Dispute Resolution Organizations, What they are and how they work.

It seems to me that if I’m going to propose the elimination of government I should make an attempt to present a method for society to organize itself so as to protect individuals from the criminals of the world. The usual method among anarchists, at least that I’ve read, is the concept of a Dispute Resolution Organization (DRO). A DRO, as I envision it, is a cross between an insurance company, private arbiter, security guard company, and private investigator. They may be one company, or several working together according to contracts and customer demand. The basic process involves a customer hiring a DRO to insure them and their property against theft, property damage, assault, murder, and other problems initiated by others. In the event that the customer is damaged in some way the insurance policy will pay the customer the agreed upon coverage. The DRO would then investigate the damage to find the responsible party to claim restitution. The high level of competition and general good business interests would encourage businesses to act in a fair and reasonable manner.

So how would a DRO be organized? While I can’t say for sure I can present a few ideas. First off while I think the idea of a large, unified DRO is possible, housing insurance, investigation, enforcement, and arbitration all under one roof, such a company is unlikely . Opening a competitor in any portion of the business consists mostly of having the ability and desire to compete, and hanging out a sign. As I see it the customer hires the insurance company and when the insurance is needed the insurance company would hire an investigator from many competing investigators both individuals and in larger companies. When the investigator determines who caused the particular problem they provide that information to an arbiter who then issues a summons to the responsible party. The responsible party then appears before the arbiter, or a different, mutually agreeable arbiter, and the case is decided. The responsible party is then ordered to pay compensation to the insurance company for the money paid to the original customer. In the event the responsible party is unwilling to come before an arbiter the insurance company, or the arbiter could hire an enforcement agent to forcibly bring the responsible party in, though this comes with the risk of having the wrong man and having to pay compensation for assault and/or kidnapping, and thus would only be likely in the event of particularly violent crimes and/or absolute certainty. The enforcement agent has an interest in using minimal force to apprehend the individual for much the same reason.

Now we have our customer, an ordinary man of ordinary means, who wants protection against crime. The natural response to a unknown risk with potentially disastrous results is to take out insurance against the risk, so our customer would call various insurance companies and take out a policy protecting him from criminal acts. These are not the huge mega-corps of today, but mostly smaller, independent companies. After all, without government to require an insurance license anybody with a modest amount of capital, some salesmanship, and a good business model can open up shop right away. This fierce competition would drive down prices and drive up service in insurance just as it does in any other market segment. Any insurance adjuster, even today, will tell you that it is cheaper to prevent problems than to fix them. The saying “An ounce of prevention is worth a pound of cure” is as true now as ever. This gives the insurance company a strong incentive to prevent crime in the first place. They may install security alarms, outside cameras and lights, re-enforced doors and windows, or whatever other technology is shown to prevent theft. They would actively encourage customers to be able to defend themselves, recommending self defense classes of all sorts, from firearms training, to jujitsu to reduce assault and robbery in the street. They may even go so far as to hire security guards when the cost/risk shows it to be worthwhile.

Suppose that despite the best efforts of both the customer and the insurance company our customer gets robbed. His first act will be to file a claim with his insurance provider. The insurer would immediately send an investigator to the customers home to determine the extent of the damage, what items are stolen and how much the insurance company owes the customer in terms of  actual damage, pain and suffering, and lost time. If the customer is not satisfied he may take the insurance company to an arbiter to press for further awards. The insurance company would then investigate the crime scene using the best available forensic technology. Remember they have an interest in catching the thief, both to claim restitution for the money they paid to the customer, and to prevent the thief from robbing another customer. As soon as the investigation is complete the insurance company would likely hire a contractor to repair the damage, and install replacements for the stolen property, or they may leave this up to the customer, depending on the terms of the insurance policy. With the investigation complete at the customers home the insurance company would pay whatever damages remain after the repair or replacement of the property. This may include some form of victim counseling, payment for the time the customer spends involved in the investigation, and an advance on other restitution/reparations that an arbiter would likely assign. The customer is no longer needed for any further proceedings and may go about his business.

