Legal

When it comes to things such as environmental policy, the Progressives have been rather successful at promoting their world view.  They realized that it would be futile to argue that property rights and human ingenuity could not solve anything – so they did not try (immediately) to socialize oil or other sub-surface minerals but they did succeed in derailing the evolutionary process by which institutions emerged to resolve emerging problems.  The economist Ronald Coase  noted this in an essay pointing out that the EMS (Emergency Medical Services) was well on its way to being homesteaded with rules for allowing multiple uses – and then the Feds created the Federal Communication Commission and the spectrum is still terribly managed to this day.  

The environment is valuable and valued by many.  The difficulty is that we have relegated its “protection” and “management” to bureaucrats – and suppressed the evolution of property rights in environmental resources (wildlife, groundwater, fisheries).  These resources remain as common property resources – and we experience repeatedly the Tragedy of the Commons.  However, the most distressing aspect of the debate over environmental policy,  is that the view gaining prevalence from the Progressive side is decidedly anti-human, and anti-technology at its core.  

There are many features of the growing anti-human-relevant-science campaign.  

  •  One is the selection of the fearful – the Malthusian wing of this movement that sees “technology” as change, as a move into an untested future and, thus, to be slowed if not banned.  These people champion the Precautionary Principle – a totally Luddite rule.  Has there ever been a market innovation (one that we hoped people would buy) that created more harm than good?
  • The Economic Rational wing, which has championed “comparative effectiveness” and so on.  After all, they argue, it would be foolish and wasteful to approve a new drug or device that was not “cost effective for the median individual.”  A wonderful capture of the rational language but, of course, that approach argues that we can know in advance that a specific innovation will or will not prove beneficial (the French minitel system comes to mind).  Most – all – innovations appear first as clunky, expensive toys or (for a very few) necessities.  The purchasers are the ‘Early Adopters’ – often rich or eager to “be the first on their block.”  However, the freedom to create an infant market for a product that would be too expensive and too inefficient for most people made it possible for the thousand dollar 1940s television sets with tiny blurry pictures and very low quality to become the few hundred 34-inch flat screen marvels of today.  We will suffer in many areas for this loss but the greatest losses may be in the medical innovation area.
  • The Government Research Must be Dominant school is characterized by those who sought on “scientific” grounds for removal of any restraints on stem cell research – not because such research was banned (private parties were largely free), but rather because it meant that their approved source of scientific funding – the government – was kept from the field.  Indeed, this group is much more ambitious – their effort to drive the market from the marketplace of ideas is one of the most threatening themes.  Research that has been funded by a company, individuals who have done consulting or worked for a company, groups who’ve received support from a company – all inherently more suspect that a government-funded scientist.  One can expect that such individuals and the research work they do will soon have to wear a yellow C (for corporate) patch on their clothes, appended on every page of their journal articles.  
  • The Science Good, Technology Bad sub-class.  This refers to the observations of Joel Mokyr and others.  That it has been the close link between (largely) non-economic driven science and (largely) economic-driven technology that transformed the slow progress of most of mankind’s history to the exponential growth we have experienced in the last several centuries.  Brilliant individuals have popped up from time to time throughout history.  They expand man’s knowledge and some small use is made of that knowledge to improve man’s welfare.  In the Industrial Revolution, however, the growth of economic freedom created a more receptive and attentive audience for such knowledge.  Electricity would be discovered and Edison and others would immediately begin to think, “What is it good for?”  Then, in turn, they would go back to the science and note – “this worked OK but … why?” and those questions would both prompt and interest the science community in expanding knowledge in directions more likely to prove human beneficial.  The resulting positive “feed back loop” is critical to progress. This group would sever that link — Science Good, Technology Bad!!

As I have stated above, the environment is valuable, and its preservation is valuable to many.  Therefore, at CEI, one of the things we have tried to do in our work is not ridicule the environmentalists or argue that environmental values are irrelevant.  We simply make the point that the Malthusian goals – less people, less consumption, less technology – is far less inspiring that the view of mankind as the Ultimate Resource.  

I am proud of the work we have done, but we have much work to do to improve our marketing skills.  The other side of this debate seems rather adept at garnering popularity, and is much better funded.  My message to those who may share our views is that we needed to find ways to create a more effective and powerful alliance between the entrepreneurial elements of the business community and the free market community.  We face many problems.  Keep up the good work – and help find the scientist-entrepreneurs who have not succumbed to this insanity.  There must be a handful of people who recognize that the politicization of science by conservatives was stupid, but the politicization of science by the Luddites is suicidal.

I was initially going to post this as a comment to Greg Conko’s recent post arguing against the Court’s recent decision in Wyeth v. Levine, but the comment system didn’t work correctly for me.

I appreciate the force of Greg’s argument (and I certainly agree that this particular case should have been decided much earlier on different grounds), but I think there is room for reasonable disagreement within the libertarian community about whether FDA preempting state tort law is good or bad. This is one of these questions about what to do in the real world, where first-best solutions just aren’t politically possible.

Most libertarians would likely agree that there should be only one system to deal with injuries caused by products, including drugs: the tort system. The tort system only operates once there has been an actual injury, not just some scared politician’s prediction of a harm. And it doesn’t ban anything; it just forces manufacturers to internalize the external costs of the injuries their products cause. If the benefits of the product outweigh the total (social) costs, the product will keep being made. This is the optimal outcome. And, further, the injured consumers will not simply be ignored; they get compensated for their harms, restored to a position as good as they’d be in had they not been harmed.

