It's not as though it's a mystery - it is easily explained by following the incentives.
In a free market, an organization thrives by producing goods and services that individuals want, and must compete for that business. Their incentives then, typically lead them to provide value - as long as they have no way to block competition.
Bureaucracies, by contrast, don't tend to charge directly for what they provide. They are funded by other means, such as taxes or donations, and must simply satisfy their funders that what they do is important, while often concealing details, to prevent real accountability.
Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people:
First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration.
Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc.
The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.
Again, you can see how that makes sense, given the incentives. The people most adept at extracting budgets are critical to the organization, and when delivering quality isn't required to get that money, it gets deemphasized.
This is a great analysis. And yes, the incentives are essential - part of the issue with bureaucracies is that those who set the rules aren’t the ones who suffer the costs of the rules. Academia has been totally taken over by the administrators. It no longer serves the students or the staff who teach. But the people who bear the costs of that are the students and the staff who teach, not the bureaucrats themselves.
And this is pretty much what happened with various priests in the US Catholic Church. They were found to have abused children, sent to some kind of ineffective training, and then reassigned to other parishes, who had not been warned of their history.
It seems to be a basic problem with bureaucracies.
Exactly the same with what happened with the Catholic Church in Australia, too, but I think it can be applied to all kinds of large organisations. If not designed carefully, the bureaucracy acts to protect itself and its reputation, rather than the people whom it is supposed to be serving. I almost feel like bureaucracies create a sort of hive-mind which leads to this kind of behaviour. If you know anything about the dynamics of this I’d be fascinated to know.
I was recently teaching settlement agreements entered between mining corporations and individuals who have suffered harm in PNG and Tanzania. These agreements were revealed through the hard work of local NGOs. One of the agreements was kept confidential and states the same on the top of the deed. The amount of compensation given is less than $5000 for having suffered sexual assault or beatings by mine company security. It made me think how in law school we are hell bent on teaching case laws but majority cases are settled behind closed doors with these settlement agreements. In saying that, regulation of NDAs will be tricky if not impossible!
That’s a devastating story, Justin (parity of monetary awards is another topic which is really interesting, watch this space).
I think the courts and the legislature would have to work in tandem - once a court had set aside some of these agreements, I think attitudes would change. At the moment, however, they’re like a black box.
In Remedies I do teach students about the importance of settlement, as a species of “self-help” - people resolving their own disputes rather than going to the court.
I find parity in monetary awards, NDAs, confidentiality and waivers as intriguing part of Remedies. I think discussions about remedies need to critically look at settlements. Thanks again for writing about an interesting aspect of Remedies!
Agreed that NDAs are not precedential. However, a small number of cases go to court but they have an outsized influence on legal development.
Whether confidential settlements are being studied is something I am not so sure of.
My understanding is that NDAs will evolve into something else once attempts are made to regulate it. Moreover, it might impinge on the freedom to contract. The idea that you can regulate each and every transaction that is "freely" entered into by parties for mutual benefit is a bit utopian. But I could be wrong!
I'm very much not taking a utopian view of this, I'm not even convinced that regulation would improve the overall distribution of outcomes (although I am sure that well-designed regulation would).
I just don't really see any difficulty doing it. We impinge on freedom of contract all the time, I doubt it is even possible to count the ways except at a certain degree of abstraction ("consumer protection", "environmental protection", etc).
Personally I would like a jurisdiction to try requiring anyone who enters into an NDA to have the NDA in relation to an amount greater than (say) 25'000 counter-signed by an advisor, another to require all NDAs to be registered with the local department of justice or equivalent and a third to try both.
Echoing the discussion about the church I am going to go out on a very unusual limb here and say that I don't think universities are in fact particularly badly affected.
Rather, they just happen to be particularly large bureaucracies with a particularly severe lack of accountability, the lot compounded by a sense of mission (heaven save us from those who would save us!).
The rest is largely what I think one would expect and what I think one pretty close to always gets.
It's not as though it's a mystery - it is easily explained by following the incentives.
In a free market, an organization thrives by producing goods and services that individuals want, and must compete for that business. Their incentives then, typically lead them to provide value - as long as they have no way to block competition.
