Economic Ramifications of Stringent Tort Laws

Essay by gandhiUniversity, Master'sB+, March 2004

download word file, 17 pages 5.0

Part 1. Executive Summary

We look at the progressive stringent interpretation of tort laws. We observe the starvation of the economic engines and commanding heights of the economy. This effect is all the more evident in tobacco, pharmaceutical and automobile industries in the US. This has resulted in stifled innovation and risk averse behavior on the part of industries in these sectors. We draw parallels from history, where we look at the evolution of tort law, with the beginning of the industrial revolution, and how it has maintained a harmony between the capitalist, the worker and the consumer. The history in this field had gone through the successive processes of integration and disintegration, and at this point it was going through a process of reintegration along new lines. The conflict between the justice culture and the market culture underlies our tort wars.

The precarious balance between the capitalist, worker and consumer is currently being threatened by excessive damages awarded by courts in various cases.

Additionally, courts fail to take into account the resources available at the disposal of the defendant, while awarding damages; resulting in large-scale bankruptcies. This could lead to a vicious cycle of bankruptcies of industrial and financial institutions, resulting in economic catastrophe. We specifically study the impact of these fallouts on the medical insurance industry.

We see a breakdown of law in this case, and propose that law has overstepped its boundaries and threatens to destroy the very society it seeks to protect. Unless this situation is urgently rectified, we predict a breakdown of free market capitalism and its benefits of freedom of expression and action.

Part 2. Introduction

?The life of the law has not been logic: it has been experience?

The objective of the project is to look at the Economic Ramifications of the circumvention...