So even if companies don't pick the arbitrator, arbitrators still have an incentive to find in favor of companies.

Additionally, small claims court already basically works like what you're describing, no jury just one arbitrator not picked by either side--the judge.

I agree we should have less of it, but all legislation should be mindful of the consequences of certain types of restrictions.

"But most of the RiteCheck customers I interviewed had done the math and found that it was less expensive to use RiteCheck than to use a bank. In their experience, required minimum balances and fees for everything from ATM usage to account maintenance were going up."

https://www.philadelphiafed.org/community-development/public...

PS I'm not sure I'd call the payday lenders savoury myself, though they be less unsavoury than loan sharks.

On the other hand, the number of people who will no longer be bent over a barrel every day will be significantly improved.

(The older alternative to unsecured very high interest short term loans is those secured on valuables - the pawn shop).

> What tends to happen is not that people go to the Mafia (traditionally they come to you!)

The mob definitely loans money at high-interest:

http://archive.boston.com/news/world/europe/articles/2009/03...

https://en.wikipedia.org/wiki/Loan_shark#Post-criminalizatio...

> high interest loans from utility companies and landlords strikes me as an obscenity.

My point is usually that this is a lot cheaper, since these don't usually charge interest at the payday rates. Utility companies have barriers to cutting you off.

But ultimately people who have negative cashflow week-to-week are going to get in trouble. Limiting how much debt they can get in causes them to hit the buffers earlier, but less hard.

(Incidentally, this is yet another major problem with "universal credit": paying it on a 6 week delay is designed to force people to use payday lenders!)

Switzerland, not really a communist hell hole and quite liberal in economic matters, for example, caps annual interest rates at 15% annually.

You don't see more broken legs than anywhere else.

Switzerland is a wealthy low-crime country to start with, the mafia do not have a strong hold. For example the homicide rate in Switzerland is 0.54 per 100,000 people, by comparison in the United States it is 5.35 per 100,000 people.

> If you cap maximum interest rates then people who are deemed too 'high risk' will be refused credit. As a result, they will seek credit elsewhere.

You could solve the loan shark problem and cap the interest rate by socializing the rest of the risk through some mechanism -- say a regulation that requires TBTF banks to offer payday loans and make up for the loss through their other products. Obviously there are details to be worked out, but the burden of a policy to combat loan sharking does not have to fall on the most vulnerable.

but if banks are forced to make loans at a loss, aren't we effectively subsidizing people that don't repay loans? you might think this is a noble goal, but I'd doubt many people will be on board.

Perhaps, but I have little sympathy for the feelings of the better-off people who want to clutch every penny to the point that they are jealous of the help the needy might get. If they're able to block reforms, then I think efforts need to be made to change their attitudes.

Add: Plus a profit to that

But that seems to be covered. There are multiple banks who will provide credit to consumers at lower interest rates than that and obviously still can make a profit.

Car loans are usually lower than that. Mortgages go for between 1 1/4 and 2% (last time I looked).

The maximum rate of 15% is usually applicable for credit card debts.

There is a saying, you can accept any customers you want as long as the price (interest rate) is correct. As a group you can manage this pretty well. For some segments of unsecured loans the default rates are high enough to warrant those interest rates. The customers who score better gets lower rates as there is competition in the market and they often shop around. Having too high rates gives a lot of not taken up loan offers which the managers hate.

Car loans are almost impossible to lose money on especially the secured ones. It becomes a question of "how much can a person damage a car before it being repossessed". Usually the car is fine and one gets the money back as long as you don't loan out more than you expect can be recovered after said damage. That's why you can give so low interest rates. Unsecured car loans are much more expensive and often requires full coverage insurance.

So yes, one can give out loans to lower interest rates than 15% but then you have to cut off the lower scoring customers that would not be profitable with that rate.

You might want to rethink that slogan.

My point is that it's hard to enforce neutrality, because there is always an implicit incentive for arbitrators to find in favor of big companies. Even if those companies aren't directly choosing a specific arbitrator, big companies in the aggregate are the ones primarily driving the business.

