up specifically to facilitate transactional sex. And it's not the same thing as going on Tinder. And somebody says like, you know, I like to travel in generous men and you know, with like a big wink, like it's, it's like the whole website is called sugar daddy for me or seeking arrangements or travel companions or whatever.com. Like it's right in the URL. That's basically saying this is a transactional sex website. Like come here. If you want to get gifts in exchange for having sex with somebody who's much wealthier, much less attractive than you. So I don't think that necessarily spoils it. Like it's obfuscated. Not in the sense that people don't know what's going on, but it's obfuscated enough that the NCAA can't get them on it.
SPEAKER_10:Not permitted. It's just not prohibited, I guess is
SPEAKER_03:the answer. Yeah, exactly. The NCAA doesn't say booster clubs are cool. The NCAA just says, and I think this wasn't actually even the NCAA. I think it was like a court case or a state or something. I think it came from the state. Am I correct about that? The booster? Well, I mean, not the booster thing, the name and likeness thing that like basically it wasn't like a lawsuit or state of California law or something saying that college athletes can sell their name and likeness. And they had in mind, like basically college athletes getting royalties from electronic arts for video games.
SPEAKER_10:As you might expect, California started it and Florida forced the issue. I
SPEAKER_03:see. I see.
SPEAKER_10:Is that right, Jackson? That's my recollection is that the California was the first, but they didn't have a timeline on theirs. Whereas Florida said, we're doing this right now.
SPEAKER_01:Yeah. California started it and then the SEC states basically. I see. I see.
SPEAKER_03:So, yeah. So, yeah. So that would be basically people have discovered a loophole and then built an economic institution around that loophole. But the but the economic institution itself is a form of obfuscation, even though it's one that's kind of routinized and institutionalized and everybody knows what's going on. But especially to the extent that the NCAA can't just take it back and said, OK, well, we thought you guys were going to be cool about this and just sell your name and likeness to electronic arts for being in, you know, you know, Final Four fantasy games. for the PlayStation or whatever, but you know, you're ending up doing this with doing exactly what we told you not to do, you know, undermining the entire idea of amateurism between the university and the, you know, undermining the pretense that these aren't just minor league teams, but are student athletes, you know, to the extent that the NCAA doesn't have the discretion to, Right. So let's say that they do have
SPEAKER_10:the discretion. Yeah, they do. This was, in fact, one of the questions at our college athletics podcast. And they do have the ability to regulate boosters and as a result could regulate the booster collectives through their power over their ability to relate to regulate boosters. I'm sorry, that was a convoluted way of saying that. Interesting.
SPEAKER_03:According to our sports law expert. Yep. Okay. So by the way, this does remind me of... The NCAA is basically a monopsonistic cartel, right? Where it's saying, we are the buyers of this good, which in this case is the services of student athletes in revenue sports. And we're going to agree that we're going to set a price for that good. And no members of the cartel are going to go over the price for that good. And that price is zero. And something that's structurally similar to that is various attempts at record industry self-regulation against payola. Um, and, and that's something, that's how I got into this in the first place. Cause my, my previous book was on, uh, radio.
SPEAKER_10:I have, I have that book. It's probably still in one of the boxes. Cause I just, I just recently moved, but yeah, I have, I have that book.
SPEAKER_03:Yeah. Oh, cool. Uh, and, and those of you who don't, it's short and I think it's a brisk read
SPEAKER_10:and
SPEAKER_03:everybody should buy it. Yeah, yeah, exactly. And, uh, and chapter three is the one on pale, if you just want to skip to that, but, um, you know there's been various attempts by the record industry to create self-regulation to avoid paying payola and that's you know structurally that's a monopsonistic cartel where um because effectively payola is a transfer from the record industry to the radio industry and if you were to set a price of zero for your radio station plays my song, that would benefit me, the record label, at the expense of you, the radio station. But as is always the case with cartels, unless there's legal enforcement, it's vulnerable to cheating. And so I think what you're describing, and so what I saw when I looked at payola, is the record industry as a whole would benefit from a strong payola norm, but a strong no payola norm. And I think, I think in this case, it's clear that college athletics would benefit from a strong, no payment to athletes norm. In fact, that's not a counterfactual. They do benefit from a strong, no payment to athletes norm because it means they don't have to pay what are effectively minor league athletes more than just the, you know, the scholarship, the scholarship is cheap compared to what a lot of these guys could make, uh, on the open market. And then what some of them do make when they go overseas or whatever. Um, but, uh, it's vulnerable to cheating. And so in the story you just recounted, the SEC schools were basically like, we care more about getting access to the resource, which in this case would be top recruits than we do about maintaining the low payment. They may come to regret that in five years when the norm against paying student athlete totally unravels or the booster clubs are so well-established that they're bidding up the price to half a million dollars a year per student or whatever. But in the short run, you can always benefit from cheating on the cartel. But in the long run, it may cost you because it will drive up costs for your whole industry.
SPEAKER_10:Thank you so much, Gabriel. I kept you for a really long time. I'm sorry, but having wanted to meet you and ask you some of these questions for so long, I wasn't willing to let the opportunity go past. I'm much happier to
SPEAKER_03:talk at 9 a.m. than at 7 a.m. It's fine to let it run. I'm just
SPEAKER_10:absolutely crushed that I have to say goodbye to these law students now. What a great semester it's been. I hope that you've enjoyed getting to know my students as much as I have. All right, everybody, sign off.
SPEAKER_01:This is Jackson Bailey. Thanks, everybody, for listening this season. Bye. This is Alex Lassini. Thanks for listening. It's been a great experience.
SPEAKER_09:This is Jillian DeMacy. Thanks for listening. This is Samantha Spindler. Thanks for listening. Hi, this is Autumn Adams-Jack. Thanks for tuning in. Hi, this is Madison White. Thank you guys for listening.
SPEAKER_00:Hi, this is Tom DelBregno. Thanks for joining us.
SPEAKER_08:Hi, this is Caitlin Stallings. Thanks for listening. Bye-bye.
SPEAKER_07:Hi, this is Courtney Inman. Thanks for listening. This is Nabah Jones. Be well.
SPEAKER_04:Hi, this is Caitlin O'Malley. Thank you for listening. Goodbye. Hi, this is Alice. And very thanks for joining our podcast. That is it. Thank you
SPEAKER_10:again. First of all, thank you. And thanks. And thank you, Gabriel. It was really great
SPEAKER_03:to thank all of you for your questions. Thank you. Yeah. And I'm glad I don't have to write them down. I can just listen to the episode. Yeah.
SPEAKER_10:Thank you, everybody.
