Saturday, January 08, 2005

More thoughts on tort "reform"

Dubya went to Michigan to announce a push to change the way asbestos claims are handled. Yup- now he wants to protect makers of asbestos, a known carcinogen, and the Time notes that Halliburton is a major asbestos defendant. They report, you decide.

Industry has been critical of asbestos suits for some time, arguing that these cases have bankrupted a number of companies. To which I respond, so what? In a nation where 38 states have death penalties, where a person can lose his life for taking even one other person's, why shouldn't corporations face the same fate when their products kill thousands of people, and injures many thousands or millions more?

I'm not anti-business; on the contrary, almost every major innovation has come from business and that history of innovation should be encouraged. However, when people are injured or killed because businesses considered profit to be more important than safety, or because they intentionally suppressed information (as the evidence suggests happened in the Vioxx case), then businesses must pay the piper. In business, that means money.

Holding businesses accountable for their actions is good for consumers, because it will ultimately result in better, safer products. What many people don't understand is that it is also good for business, because the makers of good products will no longer be at a competitive disadvantage to the companies that routinely cut corners.

If you really want to change the tort system, however, here is a free market idea that the Bushies don't want to pursue: eliminate limited liability. Corporate shareholders enjoy limited liability, meaning that shoreholders are not liable for the debts of the corporation. Imagine if after every multi-million dollar lawsuit, a small investor got a bill from a lawyer for fifty bucks, or a large institutional investor (like CalPERS) got a bill in the millions. The people responsible (i.e. the execs) would be out on their asses in a blue state minute. The Boards of Directors would take their responsibilities seriously and oversee the managers instead of rubber stamping them. As a result, business would make sure their ducks are in a row before they made a move, and lawsuits would become rarer and less costly.

Everyone wants that, don't they?

No comments: