How to Get Countries to Outsource their Businesses to the US

One of the hottest issues today is the outsourcing of American jobs overseas. The story goes that America is not keeping up with its competitors. It is cheaper, easier, and more efficient to transport manufacturing and service jobs abroad. For clothing manufactures, sweatshops, while possible to maintain in the United States, are simply less publicly damaging, cheaper, and easier to run and maintain in different legal systems with relaxed worker safety standards. Indeed, the average businessman or businesswoman may find a whole host of reasons why operating in a developing country is more favorable: lower taxation, less regulations, less oversight, cheaper wages, less organized labor, a more economically desperate and compliant workforce, weaker civil society, smaller middle class (the list goes on). However, one especially important business advantage is - the absence of a robust and effective legal system.

In Indonesia, China, India, Honduras, Mexico or whichever developing country to which jobs are being outsourced, one shared characteristic is that these country's civil justice systems are rather weak. There are less suits against corporations being filed by well oiled effective plaintiff law firms. Because the courts in the home country cannot be trusted to be fair/are not fair, and/or the procedural barriers to get into court (let alone to do so in class action lawsuit) are immense, many major civil cases against corporations that harm others in developing countries have actually been brought under the Alien Tort Statute in US courts.

The hurdles to civil justice in many developing countries are not merely aspects of the legal system, but are also practical. In countries without significant access to the internet, without cheap access to phone service, with a poor system of public roads, or with a large inaccessible rural population, it is hard to get the information needed/hard for the information to surface and get to the right people.

The "tort reform" movement consistently emphasizes the "harm" that a robust civil justice system will do to a state's economy.

Let's assume, for the sake of argument, that they are right.

The argument then goes that the more protective we are of the bodily integrity, health, and safety of a state's residents, the less attractive we become for businesses. The less civil legal protections that we offer in our state, the more businesses will come to our state. Therefore, placing modest limitations on the ability of residents to hold corporations accountable will create modest gains in the state's economy. In this way, if Texas just minimizes its protections a little bit, it can gain a competitive advantage over, for example, Oklahoma.

But why stop here? If we're willing to cap non-economic damages, cap punitive damages, or if we're willing to require more proof of an injury or more severe injuries to get a day in court - why not just eliminate the system of legal protections entirely?

If we eliminated the system, all of those costly protections the average person has from being poisoned harmed, or in any affected by corporations and other wrongdoers dealt with. Indeed, we may get some of those outsourced jobs that went to work in India to come back this way.

Now this is obviously being discussed in an overly simplistic manner. Workers in developing nations have the competitive appeal of being willing to work for far less. Moreover, it is also not true that the "tort system" costs business money in the way the "tort reform" movement attempts to frame it. Businesses that abide by the laws adopted by the state legislature are unlikely to be overly and/or unfairly exposed to the civil justice system.

But the logical extension of the "tort reform" movement is that we would all be better off without civil law protections - because we would have more jobs. Many smaller developing countries adopt this logic as the rational for the creation of small free trade industrial zones. These localized free trade areas, free of taxes and most regulation or legal oversight, are notorious for permitting the mistreatment of workers and simultaneously giving little benefit to any but the few super-rich members of the county. Moreover, these zones are equally famous for providing miniscule wages to the workers they employ that does not support a fair standard of living based on the profits they provide for the foreign owners.

If the tort reform movement gets its way, the entire US would become a special commercial zone, with likely similar effect.

As I mentioned in a previous post, one of the tort reform groups, the Pacific Research Group ("PRG"), ranked states as to how "good" they were based on the laxness of their civil justices systems. Ironically, the top ten states, as ranked by PRG, have a personal income that is on average $4,021 lower than the ten bottom ranked states. As such, it appears that states with more robust civil justice laws have economies that provide more income for individuals in the state. (click here for more discussion of this issue)

Although the claim that a weak civil justice system helps business is a different discussion in and of itself - even if it does -

Do you really want to live in a developing world legal system?

Sure, maybe we may get jobs outsourced back to us from India -  but - would you really want to live under these conditions - just for a few more jobs?

In any event, it is far from certain that a strong civil justcie system is actually bad for business, but even if it is -  a few extara jobs can't be worth our basic human well being - wouldn't you agree?

If you or your organization is interested in learning more about or working on these types of civil justice issues, please feel free to contact me at cdugger@drummajorinstitute.org.

