He Said, She Said
Why do we outlaw libel and slander? "Reputations are easily damaged but not easily fixed, and libel and slander can cause very real economic and emotional harm." Those are arguments that libel and slander are bad things, which I think is true. But "bad" does not imply "ought to be illegal," nor does the fact that someone else's actions may cause me substantive harm.
This is much like the case where someone gives me a tip about a hot stock, and I invest my life savings therein— only to find the stock tanking later, ruining me financially. What the tipster did may have been immoral, but as long as he made no actual guarantees to me, what rights of mine has he violated? It was my fault for taking his advice at face value, regardless of whether he actually believed what he was saying.
There's some terminology that I think is misleading here: we say that an individual "has" a reputation, as if it were his property. But that reputation is really an aggregate of opinions and thoughts in other people's heads, and I no more "own" those thoughts than I own the weather around my house. I should have no special rights over other people's thoughts just because they happen to be about me, and others should not be prohibited from trying to affect those opinions, regardless of their motives in doing so.
I personally don't care about the opinions of people gullible enough to believe unsubstantiated rumors anyway (about me or anyone else); but I can sympathize with those who may be harmed economically by such rumors. Even so, I don't think libel and slander laws do much good, for two reasons: first, I think they're unenforceable, given the ease of anonymous communication on the internet. Second, in the absence of such laws, people would necessarily become less trusting of unsubstantiated or second-hand information, while today they might make the assumption that "if it weren't true, somebody would have sued."
The harm in having such laws, though, is clear: if I wish to speak my mind about a person, product or company, I must watch carefully what I say— at least if the subject has enough money to sic lawyers on me. This is true regardless of whether I believe what I am saying to be true; but even if it weren't, we should not go around abridging our freedom of speech in the hopes of thwarting a few liars. That's what's really at issue here, though I'll freely admit that this is not as important as some of the other challenges to free speech that we currently face. Why not re-open a discussion on this, though? What have we to lose?