Lawsuits

[Platypus]

In very few realms is it the case that taking action after a problem occurs is as effective - let alone as efficient - as taking action before to avoid the problem altogether. An ouce of prevention, and all that. In the world of business and companies doing things they oughtn't, this effect is compounded by the high cost of litigation and the potential for its abuse. Blame for this can be shared between the courts, the lawyers, and the litigants themselves, but the cost remains a reality. Nonetheless, some "free market" zealots seem to favor litigation over regulation as a means of curbing fraud or recovering third-party costs. "Get the government out of it," they say, "and let market forces take care of it." Just today, I saw a reference to a Washington Post editorial (http://www.livejournal.com/users/jmhm/649766.html) taking pretty much this stance.

Such an attitude toward litigation vs. regulation has always seemed slightly insane to me. Certainly there are cases where regulation stimulates litigation, but there are many more cases where the effect is the opposite. Perhaps according to some purist "no prior restraint" interpretation of rights such reliance on litigation (which involves the government just as much as regulation does) makes sense, but in a practical real-world context it still seems inexplicable. Are there any advocates of such an idea who would like to attempt an explanation of how reducing economic efficiency so lawyers can make more money is preferable to the regulatory alternative?

[KG20]

Frivolous lawsuits need to stop...it is a lottery for some.

[gopman]

Litigation is the most efficient way to discover abuse of market power, but I believe very few outside of the libertarian party would suggest it as the only way to handle business regulation. As it exists now, our government does take many preventative measures, for example, the FTC reviews every merger before it takes place to prevent those that would hurt the consumers. That said, fraud has existed for as long as people have, and I don't think anything we do could possibly solve the problem all together. Our current system is very effective, but a little tricky accounting can go a long way.