Hard-line libertarians generally oppose libel and slander law: Free speech includes the freedom to speak damaging falsehoods – including damaging falsehoods about specific people. Whether or not you agree, here’s a magic bullet to privately defuse libel and slander: The Prove-Me-Wrong Prize.
The idea is simple. Suppose I claim “Joe Blow cheats on his wife, and I won’t pay you a penny if I’m proven wrong.” If you have an ounce of common sense, you’ll dismiss my lame accusation. If however I announce, “Joe Blow cheats on his wife, and if I’m proven wrong according to well-known Arbitrator X, I will pay you $10,000.” Now you have a good reason to take me seriously, right?
The main problem with our current libel/slander regime: Pronouncing the solitary sentence, “Joe Blow cheats on his wife,” is functionally equivalent to “Joe Blow cheats on his wife, and I won’t pay you a penny if I’m proven wrong.” But most people don’t treat them as functionally equivalent!
Why don’t they? Many reasons, but perhaps the most important is that we’re not used to Prove-Me-Wrong prizes. If such prizes were common, you’d practically have to offer such prizes to be taken seriously when talking smack. In such a society, vicious lies would primarily discredit the speaker rather than his target.
So why not?