That's only because they are paid by the companies (and picked by the companies). If the companies didn't pick and the payment came out of the disputed amount or the loser paid, then they wouldn't have an incentive to favor the company.

Does the arbitration company make money when the employer doesn't? Nope.

Will the arbitration company force bribe money (Fine, Civil Suite) to make the problem go away? Nope.

Will the arbitration company put someone in jail for comitting a crime? Nope.

The entire point of arbitration is to eliminate the courts. "Tendancy" is the spin word, it leaves open the possibility the arbitration comapny might rule in favor of the employee. They will literally never do that.

E.g. Google's executives harassing women then using binding arbitration to remove their ability to sue them, which irregardless of the merit of the case, would be dismissed by the arbiter every time. Took a company-wide revolt to get them to stop. I'm beyond sure if the could've gotten away with literal beating and raping women they would've, and nobody wants to deal with the horror show executives participating in that kind of behaivour would become when they started down that road.

The problem with this approach is, the courts are there to avoid people exacting justice on their own terms which I'll remind you in our history, we've done quite a few times and it doesn't work out well. Sitting a mob of strangers down and having them pass down a ruling is a much better approach. Remember, 17 guns in america per man women and child and growing.

You do not want the setiment if corporations existing to literally eat people alive or that executives would shoot their own families for money to continue to grow. You don't want to let the faith in government and the courts wane over this BS. We've got a good thing going on right now in the US, it'd be a shame to throw it away over something as banal as executive pay or stockholder income.

Court costs are a greater barrier to the side that doesn't have a full time legal team.

Also, almost no one has in house litigators. So companies being sued also have to shell out for counsel by the hour.

I very much doubt that. The vast majority of disputes that would end up in arbitration are smaller contract disputes, not personal injury claims.

>Also, almost no one has in house litigators.

They have counsel on retainer, and some companies still do. All big companies would if forcing customers and employees to accept arbitration wasn't an option.

Another important factor is that arbitration is often used by companies as a way to shield themselves from class action lawsuits. Even if arbitration were fair with low costs to the consumer, no one would go through it individually to collect a $10 damage.

If a million employees each suffered $10 in damages from a particular action of a company, there needs to be a way for them to collectively pursue damages.

This is how arbitration works. Non-binding arbitration is called mediation, and is basically glorified group therapy.

Honestly I think it does _not_ make sense. If courts are too overloaded, then we need more courts or we need to change the laws/processes that overload them.

> This seems like such an easy problem to solve too. Just don't let the company or the worker pick the arbitrator. Require by law that the arbitrator be picked by a judge, or be randomly assigned by the court system, who has presumably vetted the arbitrator.

> The main problem with these things is that the arbitrator is picked by the company, so they have a strong incentive to favor the company. Arbitration wouldn't be so bad if the inherent bias is removed.

I think these are good ideas, but I think there's another very big one to consider: why should anyone be allowed to choose arbitration before the dispute at hand arises? I simply think it should be disallowed. I always here people supporting arbitration say stuff like "it's better for both parties", but if that's actually the case then both parties would choose the arbitration at the time of the dispute. Allowing people to tie themselves to arbitration ahead of time entirely removes the incentive to actually provide a fairer and better process to both sides.

I don't think that's enough of a reason to disagree with your point but it's certainly one to consider, especially if one side has a lot more resources and jurisdictionally each side will need to pay their own legal fees.

Honestly I think that you shouldn't have any inherent right to arbitration. You should have a right to access to a court. Arbitration should only there if both parties agree to it. If one party doesn't agree because they want to make it more expensive for you, so be it. I mean I can't really see what's fundamentally different than someone deciding they want to force you to a court trial for that reason versus them forcing you for another reason. It's just a legal strategy at the end of the day. If they are truly acting in bad will, they should be assessed court fees down the road. I know that that's difficult in the US court system, but that is a problem that should be fixed with the court system not by just side-stepping it with arbitration.

Your perfect world is captured by current employment contracts. Both sides agree to arbitration and then both sides stick by that agreement.