To read my previous posts on civil justice issues, click here.

For a comprehensive overview of the logical shortcomngs of the "tort reform" movement, read William Haltom & Michael McCann's Distorting the Law, or contact me for additional online resources.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

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Tort Victim Tragedies: Third Edition - "Tort Reformers" Say Cheaper is Better Than Safer

Welcome to Tort Victim Tragedies.

Each week (first edition, second edition) I will highlight the case of an injured person who was (or likely will be) denied full justice because of changes made to state law by the national anti-civil justice movement (aka the "tort reform" movement).

Unknown to most Americans, their right and their ability to access the courts are under assault from what is truly a mass movement by business interests to shield themselves from liability for their misconduct.

This "tort reform" movement frames its agenda as reasonable reform geared to protect corporations from what they describe as frivolous lawsuits which drive up the cost of business, and ostensibly hurt the state's economy.

In most of my posts, I will be addressing the fallacies of the anti-civil justice movement arguments. However, every Tuesday, I will do something unique and perhaps unprecedented.

One of the strengths of the anti-civil justice movement is its ability to put the spotlight on specific ludicrous sounding lawsuits in order to characterize the entire civil justice system as "out of control."

As I've described before in my previous post "Why You Should be Able to Sue McDonald's if You Spill Coffee on Yourself," and as I will continue to describe, often these characterizations distort and re-tell critical aspects of these cases which would otherwise support a finding that they were not frivolous.

One organization has a representative list of said spotlights.  

This constant media barrage of outrageous lawsuits has shaped the public opinion against the very civil justice system which protects us.

As a response to this anti-civil justice media barrage, each week I will highlight the other side of this coin: the real victims who are left without access to full justice because of the effects of the laws pushed through the state legislatures by the anti-civil justice movement.

Please join us each week to read incredibly sobering stories regarding the effects of the anti-civil justice movement on real people's lives and families.

This third week highlights two cases from Michigan.

The first is Leslie Richter:

Lansing resident Leslie Richter, 62, says she should have the option of suing.
Her husband of 42 years, Richard, retired from General Motors Corp. in April 2000. They enjoyed going to casinos and taking an annual trip across the Upper Peninsula together.

"He always used to say,'Just you and me, honey,'" Leslie Richter said. "We laughed and laughed until we had tears in our eyes."

Other than arthritis, she said, Richard was in good health. His doctor put him on Vioxx in 2000.
He suffered his first stroke in June 2002. He couldn't move his left side or arm and needed a wheelchair. He suffered another stroke the following January and died 44 days later.

Leslie Richter said her jaw dropped when she later learned that Vioxx was being discontinued for side effects.

She says Michigan residents should have the same rights to recourse as people in other states.

"Somebody has to be accountable for the mistakes if mistakes are made,"she said.

The second is Dr. David Cox:

Dr. David Cox says he was in perfect health before he took Vioxx. "I suffered a stroke to my brain stem - I had a thriving practice."

But that all came to a screeching halt for Dr. Cox three years ago, when he says Vioxx nearly killed him.
Today, with chronic health problems, Dr. Cox can't work or do much else.

"I don't do a whole lot of anything any more,"Dr. Cox said.

Although Vioxx has been withdrawn from the market, and suits against its manufacturer are progressing in other states, these two potential victims of the company's decision to market a drug with significant risks have no remedy. The drug company is shielded by complete immunity because of a 1995 Michigan law. If they lived across the border, they would have access to justice.

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What Is That Weird Lawyer Ad About? (to your immediate left on the screen)

What is that weird lawyer ad  with the guy pointing at me about (to your immediate left on the screen)?

For weeks now I have been planning to figure out - what is this weird ad with the lawyer on all the liberal blogs about? Well, the Wall Street Journal beat me to the punch (click here for full article).

Basically this add is a spoof by a phone company (Alltell) to generate "buzz" about the compnay by discussing a satirical lawsuit against it.

While this is likely not the smartest ad campaign, the fact that being sued is used as a publicity stunt speaks to a perception of the public's negative reaction to lawyers and lawsuits.

The add satirically describes the lawyer involved in the suit as having dedicated his legal career to satire suits like:

Increasing national standards for elasticity in gentlemen's dress socks by almost 17%.

