30 Pages Posted: 22 Mar 2018 Last revised: 18 Dec 2019
Date Written: March 19, 2018
Automated legal systems occupy a central place in the administration of most regulatory regimes. Examples include banking, tax, environmental, copyright, consumer credit reporting, and wage and hour regulation. These systems, or compliance robots, produce centralized results which invite government examination and adjudication on a centralized, ex post basis. This is revolutionary. It means that the content of law, which now technically applies to individual regulated parties, might begin to be determined centrally by interactions between the government and the firms that make compliance robots. I call this possibility government-to-robot enforcement.
Government-to-robot enforcement could improve greatly the efficiency of compliance, which is vulnerable to underdetection and underenforcement. Government-to-robot enforcement could find mistakes, impose strict liability, use a damages multiplier, and re-solve government claims against individual users collectively by dealing directly with a centralized compliance robot. It could free third parties from the negative externalities of noncompliance, like higher taxes because of others’ tax avoidance or contaminated air because of illegal pollution.
But government-to-robot enforcement has other problems. These include the decline of individual claims against the government and the risk of reverse capture, meaning the development of pro-government bias in the law. Another disadvantage is a fairness concern, since more effective government-to-robot enforcement would not apply to those who chose not to use compliance robots.
Keywords: enforcement, compliance, negative externalities, robot, cyberspace, automation, centralization, capture
JEL Classification: K23, K34, K42
Suggested Citation: Suggested Citation