I know this is the case and I believe it is generally the way it should be (ecxept of course the fact that the agreements can be entered into prior to the disputes). I was responding to the devil’s post by basically pointing what you wrote here.

> Your perfect world is captured by current employment contracts. Both sides agree to arbitration and then both sides stick by that agreement.

I’m not sure what point you’re making here. I think that agreements by parties to restrict themselves to arbitration regarding disputes that have not yet arisen should be legally unenforceable. I think it would improve the arbitration system in every way. (This was essentially the argument of my first post.) Are you disagreeing with me?

Unless because of career specialization, location, imperfect markets...whatever, you only have access to employers who insist on arbitration as part of the terms of employment.

One side agreed to it, and one side was coerced into agreeing to it.

This is certainly true, but many parties are mutually benefited by resolving some disputes via a neutral arbiter rather than the courts. It's just another example of where private companies can be more efficient than legal bodies.

There are just more inherent costs in a legal court of law.

I don't see why relying on one arbiter saves any more time than relying on one judge. Is it that the arbiter would be less qualified/lower paid than a judge?

Small claims is like that specifically because it is a small amount of money.

(I’m also not sure what the requirements to be an arbitrator are so please correct me).

For employees this is free in the first instance and you will have a neutral judge to rule about the situation. I think you don't even need a lawyer as an employee but just "file a case" with the court, but I'm not totally sure about that.

Anyway, it's a very important part of the system in Germany, those courts keep a lot of cases with work-related topics away from the "normal" courts while still providing a neutral platform for both parties.

It most cases the only requirement is a pulse.

There’s usually no mandatory legal or industry training.

There are time limits on when a claim can be made and - if monetary compensation is ordered - how much can be paid out [1][2].

https://www.citizensadvice.org.uk/work/problems-at-work/empl...

In 2012 the government imposed a £1200 (from memory) fee for taking a case to tribunal. So a low wage employee without union representation who was harassed out of a job or unfairly dismissed would have to: File a complaint while looking for a new job. Pay the fees during or after a period of involuntary unemployment. Prepare their case while working their new job. Arrange time off for themselves (and witnesses) and pay for transport to the hearing(s). Make their case. Possibly receive compensation totalling a few thousand pounds.

Claims dropped a lot and it was five years before the Supreme Court told the government to knock it off.

It's rough (and precarious) at the bottom. There have also been large cut backs in legal aid for dealing with the "proper" courts (and not just for civil cases[3]).

[1] The tribunal can also order an unfair employer to give the employee their job back or change their employment conditions.

[2] I think there are differences for cases involving some forms of discrimination.

[3] https://www.lawgazette.co.uk/law/nigel-evans-rues-backing-fo...

Edit: formatting.

Creating ways to circumvent the legal system (e.g. plea bargains, private arbitration and so on) is rarely done in good faith.

No law of physics prevents the creation of a cheap, equitable and efficient legal system.

In case it's not obvious, here's an example of where it matters. Alice damages Bob's car. Bob offers to settle for £100. Alice says, no, I want £500. Bob says, don't be silly, you can have £150, though that's too much, in my opinion. Alice sues Bob. The court decides that Alice should be compensated, so Alice "wins", and damages should be £80. Who should pay the court costs of £500? (And what if the damages were £300?)

Perhaps everyone already understands that "loser pays" means "the party whose unreasonable behaviour led to the case coming to court pays", but I can't help being suspicious that a reform of the legal system that would drastically reduce the number of cases coming to court might be sabotaged in some way by the people with vested interests who will implement it.

Ok, you lost me on the part where the at-fault party (Alice) is owed compensation by the not-at-fault party (Bob). This makes absolutely no sense.

He just inverted the names: Bob damages Alice's car.

This is outright illegal in countries where lawyers are not allowed to work on contingency and may get a lawyer barred.

That's already the case. If the company and the worker can't agree on an arbitrator, they each pick one, and then the two get together and agree on a third arbitrator to use. Or a judge will pick one. The employee is not required to accept whatever arbitrator a company picks.