07/29/2008 05:12 am ET Updated May 25, 2011

FISA and Corporate Misbehavior

I just returned from the Netroots convention in Austin, and needless to say, there is a lot of anger out there about the FISA "compromise." I'll be blunt. I find this anger misplaced and frankly naive.

Opponents of the new law object to the provisions for retroactive immunity for the large telecoms that cooperated with the government. They would have liked the telecoms instead to refuse to comply with government request because they were unlawful. What is the underlying principle of that position? It is that American corporations do not have to comply with government requests if they think they are being asked to do something illegal. Opponents of the FISA compromise seem to think that if this principle were generalized, American corporations might help safeguard civil liberties in future cases. They won't.

Instead, they will rely on this principle to nullify laws that cost them money or go against their interests in other ways. They won't suddenly refuse government requests for information. However, they will begin to refuse orders to comply with labor and environment standards. They will question disclosure obligations. They will, in short, seek to nullify the regulatory apparatus. There will always been a legal argument to do so; to claim that the government has overstepped its bounds and has requested something illegal.

When I make this case, the reply is always the same: "If we strip them of immunity, then we can sue them which will make them behave as responsible citizens."

There are four ways to encourage responsible corporate behavior.

(1) The creation of market incentives for "good" behavior.
(2) Effective government regulation.
(3) The application of moral pressure including threats of boycotts.
(4) The threat of lawsuits.

Despite the popularity of Erin Brockovich and similar stories, the use of lawsuits to encourage responsible corporate behavior is clearly the least effective of the four. The cases are complex and expensive and take forever to litigate. Recent court decisions have increasingly been skeptical about large punitive damages and have often cut them dramatically. The risk of lawsuits is real, but the outcomes are so idiosyncratic that they have, at best, an uncertain effect.

Opponents of the FISA bill, ultimately, are willing to jeopardize the effectiveness of government regulation in order to retain the potential for coercive lawsuits. It is a terrible tradeoff, and our anger at the Bush administration's unlawful acts -- and the complicit behavior of the large telecoms -- ought not drive us into self-defeating behavior.

The way to prevent abuses of our civil liberties is to elect candidates who won't engage in such transgressions.

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