Fighting for lick-less postage stamps.

Suing his doctor for his "innie" belly button

In a nutshell, this add is an attempt to gain attention by satirizing the legal community and lawsuits.

Although this add -  just seems stupid,  it message feeds into a larger movement by some corporate interests to make you devalue your right to go to court to hold corporations accountable for very real acts of misconduct.

If the add annoys you - visit it - it will cost Alltell money - just don't sign up for their sevice afterwards.

If you or your organization is interested in learning more about or working on these types of civil justice issues, please feel free to contact me at cdugger@drummajorinstitute.org.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

There's more...

US Government Says: Don't Sue So Much - Don't Worry We Won't Either - That Way Nobody Will

A letter from Representatives Waxman and Conyers released Monday shows that US Attorney Offices have been under-funded to the extent that the it is affecting the outcomes of civil and criminal cases. Some offices even lack basic office supplies.

An excerpt of the letter is below.

Dear Mr. Attorney General:

We are writing to express our concern that U.S. Attorney offices across the nation are suffering from staffing shortages and lack of funds The consequences appear to be severe. According to Assistant U.S. Attorneys, the lack of staff and resources force federal prosecutors to forego prosecutions in some important cases and to reach plea bargains in others. In some offices, there are shortages of even basic office supplies, like binder clips and envelopes.

Over the last month, our staffs have interviewed Assistant U.S. Attorneys in their individual capacities and gathered information about a dozen U.S. Attorney offices around the country. The picture that emerges is unsettling. U.S. Attorneys have the crucial responsibility of prosecuting federal crimes and pursuing civil enforcement actions. Yet it appears that their ability to meet this responsibility has been severely undermined.

Staff and Supply Shortages

U.S. Attorney offices across the nation are severely understaffed. Due to hiring freezes, experienced prosecutors who leave for the private sector are not being replaced. In several key offices, 20% or more of prosecutor positions remain unfilled.

In Los Angeles, there are 190 positions for Assistant U.S. Attorneys. Forty of these are vacant. The District of Columbia also has 40 Assistant U.S. Attorney positions unfilled, and Maryland has 30. In Chicago, there are 25 to 35 vacancies for 160 Assistant U.S. Attorney positions. Smaller offices are under-staffed in similar proportions. U.S. Attorney offices in Oregon and Arizona each have eight to ten vacancies among about 40 prosecutor positions.

In addition to the reduction in personnel, U.S. Attorney offices lack funding for essential items like office supplies. In Philadelphia, the U.S. Attorney's office adopted a new policy of charging indigent defendants for photocopies of Brady material, the potentially exculpatory evidence that the government is constitutionally required to provide to defendants, because the office could not afford paper for the copier. Forced to defend this policy in U.S. District Court, prosecutors explained that it was necessary because the "office has seen, in recent years, a reduction of about twenty percent in its allocation from Main Justice, with further reductions anticipated in the future."

(click here to read entire letter)

This under-enforcement of the nation's laws by the government is especially striking in light of the current administration's attack on the legitimacy of private civil suits. On several occasions, President Bush, imitated by many other politicians, has campaigned on the evils of the civil justice system and "out of control" lawsuits.

If the government is not enforcing the nation's civil laws - but lawyers also should't sue corporations because, according to the anti-civil justice movement (aka the tort reform movement), private lawyers (so it is said)  take all the victims money through their fees - what is the alternative?

If you or your organization is interested in learning more about or working on these types of civil justice issues, please feel free to contact me at cdugger@drummajorinstitute.org.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

There's more...

LAUNCH: TORT VICTIM TRAGEDIES

This post chronicles the launch of a new series: Tort Victim Tragedies.

Each week I will highlight the case of an injured person who was (or likely will be) denied full justice because of changes made to state law by the national anti-civil justice movement (aka the "tort reform" movement).

Unknown to most Americans, their right and their ability to access the courts are under assault from what is truly a mass movement by business interests to shield themselves from liability for their misconduct.

This "tort reform" movement frames its agenda as reasonable reform geared to protect corporations from what they describe as frivolous lawsuits which drive up the cost of business, and ostensibly hurt the state's economy.

In most of my posts, I will be addressing the fallacies of the anti-civil justice movement arguments. However, every Tuesday, I will do something unique and perhaps unprecedented.

There's more...

Diaries

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