State Farm just spent a quarter of a billion dollars to settle allegations that seem like a plot straight out of a John Grisham novel. You may remember that in The Pelican Brief, a wealthy and very shady character with a case heading to the Supreme Court paid for the murder of two Supreme Court justices in order to improve his chances of winning. State Farm, fortunately, did not murder anyone. However, while appealing a $1.05 billion class action judgment against it for having failed to supply proper replacement parts for damaged vehicles, State Farm allegedly secretly recruited Lloyd Karmeier to run for an open seat on the Illinois Supreme Court, which would hear the appeal. Allegedly State Farm organized and managed Karmeier’s campaign behind the scenes and covertly funneled millions of dollars to support his campaign through intermediary organizations that it heavily influenced. After Karmeier was elected, State Farm concealed and otherwise misrepresented the nature of its support for Karmeier so that he could participate in deciding the appeal, rather than recuse himself. Karmeier did, indeed, vote for State Farm and the verdict was overturned. But plaintiffs’ attorneys hired a former FBI agent to suss out State Farm’s hidden manipulation and filed a new class action lawsuit alleging fraud and RICO violations. While State Farm denied wrongdoing, it paid $250 million rather than defend itself before a jury.
“We learned a lot about dark money in America,” said one of the plaintiffs’ attorneys. “The problem isn’t confined to Illinois. And it’s not going to change unless there’s campaign finance reform.”
I will admit that I am concerned about dark money in politics. An overwhelming percentage of Americans, both Republicans and Democrats, are also concerned about money’s influence in politics. (Once upon a time, I favored the idea of money as protected corporate speech; I no longer do, though I admit that I am not enough of a Constitutional law expert to credibly critique the Supreme Court’s reasoning in Citizens United.)
The point I want to make here relates to transparency. Just as lack of transparency can harm our political system, it can also harm individuals’ moral decision making. Social norms evolved to enable people to live together cooperatively. We relentlessly judge each other regarding whether or not we are following social norms, including moral ones. If we do not conform, we will be punished by others, mostly reputationally. Tomasello has noted that the effect of this constant monitoring is that “simply being watched keeps people mostly in line most of the time.”
Although employers should not be overbearing in monitoring their employees, for this can lead to rebellion, studies found that increased monitoring reduced cheating by students and corruption in a public hospital.
Philosopher Jeremy Bentham realized a couple of centuries ago that “… it is sufficient for people to know that they are seeable, that there is the potential for them to be judged, evaluated, and punished. Being seeable is enough to trigger us to restrain our unsocialized impulses through self-control.”
Bentham was right. Numerous studies show that humans will commit fewer wrongs and act more prosocially if they are prompted to feel, even subconsciously, that they are being monitored. People will act worse if they are alone than they will in the presence of a child, of a dog, even of a poster with a pair of eyes drawn on it. In one experiment, 71% of subjects cheated on a task when alone, though the rate of cheating was only 7% for subjects seated in front of a mirror who were monitored, at least subconsciously, by themselves. In another study, a psychologist “accidentally” dropped a big stack of papers in front of a participant. The participants were 30% more likely to help pick the papers up in the presence of a security camera. And soccer hooliganism drops by 65% in the presence of security cameras, one study found.
From such studies comes the explanation behind the traditional idea of the newspaper test: “Would you do this if it were going to be reported on the front page of the New York Times tomorrow? I hope that State Farm’s actions are reported on the front page of the Times. They make me all the more worried about dark money in politics.
Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).
Mark Covey et al., “Self-monitoring, Surveillance, and Incentive Effects on Cheating,” 129 Journal of Social Psychology 673 (1989).
Edward Diener & Mark Wallbom, “Effects of Self-Awareness on Antinormative Behavior,” 10 Journal of Research in Personality 107 (1976).
Rafael Di Tella & Ernesto Schargrodsky, “The Role of Wages and Auditing During a Crackdown on Corruption in the City of Buenos Aires,” 46 Journal of Law & Economics 269 (2003).
Alison Frankel, “Behind $250 Million State Farm Settlement, a Wild Tale of Dark Money in Judicial Elections,” Reuters, Sept. 5, 2018, available at https://www.reuters.com/article/legal-us-otc-darkmoney/behind-250-million-state-farm-settlement-a-wild-tale-of-dark-money-in-judicial-elections-idUSKCN1LL2ZQ.
John Grisham, The Pelican Brief (1992).
Hale v. State Farm Mutual Automobile Insurance Company, 2018 U.S. Dist. LEXIS 19276 (S.D.Ill., Feb. 6, 2018).
Bradley Jones, “Most Americans Want to Limit Campaign Spending, Say Big Donors Have Greater Political Influence,” FactTank, May 8, 2018, available at http://www.pewresearch.org/fact-tank/2018/05/08/most-americans-want-to-limit-campaign-spending-say-big-donors-have-greater-political-influence/.
Matthew D. Lieberman, Social: Why Our Brains Are Wired to Connect 228 (2013).
“Manager’s Best Friend; Animal and Human Behaviour,” The Economist, Aug. 14, 2010, available at https://www.economist.com/science-and-technology/2010/08/12/managers-best-friend.
Jane Mayer, Dark Money (2016).
Mikael Priks, “Do Surveillance Cameras Affect Unruly Behavior? A Close Look at Grandstands,” 16 Scandinavian Journal of Economics 1160 (2014).
Matt Reynolds, “State Farm Must Face Claims it Helped Elect Favorable Judge,” Courthouse News Service, Feb. 8, 2018, available at https://www.courthousenews.com/state-farm-must-face-claims-it-helped-elect-favorable-judge/.
Michael Tomasello, A Natural History of Human Morality (2016).
Thomas van Rompay et al., “Effects of Security Camera on Prosocial Behavior,” 41 Environment and Behavior 60 (2008).
Debra Cassens Weiss, “State Farm to Pay $250m to Settle Suit Claiming It Orchestrated Sin of Justice Who Voted Its Way,” ABA Journal, Sept. 10, 2018, available at http://www.abajournal.com/news/article/state_farm_to_pay_250m_to_settle_suit_claiming_it_orchestrated_win_of_justi.