Can binding arbitration be applied to contract negotiation?
Rothbard gives praise to the idea of abritration in For A New Liberty, p569:
Arbitration therefore permits judgments to be made by people expert in the trade or occupation concerned. Currently, the American Arbitration Association, whose motto is “The Handclasp is Mightier than the Fist,” has 25 regional offices throughout the country, with 23,000 arbitrators. In 1969, the Association conducted over 22,000 arbitrations. In addition, the insurance companies adjust over 50,000 claims a year through voluntary arbitration. There is also a growing and successful use of private arbitrators in automobile accident claim cases.
Suppose I am negotiating with the seller of hats. He refuses to sell the hat for less than $20, but I am not willing to pay more than $10 for the hat. What good would arbitration be? How can it work in such a case? How can the abitrator understand how much I value the hat or how much the merchant values it? Won't it always result in a lose-lose deal? Isn't it like an imposed transaction?
Here is the reason for my questions. In the recent negotiations between the TV programmers and the cable tv and satellite companies there have been calls for binding arbitration by both sides. Now the Senate is considering legislation that would impose binding arbitration on such negotiations.
http://www.hollywoodreporter.com/news/senator-proposes-new-rules-tv-31476
I don’t think it works like that. For arbitration to even begin, some breach of contract must be present (or alleged). In the case you bring, no contract is even signed.
As for binding arbitration, that would defeat the point. There are ways to make arbitration hard to overlook, as boycott clauses in some contracts, but otherwise the beauty of arbitration is that both parties can be expected to agree of their own accord. If Congress really want to help spread arbitration, they could allow for no case to be heard in court before it has been submitted to some arbiter at least once. That would be cool.
Thanks for the reply. I suppose in these programming contracts there must be some automatic renewal clause. In that case they are not really negotiating over a new contract per se, but negotiating some particular details of the extension or renewal or the ability to cancel the contract. I'm no lawyer so I don't know if this makes sense, but perhaps that is why they want arbitration?