Braille Monitor                                    June 2018

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It’s the Economics, Stupid

by Dylan Hedtler-Gaudette

Dylan Hedtler-GaudetteFrom the Editor: Dylan Hedtler-Gaudette was born and raised in Maine and now lives in Baltimore, Maryland, with his partner and two cats. He has a background in the mission-driven nonprofit sector and has been a member of the Government Affairs team of the National Federation of the Blind since May of 2017. Dylan is an avid fitness enthusiast, a political junkie, and loves following his favorite Boston sports team, especially the Red Sox and Celtics. He says he loves to write and would like to contribute more to the Braille Monitor. After reading his article I hope you will be as excited about this prospect as I am. Here is what he says:

There are few things more infuriating than inconsistency in a logical argument. It is maddening when your opponent in a debate, especially an existentially important one, appears to be making an argument that you know to be false or, to be more charitable, that is confusing when considered alongside other things you know to be true.

This state of confusion and irritation is where I have found myself ever since I joined the government affairs team here at the Jernigan Institute and began actively working on our opposition to H.R. 620, the “ADA Education and Reform Act of 2017.” This bill, which was passed by the House of Representatives in February, represents an example of a broader push for a “notice and cure” provision within the Americans with Disabilities Act (ADA). For the purposes of this writing, I will refer to the broad “notice and cure” construct and not so much to H.R. 620 specifically. Though everything said about notice and cure applies equally to H.R. 620.

As a quick primer on notice and cure, it is first vital to know that it would fundamentally alter the way people with disabilities enforce their rights under the ADA. It requires that a person who has encountered an access barrier that violates his or her rights, typically his or her rights to equal access to places of public accommodation under Title III of the ADA, first provide written notice to the proprietor of the place of public accommodation in question and then permit that proprietor some specifically-defined amount of time to cure the problem. Hence, we have “notice and cure.”

As the ADA currently stands, a person who has encountered an access barrier that violates his or her rights under Title III of the ADA may pursue one of three immediate options: 1) They can seek a private resolution by negotiating directly with the proprietor; 2) They may file a complaint with the Department of Justice (DOJ), and the issue will be investigated; or 3) They may file a private lawsuit in order to seek redress of the violation. It is essential to point out that under the federal ADA a plaintiff may not seek money as a part of the lawsuit, only redress of the access barrier. There are, however, some states that have passed their own state-level versions of the ADA that do permit a person filing a lawsuit alleging a violation of the ADA to seek money as a part of the dispute.

While there are many problems with a notice and cure framework, one of the most glaring ones is the negative effect it would have on proactive compliance with the ADA. It is often said by those of us who oppose notice and cure that it would produce a wait and see approach to compliance with the ADA, which is a slap in the face to the original intent of the law. Think of it this way—why would a business proactively comply with accessibility requirements under the ADA if they are not legally obligated to do so until they receive a notice from a person who has encountered an access barrier and thus have had her or his rights violated?

And here is where the frustrating part of the argument comes into play. The groups actively promoting notice and cure and those who were largely responsible for H.R. 620 do not acknowledge the new reality that notice and cure will produce. They represent large and powerful sectors of the business community and were the key to successfully passing H.R. 620 in the House of Representatives. They lament the existence of “drive-by” and “serial” lawsuits as being prohibitively onerous on the business community. These types of unscrupulous legal activities do exist, though on a much smaller scale than the business community would have us believe. But supporters of H.R. 620 simply will not accept or affirm the undermining effect on the rights of people with disabilities that notice and cure would have. They often stress how much they admire the ADA and how most businesses genuinely want to comply and welcome customers with disabilities. But, according to these groups, it is just too difficult to know how to comply with the ADA, and it is only reasonable that all of the burden of education and enforcement should be placed on the backs of people with disabilities.

The National Federation of the Blind, as readers will know, rejects the premise of notice and cure and the arguments that undergird it. Notice and cure unacceptably diminishes the civil rights of people with disabilities, and we stand ready to fight these efforts, armed with both moral and legal counter-arguments.