Bureaucracies, by contrast, don't tend to charge directly for what they provide. They are funded by other means, such as taxes or donations, and must simply satisfy their funders that what they do is important, while often concealing details, to prevent real accountability.
Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people:
First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration.
Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc.
The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.
Again, you can see how that makes sense, given the incentives. The people most adept at extracting budgets are critical to the organization, and when delivering quality isn't required to get that money, it gets deemphasized.
This is a great analysis. And yes, the incentives are essential - part of the issue with bureaucracies is that those who set the rules aren’t the ones who suffer the costs of the rules. Academia has been totally taken over by the administrators. It no longer serves the students or the staff who teach. But the people who bear the costs of that are the students and the staff who teach, not the bureaucrats themselves.
And this is pretty much what happened with various priests in the US Catholic Church. They were found to have abused children, sent to some kind of ineffective training, and then reassigned to other parishes, who had not been warned of their history.
It seems to be a basic problem with bureaucracies.
Exactly the same with what happened with the Catholic Church in Australia, too, but I think it can be applied to all kinds of large organisations. If not designed carefully, the bureaucracy acts to protect itself and its reputation, rather than the people whom it is supposed to be serving. I almost feel like bureaucracies create a sort of hive-mind which leads to this kind of behaviour. If you know anything about the dynamics of this I’d be fascinated to know.
I was recently teaching settlement agreements entered between mining corporations and individuals who have suffered harm in PNG and Tanzania. These agreements were revealed through the hard work of local NGOs. One of the agreements was kept confidential and states the same on the top of the deed. The amount of compensation given is less than $5000 for having suffered sexual assault or beatings by mine company security. It made me think how in law school we are hell bent on teaching case laws but majority cases are settled behind closed doors with these settlement agreements. In saying that, regulation of NDAs will be tricky if not impossible!
Well, NDAs are not precedential so not quite as relevant as cases 😆
Arbitration is a bit trickier; I believe that people often do study redacted confidential settlements.
But I'm curious why you think NDAs would be tricky to regulate?
That’s a devastating story, Justin (parity of monetary awards is another topic which is really interesting, watch this space).
I think the courts and the legislature would have to work in tandem - once a court had set aside some of these agreements, I think attitudes would change. At the moment, however, they’re like a black box.
In Remedies I do teach students about the importance of settlement, as a species of “self-help” - people resolving their own disputes rather than going to the court.
I find parity in monetary awards, NDAs, confidentiality and waivers as intriguing part of Remedies. I think discussions about remedies need to critically look at settlements. Thanks again for writing about an interesting aspect of Remedies!
Agreed that NDAs are not precedential. However, a small number of cases go to court but they have an outsized influence on legal development.
Whether confidential settlements are being studied is something I am not so sure of.
My understanding is that NDAs will evolve into something else once attempts are made to regulate it. Moreover, it might impinge on the freedom to contract. The idea that you can regulate each and every transaction that is "freely" entered into by parties for mutual benefit is a bit utopian. But I could be wrong!
I'm very much not taking a utopian view of this, I'm not even convinced that regulation would improve the overall distribution of outcomes (although I am sure that well-designed regulation would).
I just don't really see any difficulty doing it. We impinge on freedom of contract all the time, I doubt it is even possible to count the ways except at a certain degree of abstraction ("consumer protection", "environmental protection", etc).
Personally I would like a jurisdiction to try requiring anyone who enters into an NDA to have the NDA in relation to an amount greater than (say) 25'000 counter-signed by an advisor, another to require all NDAs to be registered with the local department of justice or equivalent and a third to try both.
Someone else I know was saying maybe it should be like listening devices - subject to judicial scrutiny on a confidential basis?
Also an idea, but a bit complicated to extend what is essentially a criminal process to civil matters.
Echoing the discussion about the church I am going to go out on a very unusual limb here and say that I don't think universities are in fact particularly badly affected.
Rather, they just happen to be particularly large bureaucracies with a particularly severe lack of accountability, the lot compounded by a sense of mission (heaven save us from those who would save us!).
The rest is largely what I think one would expect and what I think one pretty close to always gets.