Sadly, if not surprisingly, some on the right-wing fringe of the libertarian movement are jumping all over themselves these days to defend the American Legislative Exchange Council — ALEC — as a lobby for “limited government” and “free markets.”
Competitive Enterprise Institute chief Fred Smith characterizes the attack on ALEC (a “free market group” of “CEOs willing to stand up for free enterprise”) as part of a broader move to “drive all market voices from the marketplace of ideas.” He frames the conflict as ALEC’s attempt to “expose … capricious legislation,” versus radical attempts to “silence” ALEC (“Letter to the Editor — An Attempt to Drive Free Market Voices from the Field,” Wall Street Journal, April 25).
Ron Bailey at Reason (“Leftwing Pitchforkers: Kill the Limited Government Monsters!” April 26) calls ALEC a “limited government think tank” whose chief offense for the Left is supposedly “advocating free markets.” As evidence, he links to accusations by The Nation that ALEC promotes a “vast procorporate strategy” and writes “‘model’ legislation designed to boost the profits of its corporate members.” So apparently big business interests secretly collaborating with government to boost their profits = “free enterprise.”
Participants in the “marketplace of ideas” generally try to maximize public attention to their ideas. When they draft legislation in their own interest, in settings designed to minimize the chance of public notice, terms like “railroad job” are more appropriate. Contra Smith, it’s ALEC that’s tried its best to keep the debate “silent”– and its critics who’ve done the “exposing.”
Let’s take a look at some of the “free market” interests involved in ALEC and their “limited government” agenda: ALEC’s “model bills” are written mainly by corporate lawyers representing firms like Exxon-Mobil, Pfizer, and the Corrections Corporation of America.
Let’s start with Exxon-Mobil. The oil industry’s probably not the best examplar of libertarian values. In general terms, extractive industries like fossil fuels and mining have a long history of collusion with murderous regimes around the world, when access to resources is impeded by local populations living over them. Hence the crimes against humanity in Nigeria carried out at the instigation of Shell, and in Indonesia under its earlier name Royal Dutch Shell. Exxon-Mobil, in particular, colluded with the Indonesian government in carrying out human rights violations at Aceh (e.g. providing the government with excavation equipment to dig mass graves for those murdered by an Indonesian military unit hired by Exxon-Mobil).
In the United States, ALEC strongly supports state capitalist projects like the Keystone XL Pipeline, and “fracking” and mountaintop removal operations. The former would be impossible without eminent domain to secure rights-of-way. The latter depend heavily on privileged access to vacant land preempted by the state, and on safe harbors created by regulatory preemption of common law liability standards for groundwater and air pollution and other environmental harm (just look at respiratory disease stats for kids in schools close to mountaintop removal actions).
You probably wouldn’t expect the agenda of private prison corporations like CCA to carry a whole lot of “free enterprise” street cred. And you’d be right. First of all, the model of “privatization” exemplified by private prison companies, with revenue directly provided by the state or profits guaranteed by the state, is more accurately called “corporatism.” And second, the private gulag industry has a huge vested interest in policies (like Arizona’s “Papers, Please” law, written by CCA’s busy scribblers) that keep as large a share of the population as possible under lockdown.
The private correctional industry, somewhat unusually for “limited government” types, sees the decriminalization of consensual activity as bad for its business model. The GEO Group (formerly Wackenhut) 2011 annual report warned that “demand for our correctional facilities and services” could be reduced by less restrictive drug and immigration law. An industry whose profits depend on America having a larger prison population than Red China — pretty “libertarian,” eh?
Another major item in the ALEC agenda is so-called “tort reform.” Now, most libertarians favor replacing the regulatory state with a vigorous system of tort law. The most effective way to punish pollution and other forms of corporate malfeasance is to make wrongdoers pay full civil damages for the harm they caused. The “loser pays” rule, the centerpiece of virtually every so-called reform package, would cripple any such system of civil liability by making civil action insupportably risky for all but the very rich.
Adam Smith, writing almost 240 years ago, could teach these modern-day “libertarians” a thing or two: “Men of the same trade seldom meet together” — let alone go hunting with Dick Cheney and Antonin Scalia — “but that it ends in a conspiracy against the public.”
ALEC’s proposals represent “free enterprise” in much the same way that a chain gang from one of their “private” prisons represents “free assembly.”
Great article Kevin! You and c4ss provide a much needed balance to the libertarian movement with your excellent, thoughtful criticisms. Thank you and keep it up!
Thanks, Rick! If I'd had more space, I'd have added a paragraph on electoral regulations intended to disfranchise students, minorities and old people (I think bullshit concerns about ACORN "voter fraud" are about as believeable as Katherine Harris's "concerns" about felons on the voter rolls).