Now the insurance company will use the information gathered in the investigation to determine the thief who robbed our customer above. Once they have a suspect they will bring the evidence before an arbiter and request that the accused thief be summoned before the arbiter to resolve the dispute. An innocent man accused would have an interest in appearing to clear his name, and would likely be compensated for his time, trouble, and legal fees. A guilty man may try to avoid the arbiter, but this would not be the wise course of action. The arbiter is likely to order the thief to pay restitution, investigation costs, and the cost of the arbiter, undergo career training, and perhaps psychological treatment. A payment plan for the restitution and other costs would be worked out and if unique items were stolen their return or purchasers name would be expected. If the thief runs, the arbiter could try the thief in absentia and simply place the restitution demands on the thief’s credit report with a note that the thief refused to participate in arbitration. This kind of notation on a credit report would be economically crippling. Nobody would make a loan to a man who neither pays nor takes the time to dispute a debt. Nobody would enter into a contract for rent with a person who doesn’t follow the results of arbitration. Things could even go so far as nobody allowing a person who refuses to pay legitimate debts or enter arbitration to refute their validity to enter their property. Further, if the thief himself has a insurance agent against theft he may find himself contractually obligated to penalties for stealing by his insurance policy including asset forfeitures to cover his arbitrated debts. At this point the thief is left with few choices. Either go out into the wilderness and make due without society, stay exclusively on his own property and be completely self sufficient, or enter arbitration and attempt to settle the matter. Upon entering arbitration most of the restrictions on the thief’s movements and activities would be removed and he could attempt to conduct himself in society.

The last option for a DRO is enforcement agents hired to bring a reluctant individual in. These well armed agents would be hired in situations where direct force is needed to prevent further crimes. The use of direct force such as this comes with many risks. If an individual is innocent and an enforcement agent takes them before an arbiter by force it is kidnapping and full restitution would be required by the innocent parties arbiter. Such restitution would more than likely be charged to both the enforcement agent and the agency hiring it. If a guilty individual is brought in by an enforcement agent and the force used is excessive the enforcement agent would be liable for damages. Because of the extreme risk brought on by the use of enforcement agents it is highly unlikely that they would be used often. The high risks such agencies would take would cause them to carry expensive insurance policies, the cost of which would be passed on to their customer, usually an arbitration company. This same risk would cause them to be very cautious about the contracts they accepted and further drive up their price. The high cost and high risk involved in the use of force would make it an option of last resort.

Overall the DRO system provides everything that a person could want in protective services. His loss is covered should he be the victim of a crime. The investigating party has a vested interest in actually catching the criminal. The criminal even has an interest in showing up for arbitration and following the arbitrators decision. Innocent or mistreated parties can hire a different arbitrator, unrelated to the first, to re-examine the case and gain restitution for unjust rulings. While force remains an option, it is expensive, risky and thus unlikely to be used. As the power of the free market works the most effective system will win out, eventually leading to lower crime overall.

Published in: on September 2, 2009 at 10:31 pm  Comments (3)  

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3 CommentsLeave a comment

  1. What if the thief can’t pay restitution? After all, if you have money/a job you wouldn’t be a thief, would you?

    Who maintains the records of folks who haven’t paid, or who failed/refused to show up for arbitration? Who would have access to these records, and for what purposes? How is one John Smith differentiated from another John Smith without assigning a unique ID number, like an SSN, so that one can dispute someone else’s negative information from appearing in one’s file? Who assigns the number and keeps up with it? Is “Big Brother” watching?

  2. “What if the thief can’t pay restitution? After all, if you have money/a job you wouldn’t be a thief, would you?”

    From the post “The arbiter is likely to order the thief to … undergo career training, and perhaps psychological treatment. A payment plan for the restitution and other costs would be worked out”

    In addition the insurance agency or arbiter might work with a placement company to find work for those individuals whom have been convicted of a crime. The insurance agency certainly has an interest in getting the thief to lead a productive life. That protects it’s customers

    The current system of credit reports could easily be adapted to maintain records of debts ordered by arbitration and to note the refusal to attend arbitration at all. Currently the records are kept separate both by SSN and by a history of past addresses, such a system could be expanded if needed.

    As to privacy, the records themselves would likely be public. After all the purpose here is to highlight those people who don’t meet their obligations. Identity theft is still theft and would bring about the same consequences as breaking into somebody’s home so the insurance company covering you for theft would have a similar interest in protection from ID theft that they have in protection from burglary.

    Currently there are agencies like LifeLock and FreeCreditReport.com’s Triple Advantage that keep an eye on your credit report for a nominal fee and alert you to potentially false information. Don’t want to pay for this? Purchase a report yourself on a regular basis. Still not happy? You can always take the risk of not checking and handle a dispute when the issue arises through arbitration at your own expense, which might be passed on to the credit agency in the event of wrongdoing on their part.

    As to “Big Brother”, no he’s not watching. In fact it’s not even clear how he could exist.

  3. […] is ultimately property damage. Having already discussed how a DRO works I’m sure that it’s easy to see how pollution can be dealt with after it happens. The […]

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