Red Dirt Liberty Report: Litigiousness is Better Than Regulation

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Having experienced far too many frivolous lawsuits personally over the years, I have a true disdain for litigiousness and regulations at large.

Because I have been in retail nearly all my life, I have been the subject of many such lawsuits, and I have refused to be a part of a class in a number of class action suits involving things from cell phone carriers to drug companies. I refuse to be a part of it, because I believe that many times, litigiousness acts not only as a deterrent to business productivity and costs society massive amounts of money, but also because I believe (especially in the case of drug companies) that all the current state of litigiousness serves to squelch innovation by deterring companies to want to take risks in creating wonderful things.

There are many times when lawsuit-happy attorneys and litigants put a damper on otherwise free capitalism. It is a sad state when many people can actually make a career out of injury law suits against businesses.

After having stated all of my disdain for litigiousness, I do find it, by far, preferable to government intervention and regulation. I believe the cost of overzealous litigiousness is much smaller and less corrupt than the cost and corruption of government regulation. While litigiousness affects all businesses (though larger ones disproportionately), regulation often serves to protect larger businesses by creating massive barriers to entry into markets by potential smaller, nimbler, competitors. There is a reason why we often see large businesses pushing for new regulations that may seemingly cost them lots of money. The truth is that any potential costs in changing their business is smaller than the cost of new competition, and the larger companies can afford to operate under large amounts of regulation, where smaller companies cannot afford it.

When it comes to real costs in hard currency, businesses stand to lose more under litigation than they do under fines, fees, and sanctions. A potential massive class action lawsuit serves as a greater deterrent than a $10,000 fine. When businesses act in poor faith, they get sued, and not only do they stand to lose millions, but they also stand to lose considerable valuable goodwill with customers and clients.

It is typical for people to think of large corporations as evil entities waiting at the ready to take advantage of anyone that either stands in their way or offers potential better profit. They believe that without regulations and without the government as their watchdog, businesses will go wild at the opportunity to destroy all that is holy. However, where regulation does not exist (and even where it does), businesses are more deterred by litigation. While they might be able to afford better representation than the little people, in the end, that’s only a small advantage. There are far too many attorneys that salivate at the opportunity to get at a large business with big money for potential punitive damages and possible class actions. Even small amounts of damages can add up. I was once offered the opportunity to be a part of a class where I would have been paid the whopping sum of a little over $5. Which do you think sounds more frightening to the leadership of a business – a fine and maybe a few penalties, or the potential to lose millions in court?

I don’t mean to make the case that government regulations are entirely without deterrence. Companies don’t want to break the law, and really bad things can happen to them as a consequence. I merely wish to make the point that it is unnecessary and offers less value as a deterrent than litigation factors that are already in place. Government regulations do more harm than good in their inefficiencies and corruption.

The sort of attitude many Americans take toward litigiousness really sucks – viewing it like winning the lottery when they can create any sort of profitable complaint against a company. Yes, it dampers free markets and squelches innovation and things that better society. However, it is that same mechanism that allows for litigiousness that also provides better protections for society than government can provide.

Corrupt litigiousness should be called out wherever it rears its ugly head. People who use litigation as an opportunity for enrichment should be publicly shamed and humiliated by concerned citizens. In some cases, where litigation threats are treated as a sort of protection scheme, it should be prosecuted as racketeering. There could even be room for a little bit of tort reform. But where litigation acts in the protection of the people it must be protected. And, even in the face of abuse of the civil justice system, litigiousness is highly preferable to corrupt regulatory bodies of deviant inefficiency that act as hands of authoritarianism to control businesses and the economy.

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Danny Chabino

Danny Chabino has a background in operating small businesses. He has been involved in managing and/or owning the operations of multiple retail establishments, a sub-prime lending company, a small insurance company, a small telemarketing venture, and insurance consulting. In addition to these activities, he also has spent many years managing investments in stocks and stock options as a successful trader. He is the married parent of two adult children, living as a proud lifelong Oklahoman and a part-time redneck. Danny writes for the enjoyment and pleasure of sharing ideas and for the love of writing itself. His opinions skew libertarian, but he enjoys hearing open debate and listening to or reading of opposing ideas. As an odd confession, he personally detests politics, but enjoys writing about political ideals and philosophies.

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