FireDogLake.com published an article this week titled Economic Nonsense Infects Courts.
In closing comments, the article concluded ”
“There is no protection for individuals. We are at the mercy of corporate decisions about safety”
In Yves Smith’s Econned, she touched on the judicial system having been recruited into the school of neoclassical economics supporting efficient mkt and invisible hand theory. But of course, the theory ignores what Nobel Prize winner Herbert Simon argued, namely “that people and companies do not maximize, they look for outcomes that are good enough rather than optimal” and that in fact “business schools train students in the art of making decisions under uncertainty.” Econned page 97,
Of course, the art of running a successful business is precisely to make decisions under uncertainty. However, the US gov’t has been so friendly, they have to a large degree removed many normative uncertainties that go along with running a business. Through various policies and reform measures to backstop the financial industry has been liberated from the binding chains of risk and uncertainty. Elements of risk and uncertainty have been transferred to the taxpayers through various decrees of the executive branch. The safety nets for the financial industry have been raised too high since this crisis began. These safety nets and guarantees come largely at the expense of the consumer, Main Street, and real economy.
The FireDogLake article addresses the Kaldor-Hicks criterion of using a cost-benefit analysis towards deciding cases under Common Low. Appropriately, the article points out that the use of cost-benefit analyses in courts could lead to biased outcomes that protect businesses, over and against the consumer and thereby undermine consumer safety.
Not sure if Elizabeth Warren (who is expected to head up Obama’s new Consumer Protection Agency) is up to speed on Neoclassical economic theory biasing judicial decisions in favor of corporate bad actors at the expense of consumer safety. It might be advisable to give her a heads up just in case. Consumer safety issues abound, in many industries outside of financial services. Consumer safety issues are not limited to credit card companies jacking rates or banks gauging consumers with bank fees for insufficient funds.
You may recall that telling investigative report by Bloomberg about regional airline safety in Dec 2009. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaNPBjZ2kB54
Of course, these consumer safety issues are not just domestic. Just two weeks ago, a plane broke in two and caught fire in China last week. http://www.bloomberg.com/news/2010-08-24/plane-crash-in-china-s-northeast-kills-43-injures-dozens-xinhua-reports.html
WSJ and Bloomberg have been reporting vigorously on airline safety issues in recent weeks/months as a glaring and immediate. However, many other industries are just as guilty…)
Safety might become a more relevant concern or input into the decision making processes of company executives if company executives realized they could be held criminally liable for consumer safety negligence issues.
Let’s not give corporate bad actors a judicial guarantee that they will not be held criminally accountable….” From a legal and criminal liability viewpoint, corporate bad actors need a little more uncertainty introduced into their decision-making processes beyond maximizing short term profits. This can only come from effective legislation that is enforced by the regulators and the judicial system. Making this 180 degree u-turn will be a monumental task for E. Warren… But EW has my support…
September 11, 2010
FAA proposes rules to curb pilot fatigue
Buffalo News
The proposal would replace a set of archaic rules that are “really very bad,” said Bill Voss, president of the nonprofit Flight Safety Foundation. …
September 10, 2010
Airline Pilots Get More Rest Under US Rule Prompted by Crash
Bloomberg
… are “really very bad” and don’t recognize “the difference between day and night,” said Bill Voss, president of the nonprofit Flight Safety Foundation. …
September 2, 2010
The Difficulty in Improving Airline Safety Now
Wall Street Journal
“You can look at it as a plateau in the western world,” said Kevin Hiatt, executive vice president of the Flight Safety Foundation, a non-profit …
September 1, 2010
Aviation Thinks Outside the Black Box
Wired News
… it has been difficult to justify spending money on something that wasn’ta problem,” William Voss of the Flight Safety Foundation told Wired.com. …
August 31, 2010
Jetliner Brake Systems Probed
Wall Street Journal
… runway excursions, often in rain or snowy conditions, according to the Flight Safety Foundation, an industry-supported group based in Alexandria, Va. …
