February 18, 2009
American General Anthony McAuliffe sent a terse one-word response to the Nazi army that had surrounded his forces in Bastogne, Belgium and demanded his surrender:
The American public needs to send a similar message to Corporate America the next time it proposes to limit its accountability through "tort reform."
Free market principles work. They increase productivity and maximize freedom, but they don't protect the public from thieves and wrongdoers. Many corporations today have manipulated the language of the free market (think "deregulation") in order to conceal their misdeeds and to protect themselves from accountability. They deceive, steal, or act in a negligent or reckless fashion, then lobby for laws that protect them from their victims. Examples abound:
Worldcom cost its shareholders $191 billion by reporting profits when it had losses. Enron hid debt through unreported deals, costing its shareholders $68 billion. Qwest posted fake revenues and cost its shareholders $108 billion (while CEO Joseph Nacchio cashed out a pretty $248 million of his own stock options). These scams were enabled by the shady audits of accounting firms like Arthur Andersen. Nevertheless, when Enron shareholders sued to receive compensation from the companies that participated in the fraud, the Bush Administration argued that imposing liability on all of the wrongdoers would inhibit the ability of American businesses to compete in the marketplace. Not surprisingly, the Supreme Court ruled against the victims and threw their cases out of court.
More recently, Bernie Madoff perpetuated one of the biggest financial scams in history. A respected "elder statesman" of Wall Street, he took billions of his investors' money and then, in classic Ponzi scheme fashion, Madoff paid out dividends to those who invested earlier from the money of his latest investors—meanwhile skimming plenty off the top for himself. How did he get away with it for so long? According to a fellow investor: "He was the darling of the regulators, without question. He was doing everything the regulators wanted him to do." It's easy to scam people when the government is on your side.
The dangers of immunizing corporations from the consequences of wrongdoing are evident in the current peanut scandal. The Peanut Corporation of America knowingly shipped contaminated product to schools, stores, and nursing homes, notwithstanding the best efforts of the FDA. The FDA rules and regulations were not enough to protect the public from the consequences of eating peanuts laced with animal feces. As a result, nine people died and over 600 have become ill. Do we really want to immunize such corporate miscreants from full accountability for their actions?
These and many other instances of consumer abuse in recent years point to a great need for increased accountability and transparency in the marketplace. Corporations have swindled their shareholders and injured their customers. Meanwhile, the government fails to ensure corporate accountability and even protects them from liability in state and local courts.
Ensuring accountability doesn't conflict with free market principles—it reinforces them. Misrepresenting a product or service is fraud, and deceit will destroy the free market system. Wrongdoing requires the firm response of government and full accountability to the victims.
Since government has demonstrated its inability to protect the public from corporate abuse and neglect, the average taxpayer must be free to seek relief in the court system. Sadly, however, many conservatives want government to step in and restrict the individual's right to a full recovery and a trial by jury. They point the finger at "greedy trial lawyers," but what about the injured individuals who are wronged? Are we willing to sacrifice their right to justice and place our trust in the hands of government bureaucrats? This was not the view of the Founders of our country. Suffering under the hands of a tyrannical king, they understood the importance of preserving the right of the individual to seek justice, so they placed their trust in the hands of a jury of their peers and enshrined the right to trial by jury in the Constitution. Everyone likes to complain about lawyers, but, as the Founders understood, they sure are nice to have around when you need one.The average citizen has more power to resist "tort reform" than most people realize. We can vote out politicians who restrict our rights and protect corporate cretins. We should insist on protecting our right to take these companies to court when they injure or defraud us. "Tort reform" is business-speak for "if we don't cheat, we can't compete." So the next time you hear some corporate shill for the Chamber of Commerce advocating that we should limit liability of American business to increase competitiveness, do yourself a favor. Just say, "Nuts!" Sooner or later, they'll get the message.
Ken Connor is an attorney and co-author of "Sinful Silence: When Christians Neglect Their Civic Duty" He is also Chairman of the Center for a Just Society. For more articles and resources from Mr. Connor and the Center for a Just Society, go to http://www.centerforajustsociety.org/