🔗 Being Able to Surrender Your Rights Isn't Freedom

Have you ever seen a movie or a TV show where a crime has been committed against someone, and both the perpetrator and the victim find themselves in a police station, where the victim is asked whether they would "like to press charges", and if the victim says "no", they just let the perpetrator go? Maybe the beloved friend group breaks into someone's apartment, gets caught and dragged to a police station, but the homeowner decides not to press charges, to the relief of everyone involved, and our protagonists get to live another episode.

This is an incredibly inept illustration of reality, but many people actually believe that if the victim doesn't wish to press charges, law enforcement has no choice but to release the perpetrator. This is, of course, blatantly false. There's a certain balance that free societies strive to achieve when it comes to law enforcement. Depending on the severity and effects of the crime, authorities may prefer that two sides reach a resolution that satisfies them both by themselves (as they do in various other disputes and "civil matters" which may not necessarily result from clear-cut crimes), and police may respect the wishes of victims.

Allowing victims to guard criminals from prosecution is an incredibly dangerous idea, for not only does it open the door for the victims to be victimised even further (for example, by being threatened by the criminals with violence if they dare to pursue charges), it also makes no sense in the context of a free, democratic society, for no individual has the authority to declare the illegal legal, and it is in the best interest of society that crimes—especially violent ones—be properly handled by the justice system.

And yet, there is an entire world built on top of ours where victims do, in fact, have the magical ability to make the illegal legal: corporations. Corporations are fictional entities that in part where specifically invented in order to guard the real-life humans that operate them from legal liability. They don't call an LLC a Limited Liability Corporation for nothing.

There are two main ways in which corporations abuse the legal system in order to make the illegal legal:

1. Asking the victims for permission to commit the crime.
2. Treating crime as if it were a menu.

I'll talk about the first one today. Have you ever signed a contract with an employer, and noticed a "non-compete clause"? This is a prime example of corporations trying to make the illegal legal.

In Israel, for example, while there is no constitution, there are what we call "basic laws", which were originally intended to eventually become the constitution. One of these basic laws is the Freedom of Occupation law, which we can synthesize down to these two sentences:

1. Every Israel national or resident has the right to engage in any occupation, profession or trade.
2. There shall be no violation of freedom of occupation except by a law befitting the values of the State of Israel[…]

This law makes it clear that a person's freedom of occupation cannot be infringed upon. And yet, pretty much every company believes it has the authority to prevent you from working for another company in the same field if you quit or get fired. Say my occupation is Mechanical Engineering—a field I have studied four years in university to receive a degree in—and I get fired by "Broken Down Machines LLC", and I signed a contract that says I can't work for a competitor for three years. What am I supposed to do? Not use my Engineering skills for three years because doing so for another company may impact the business of the company that fired me? Should I start again in a completely new field? Pump gas for a living?

It's easy to see that non-compete clauses are illegal, or at the very least "inconsistent with the law". And yet, we sign them anyway. Does that make them legal? Can a company that fired me sue me merely for signing with a competing company because of that clause and win? Americans may say the answer is "yes", and in the US perhaps they'd be correct, because freedom works in mysterious ways in the US, but in Israel I am not sure. The answer should be a resounding "no", not only because—as I mentioned before—I do not have the authority to make the illegal legal, but because the company making my employment dependent on my signing an illegal clause is basically a double whammy. Fuck off with that bullshit.

How far does this go though? I can, apparently, yield my right for medical secrecy (which you may know as "physician–patient privilege") for an insurance company so they can go through my entire medical history and decide to drop me as a client. I can even give permission to an insurance company to get privileged, private information about my insurance policies at other providers just so they can try to sell me more bullshit. Should I be able to surrender my rights in such a broad way? Is this a net positive to society, or would it be better for us to share only what we're comfortable sharing and that's it? Obviously, I believe in the latter.

This subject is one I spent a lot of time thinking about, but I'm writing about it now—as I seem to often do—because of my favorite villain - Elon Musk. A few months ago, the Delaware Court of Chancery struck down Musk's obscene, self-awarded Tesla compensation plan, due to various breaches of fiduciary duty committed by the Tesla board of directors. I've been following Lawrence Fossi's excellent coverage of this topic for a while, and I encourage you to go back and read his analysis of the case if you're interested.

After the court repealed Elon's stock option plan, Tesla very quickly moved to reverse the court's decision before the case is officially closed (which it wasn't, simply because the decision of legal fees for the prosecutors has not been decided yet), by the extremely novel way of asking the victims—the Tesla shareholders—to retroactively make it legal. Oh Elon, you innovator you. Tesla's proxy statement asking shareholders to "ratify" the compensation plan after the court's decision included the following paragraph (emphasis mine):

If the 2018 CEO Performance Award is ratified by our stockholders at the 2024 Annual Meeting, the Company believes []: the deficiencies, including disclosure deficiencies, procedural deficiencies, and breaches of fiduciary duty, identified by the Delaware Court in connection with the Board and our stockholders’ original approval of the 2018 CEO Performance Award should be ratified and remedied, and any wrongs found by the Delaware Court in connection with the 2018 CEO Performance Award should be cured[.]"

This is an incredibly brazen position to take. Tesla's lawyers are now arguing in front of the Court of Chancery that the court's decision should be reversed, because the victims have retroactively given Tesla their permission to commit those breaches, which are now "cured".

Now, I'm not sure whether this is considered a civil or criminal case, but I certainly hope the court does not accept this claim; Which it seems like it won't, not only because the shareholders do not have the authority to make the illegal legal, but because Tesla's directors have allegedly repeated the same and added even more breaches of fiduciary duty with this new proxy statement and shareholder vote, as discussed extensively in the blog I linked. For example, the board threatened shareholders that if they do not vote "yes" on the compensation plan, then the company will be forced to lose even more money on Elon's new compensation.

So, by living in a "free society", are we so free that we can surrender our own rights? Obviously, we're not totally free, otherwise there wouldn't be laws and restrictions to begin with. I don't think we should be free to surrender our own rights, and we certainly shouldn't be able to make the illegal legal, lest we create monsters like Elon.