Unfortunately, however, we don’t just have the tort system. We also have the FDA and other prospective regulatory agencies that pass judgment on products before they hit the market, banning some and restricting how others can be marketed and sold. If the FDA isn’t going away, what should we do?

Greg’s answer is essentially the one I gave in the context of internet regulations: “multiple levels of regulation [are] always worse than… only one.” There is a difference between multiple levels of regulation and a tort system plus a regulatory system, though. If the FDA gets lots of stuff wrong, but the tort system functions ideally (a big, and admittedly untrue, assumption), then the FDA should not be able to preempt the tort system. If the FDA allows a drug that nonetheless causes injuries, the tort system has not failed or “overregulated” if it correctly assesses and assigns damages. It has internalized costs that would otherwise be external.

If the Court had found preemption, however, then there would be calls for the FDA to regulate even more heavily, banning every drug that might cause any problem. The tort system currently functions as a safety net. Remove it and politicans and voters will demand more stringent protection from the system left – the regulatory one.

However, finding no preemption emphasizes the point that the FDA is not infalible and that the tort system does a better job, at least sometimes. Unfortunately, it only does this in one direction, and does nothing to expose the much more common and deadly – but largely invisible – type I error. Still, I think though the tort system may get some stuff wrong and incorrectly over-compensate, this risk is more acceptable than the risk of further entrenched and onerous FDA regulation.

I revoke my previous apology to the Swiss, and reiterate my previous disapproval.  As evidenced by the latest outcome in the U.S. tax case involving UBS, we have moved beyond troubling and into something much worse.

...the world’s largest wealth manager in terms of assets, agreed to pay a $780 million fine and disclose information about some of its clients to settle a landmark U.S. tax case.

As I said in my older post: “In direct contradiction to their own legal view of tax evasion.  Even though some may argue that this is moot because the U.S. does not consider a financial transaction as something beholden to privacy rights, the Swiss do–and besides, the U.S. view is wrong.  A person’s financial records should be considered as sacred as their medical records.”

And with an eye toward history, let us not forget:

One issue of the time that reinforced the passage of this law [Swiss Banking Secrecy Act] came during the era of Hitler when a German law stated that any German with foreign capital was to be punished by death. Swiss banks were watched closely by the German Gestapo. It was after Germans began being put to death for holding Swiss accounts that the Swiss government was even more convinced of the need for bank secrecy.

Reading the comments on left-leaning blogs, you hear cheers and a tinge of jealousy about the whole thing.  No matter if UBS did or did not help people avoid U.S. taxes, I cannot read this without envisioning a slippery slope argument.  If the current climate continues, it won’t be too far-fetched to imagine laws like that of WWII Germany criminalizing and imprisoning people for choosing where to put their own money.  And I won’t even mention the new Treasury Secretary. Oops

But, alas, not as a litigator – the role that made him rich and famous – but as a defendant. According to Legal Newsline, Richard “Dickie” Scruggs is headed back to federal court to plead guilty to another count of trying to bribe a judge. He’s already serving a five-year sentence for a previous bribery attempt.

OpenMarket readers will remember Scruggs as one of the fattest of fat cat trial lawyers to emerge from the multi-state tobacco settlement reached between tobacco companies and state attorneys general in 1998. Our own Hans Bader revisited the scandalous fees charged by lawyers like Scruggs last June and August. Attorneys, many of whom did nothing but re-file copycat lawsuits in their own states, reaped a windfall of $15,000,000,000 (that’s fifteen billion dollars) in legal fees.

But at least the money that didn’t end up in the pockets of men like Scruggs went to help sick smokers, right? That was, after all, the rationale for extorting $240 billion from tobacco companies. Not so much, it seems. Just in the last week the Virginia General Assembly has been a contentious place, as state lawmakers argue about whether the state should have spent large amounts of its tobacco settlement money on things like “high-speed Internet access in rural areas, upgrades to sewer lines, a scenic trail to honor Virginia’s musical heritage and a railroad museum.” I don’t remember anyone campaigning for the MSA by telling us they were fighting for more railroad museums and musical hiking trails. It must have slipped their mind.

Nebraska State Senator Ernie Chambers’ lawsuit against God has been thrown out of court because God couldn’t be served papers informing him of Chambers’ suit.   The court threw out the suit by Nebraska’s most famous liberal lawmaker because of his failure to serve God with a summons. 

But law professor Ilya Somin believes a better reason for dismissing the suit would be that any lawsuit against God, who is Almighty, would be “unredressable” by earthly officials, who could not force God to do anything.  (“Redressability” is one of the elements for showing standing to sue under the Supreme Court’s 1992 decision in Lujan v. Defenders of Wildlife). 

Last year, I predicted the dismissal of Chambers’ lawsuit here.  Like Somin, I argued that “Chambers’s suit fails the constitutional requirement for standing, that a harm be judicially redressible before it can be challenged in a lawsuit. It would be an exercise in futility for an earthly court to order God to do anything.”  Chambers’ lawsuit also should have failed because it was simply a “generalized grievance,” and been barred based on principles of sovereign immunity.

Chambers’ bizarre lawsuit, strange antics, and vitriolic speeches, have not kept him from being courted by liberal presidential candidates or receiving accolades from journalists, such as being called a “national treasure” by Mother Jones magazine, and being praised by reporters and liberal politicians for his “conscience,” “heart,” and “empathy.”