One category of counter-argument that does not receive enough attention lies in the realm of economics. More specifically, microeconomics.

A bit of personal background on me. I am an economics enthusiast and as such I studied and obtained a degree in economics during my undergraduate studies, and then I continued that focus on the study of economics in graduate school. As a result of this interest and this training, I tend to analyze problems and assess issues through the lens of economics and the principles associated with the discipline.

There are two bedrock principles of microeconomics that can tell us a lot about why notice and cure will lead to an exacerbation of the problem of noncompliance with the ADA. Those two principles are rational choice theory and profit-maximization. I will briefly describe both ideas below and then demonstrate why they should deliver the finishing blow to any argument favoring a notice and cure provision that posits that it would not have a negative effect on ADA compliance.

Rational Choice Theory: This is a key principle that lies at the core of much of the economics discipline. In short, rational choice theory asserts that people and firms are rational actors and as such, will pursue the rational economic decision in most instances. The “rational” thing to do is to make the decision that produces the most pleasure and the least displeasure. The term often used in this case is “utility,” which is another way of capturing pleasure or satisfaction. So maximizing the utility we gain from any given decision is the goal of a rational actor, and that actor will therefore make the decision most likely to result in the highest level of utility for that individual.

The theory further posits that if everyone pursues this rational course of action, the overall level of utility across a given society or economy will increase. Efficiency will also increase, according to this theory, as rational choices will produce the most efficient allocation of resources, and this will also produce a positive aggregate outcome.

Profit-maximization: This is a concept connected to rational choice, but it relates more to decisions made by businesses. The basic idea here is that businesses will always seek to generate the highest possible level of income while simultaneously striving to minimize the costs of production. The cost of production is comprised of a variety of factors, called “inputs,” that range from labor costs to the cost of raw materials to compliance costs, among others. The ultimate goal of the firm at the most basic level is to maximize profit, which is income minus costs.

The merging of rational choice theory and profit-maximization means that in order to be the most efficient and successful business, rational choices about income and costs must be made in order to keep profits as high as possible. This is especially true if the business in question is a publicly traded company, answerable to shareholders. In this instance, businesses actually have a legal obligation (called the “fiduciary” obligation) to generate the highest possible profits and, in turn, the most shareholder value through higher share prices.

We can now take these fundamental principles of microeconomics and apply them to our arguments against notice and cure. It is also important to note that businesses would likely agree with everything laid out above about rational choices and profit-maximization; we are not making wild or erroneous assumptions about the views and actions of the business community. These are widely held and generally agreed upon pillars of economics and business management practice.

So here is the point: if businesses are rational, profit-maximizing actors with a responsibility to act in this way (especially if they are publicly traded companies), what possible incentive would any of them have to proactively and consistently comply with their obligations under the ADA? Remember that rational choice theory lays out the virtues of making self-interested decisions that produce the most personal gain possible. Remember that the profit-maximizing imperative of businesses shapes their production strategies and budget objectives.

Businesses will always avoid expenses they do not have to incur in order to keep the margin between income and costs as large as possible. Or, in other words, in order to maximize profits. If it will cost a business x to install a wheelchair ramp or y to purchase an accessible point-of-sale (POS) machine, they will not do it unless they have to. If notice and cure becomes an enshrined part of the ADA and creates a wait and see environment, what reason would a rational, profit-maximizing firm have to ever install that ramp or buy that POS machine before receiving a notice letter from a person with a disability?

The implications here are straightforward and alarming. Businesses exist to generate profits and complying with the ADA will, by definition, reduce by some degree the profit margin. If businesses are not required to comply with the ADA proactively, and if they do not have the incentive to do so out of a desire to avoid legal action, they never will comply proactively. It would be, in strictly economic terms, irrational for them to do so. And this is a key argument against notice and cure and one that we should be making more forcefully. If we can speak in their language and demonstrate that we know how business works and how economics work, we can better isolate and knock down their arguments in favor of notice and cure. In doing so, we can deliver the death blow to this effort and safeguard the civil rights of people with disabilities for the foreseeable future.

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