My recent post New Book in the Works
Kevin, I normally consider your work incisively brilliant, to a degree that I've been forced to abandon a TRUCKLOAD of preconceptions just as a result of reading Organization Theory.
But I think you've got loser-pays all wrong. I see your point regarding the wealth disparity of the parties involved, but as a basic principle it seems sound. I see no reason a person's legal fees should be their own burden to bear when bringing action against a wrongdoer, especially given the general consensus among statists I speak to that "a move to tort-based law just means the corporations always win because they can outspend their victims on million dollar attorneys".
Yes, it poses a risk on face. But markets sway regarding demand; already many lawyers, especially those specializing in tort rather than criminal law (catch a commercial sometime trying to sell new clients on suing manufacturers of dangerous products), promise "we don't get paid unless you do!"
That model already creates incentives not present in fee-per-suit price models to work smarter, minimizing court time and maximizing effort per case. A model of percentage-of-winnings fees was, according to David D Friedman, common under the loser-pays systems in medieval Iceland. And in suits against, say, BP, those winnings represent a BIG cut. With attorneys already pitching tort suits to unaware clients, it seems to me the attorneys want CLIENT business, rather than vice-versa, in matters of tort.
Is it so hard to believe that, if increased risk tempered willingness to "risk" a lawsuit, tort lawyers might respond to shifting market forces and promise in addition to EAT the opposing side's attorneys' fees portion of the loser's expenses, and offset this potential loss by (nominally) charging much higher rates knowing that it would not affect their client's actual ability to pay? Such an upward racheting of costs would mitigate the increased spending power of companies on legal representation.
Of course, these ever-increasing attorneys' costs are tempered in turn by the increased likelihood of settlement as the cost of attorneys and the associated risk grows higher. But the primary effect of a model such as I've predicted would be to equalize the ability to access an attorney based not on spending power but on the likelihood of winning the case, at little to no additional risk to tort victims while posing an additional cost-risk to corporations (whose current model of defense in torts is to hire attorneys even in the face of obvious guilt in hopes that high spending can overpower the legal competence of their opponents).
Not to mention, loser-pays is reviled by the vast majority of corporate America, polls extremely well among the general public, and is in place in much of Europe. Knowing what I know about the economic landscape of America, those three things alone lead me to presume that it's probably BETTER for the public than for big business.
My recent post >2012
I agree with TheBaker. The loser pays system is a good deterrent to frivolous lawsuits, and that would be very necessary in a tort-based regime as you've proposed.
My recent post The Idle Society
Given Carson says breahttakingly *stupid* things like this which are in complete opposition to reality:
"A major requirement of finance capitalists is to avoid inflation, in order to allow predictable returns on investment. This is ostensibly the primary purpose of the Federal Reserve and other central banks."
excuse me if I don't take his entirely seriously.
First, TheBaker, I am genuinely impressed with this comment. You are clearly a very intelligent, well-read libertarian (I presume more centrist, as opposed to a right-libertarian (ie fusionist, paleo, etc). A vanishing breed.). Further, you are capable of nuanced thinking, and open minded enough to consider new ideas.
Which is why I am pained to point out a few things. First, we don't live in a world where market forces would have the effects you point out. The law itself is on the side of the powerful. Lawyers, thanks to licensing, are scarce. Corporations can spend a ton of cash on PR.
Next, source? Who among the capitalists resent this? How was the poll on on the public conducted? And what is the relation of the powerful & the powerless following the implementation of said reforms?
Besides, define your terms. What is a 'frivolous' lawsuit? Are they nearly so widespread as that? And for every 'frivolous' lawsuit deterred under the present system, how many real ones would be prevented?
I for one stand with Ralph Nader on this: I am against tort reform. More like tort deform. If anything, Americans are not litigious enough. As for frivolous lawsuits; the courts can do something about them. They can dismiss them.
This is not to be taken as personal criticism. You are a very thoughtful person. Esp. from 4chan! Intelligent life, on 4chan, whodathunkit?
Well, depends on the situation. If you are in the business of lending to the average person, inflation would hurt you. It means you get paid back in 'worthless' dollars. (Of course, I take the debtors side on this matter.) The casino types aside, most financiers who have been in the business of things for a while, generally are ancy about inflation. Esp. since the current crash brought down Bear Stearns, they are going to be more interested in predicability in the future. And if that means giving up quick returns, they may do that.
The other thing to bear in mind is that the Federal Reserve is not a monolith; different factions argue for different policies and sometimes more deflationary ones win. Besides, an argument can be made that the Fed was too tight when the crisis hit. It is not that crazy.
Define 'frivolous'. Does anyone know a good book that refutes tort 'reform'?