Thursday, October 10, 2002

Haven't written too much. At some point I've got to figure out how to work this thing - do links, add comments, etc. - turn this into an actual blog.

Anyway, 2 things on my mind today - the market hit 7191 or so this morning and then came back really strong to finish at 7532. We're still technically in the "retest" territory and keep bouncing back whenever we get too low. EVERYBODY talks about how the market sucks. The VIX is up at 50 - great bottoming territory indicitating high fear level - and the NYSE volume has been outpacing the NASDAQ's the past several days - all good portents of a possible real turnaround. So my fingers are crossed that we still may successfully get through this retest.

As for the second thing, one area of which I have PASSIONATE feelings for, is so-called "tort reform" by which the Bushies of the world try and make us think that access to courts and the court system needs to be tightened up because of so many frivilous lawsuits ruining the system. Sorry - I remember the discussion of the Ford Pinto cases (the ones whose gas tanks exploded when impacted trapping and burning many people to death in minor accidents). The rationale was that Ford had weighed the costs of fixing the problem (allegedly $20 bucks or some other scandalous number like that per car) vs. the costs of paying the lawsuits and had decided that it was *cheaper* to payoff the inevitible wrongful death suits (many of which were then sealed from the public) than to fix all the cars. Basically, in corporate America, such things are weighed, and the non-economic value of human life is completely discounted in the cost/benefit analysis if there are profits to be made. But this isn't good enough for the Bushies and the corporate crowd - they have been banging the drums since Reagan came in, with claims of frivilous lawsuits gumming up the court system impovershing corporations and stalling innovation because of greedy people who sue at the drop of a hat and outlandish juries who give multi-billion dollar puntive damage awards. Sounds like the system does need fixing, right?

Well this little blurb was in the Washington Post today:

The soaring premiums that doctors face for medical malpractice insurance are the result of poor investment returns earned by insurers and not a surge in court settlements and jury awards, a study found. Not only has there been no "explosion in medical malpractice payouts at any time during the last 30 years, but payments [in constant dollars] have been extremely stable and virtually flat since the mid-1980s," according to the study, written by former Texas insurance commissioner J. Robert Hunter for a group called Americans for Insurance Reform. (Washington Post, 10/10/02 at E2)

SO think of this stuff in terms of the formula: Put out an unsafe product, and measure the cost-benefit of the lawsuits vs. fixing the product. Of course, if you can lower your lawsuit costs by making it harder for people to sue, then you can put that many more unsafe products out there and still make that much more of a tidy profit when they do the cost-benefit analysis. I know this little blurb doesn't have anything to do with product liability as opposed to medical malpractice, but the arguments are the exact same. If they are willing to tell the lies to push their "tort reform" agenda when it comes to medical malpractice, don't put it against them to not tell the lies when it comes to product liability. There's just too much money at stake.