Wednesday, November 7, 2007

Experts, Bah Humbug

"Hank Johnson (D., Ga.) ... does claim that arbitration is often heavily stacked in favor of companies. but a 2004 study in Law and Contemporary Problems, a publication of Duke Law School, found exactly the opposite. ... Univerity of Kansas law professor Stephen J. Ware says that even in cases where arbitration contract terms are more favorable to sellers, the result is generally lower prices for consumers, because the cost of lawyering has been stripped out", editorial in the WSJ, 7 November.

The WSJ's continued attacks on lawsuits are economic idiocy. Why not repeal the Seventh Amendment? Even better, why not exempt all Fortune 500 companies from lawsuits by individuals? If arbitration was "better" for Merrlll Lynch's (ML) clients, wouldn't ML make its clients sue? What "hackacademics" say means nothing to me. The WSJ's position ignores "externalities", just like its open borders position. The benefits go here, the costs are borne somewhere else. You can read Henry Hazlitt's wonderful Economics in One Lesson, 1946 to see many applications of the doctrine of "seen and unseen effects". The WSJ is sufficiently economically sophisticated that it should not peddle this nonsense.

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