10 Comments

Ted, please stop misrepresenting my purported misrepresentations. The October 3rd and 25th posts weren’t even my posts. As for the September 26th post: If you really want to continue to argue that we should first focus on “fixing” the liability system before we try and overhaul the broken technology systems in use in the healthcare industry, we’ll just have to agree to disagree. I believe that we need to take advantage of advances in technology and eliminate inefficiencies in the healthcare system before we look at changing the liability system.

I’m in the process of reading the 56-page Schwartz article now. It casts doubt on the authenticity of the memo, but admits that similar cost-benefit analyses probably occured. Even if you take the Pinto out of the argument entirely, my premise is true: Capping noneconomic damages increases the probability of a manufacturer releasing a dangerous product.

On the subject of damage caps: What dollar amount do you think is fair for a cap on noneconomic damages? This isn’t some sort of a trick where I’m going to come back and retort, “You mean you only think (insert horrible death or injury) is ONLY worth X?” to try and make you look like an insenstive ass.

I’m just curious if you fall into the $250k camp, $500k camp, etc. I’d also like to know if you believe caps should apply in cases of intentional torts.

I believe that we need to take advantage of advances in technology and eliminate inefficiencies in the healthcare system before we look at changing the liability system.

Aside from the fact that the liability system is an inefficiency in the healthcare system, curing the liability system is hardly mutually exclusive with improving technology; in fact, curing the liability system makes it easier to improve technology by reducing the cost of innovation. See also Tyler Cowen’s column today.

Lane, rather than engage in real debate, regularly presents false dichotomies like that one. It’s why I’m coming to agree with Erik Bell and private correspondents that we should be ignoring his site.

Justinian is right. A cap on non-economic damages WILL increase the cahnce that a dangerous product will be introduced.

In fact, if we can make the risk of large, non-economic damage awards high enough, we can probably prevent ANY product from being introduced.

I’m in the process of reading the 56-page Schwartz article now. It casts doubt on the authenticity of the memo, but admits that similar cost-benefit analyses probably occured. Even if you take the Pinto out of the argument entirely, my premise is true: Capping noneconomic damages increases the probability of a manufacturer releasing a dangerous product.

(1) What manufacturer wouldn’t do a cost-benefit analysis? Again, a car maker could make an almost perfectly safe vehicle: it’s called the Sherman tank.

(2) Does capping noneconomic damages “increase[] the probability of a manufacturer releasing a dangerous product”? Under some conditions, on the margins, of course. But also, of course, such caps (a) reduce the cost of innovation, as Ted notes; and (b) lower the cost of manufacturing new, typically safer, products — thus facilitating their diffusion. The question, then, is which of these effects predominates. The answer, based on work spanning the decades, from Priest’s in the 80s to Viscusi’s in the 90s to Rubin and Shepherd’s last year, seems to be that the benefits of tort reforms tend to outweigh the costs.

But I forget — you don’t like cost-benefit analyses.

Jim, you assume that manufacturers want to release safer products. Look at what happened with Oraflex and with the Firestone Tire/Ford Explorer problems. In both instances, the manufacturers had time to correct, recall, or replace the defective products… but they didn’t.

Is it really that much of a stretch to think that in the same world that saw Enron, Worldcom, and all the others that a manufacturer would choose to kill a few customers to make a buck?

Even if such instances occur only “on the margins,” those are still deaths that could have been prevented with the deterrent effect of the tort system.

Justinian, of course the tort system can deter deaths. But it can also deter and raise the price of innovations that reduce deaths. That’s what I wrote, but you don’t seem to want to respond to the point.

You really don’t believe that profit-maximizing companies would have an incentive to create safer products? The only reason that could logically hold is if consumers had no interest whatsoever in safer products — which of course isn’t the case, but if it were forcing consumers to get what they don’t want through the tort system would be pretty tricky to defend.

You might want to read Priest’s work on safety innovations before the expansion of tort, before you engage this debate.

“You really don’t believe that profit-maximizing companies would have an incentive to create safer products? The only reason that could logically hold is if consumers had no interest whatsoever in safer products…”

Your statement only holds if consumers are unaware that their products are unsafe. I would imagine that sales of Firestone tires and Ford Explorers dropped quite a bit after their defects were revealed. Ford and Firestone had knowledge that the products were dangerous, but didn’t creative safer products. Instead, they used confidential settlements to prevent the public from discovering the products were unsafe.

I’m not a very trusting person. I don’t trust that manufacturers will always do “the right thing” and recall or repair defective products. Damage caps make it easier to use confidential settlements to hide a product’s unsafe nature.

The wave of recent corporate scandals have only reinforced my belief that from time to time, unethical men and women are able to advance to positions of power, and that those unethical men and women will make unethical decisions to benefit themselves to the detriment of others. The lengths certain individuals went to in order to hide the deadly effects of asbestos is another example of such behavior.

If men were angels, I wouldn’t oppose damage caps.

If men were angels, I wouldn’t oppose damage caps.

If lawyers were angels, we wouldn’t need them.

Touché.

“It’s why I’m coming to agree with Erik Bell and private correspondents that we should be ignoring his site.”

Mark me down for this, as well.

BUT

Since JL is here, I’ll respond.

JL,

The argument is NOT that manufacturers won’t, from time to time, make more unsafe products.

The argument is that the NET effect is POSITIVE. That is, sure we can prevent certain deaths… but the OPPORTUNITY COST of doing so is more deaths somewhere else.

I accept that death happens. I accept that sometimes it happens do to bad behaviour on the part of private individuals (murder being only one example).

I also accept that many people want to reduce this happenstance – to push it off until later, as much as possible.

The effects of damage caps is to stop punishing many of the people trying to PREVENT deaths.

It lessens the punishment for the guilty in rare cases. I admit that. I dislike that (which is why I think caps are a bad solution… but still better than the status quo), but the only solutions that seem better can’t seem to get passed (and are opposed just as strongly or more by the anti-tort reformers).

So, arguing that “people will die!” is completely useless. Yes, people will die. The difference is that there will be FEWER people dying than the current system.

If you think people dying is bad, you are arguing for the wrong side.