It’s a bit like legalizing violence from shopkeepers because most of the time they’re punching thieves.
Robin Hanson argued that negative gossip is probably net positive for society.
Robin Hanson: On average, letting people know about other people’s dirt is a good thing.
The act of providing negative gossip to the public ‘for free’ is a public good. In a transaction-cost-free market, the blackmailer might try to sell the secret to the public (e.g. via assurance contract).
surely blackmail gives more incentive to lie
Lying about someone in a damaging way is already covered by libel/slander laws.
You’re describing a business that sells dominant assurance contracts. Seems reasonable, though I’ve had trouble finding examples of these types of businesses in the wild (outside of Kickstarter).
Related:
https://www.lesswrong.com/posts/fQkzGfRoL82XX4cPr/if-a-kickstarter-for-inadequate-equlibria-was-built-do-you
https://www.lesswrong.com/posts/98HihPxpoRFja2JNF/is-there-an-assurance-contract-website-in-work
https://www.lesswrong.com/posts/KvBsCRyAbtCd3QELj/thinking-about-a-technical-solution-to-coordination-problems