One of many fundamental philosophical differences dividing today’s conservatives from progressives is the extent to which they believe the marketplace can be relied upon to prevent dangerous or polluting products and practices. Some conservatives argue that markets are self-correcting, and that manufacturers who produce shoddy products quickly lose customers and go out of business. Similarly, some conservatives maintain that companies that pollute the environment fall into disfavor with consumers. Therefore, they argue, current laws and regulations that establish minimum health, safety and environmental requirements are either excessive or downright unnecessary and should be rolled back so as to allow the market to correct itself.
Try telling that to the victims of the BP Oil Spill, or the families of miners killed in the Upper Big Branch mine disaster, or the tens of thousands of West Virginians who lost their drinking water supply to a chemical spill — or indeed to anyone who's ever been harmed by a defective or unsafe product or practice. These and other examples of corporate misbehavior demonstrate the need for a vigorous regulatory system that protects people and the environment, counteracting market forces that not only don't "correct" misbehavior but incentivize companies to take shortcuts. Still, even strong regulations and vigorous enforcement can't prevent all harms, and they certainly can't make victims of misbehavior whole. One of the best ways to force corporations to behave responsibly is to make it genuinely unprofitable for them to do otherwise, which is why a well-functioning civil justice system is so crucial: It holds businesses accountable and provides justice for victims.
Reining in Forced Arbitration in Consumer Financial Services
If you have a credit card, a student loan or a car loan, there's a good chance you're bound by a "forced arbitration" agreement that bars you from suing the lender if they cheat you. A CPR paper urges strong action by the Consumer Financial Protection Bureau.
According to a CPR white paper, "defensive medicine" does not drive the cost of medical malpractice insurance, as proponents of so-called "tort reform" claim. The actual cost of defending malpractice suits and paying injured victims is less than 0.3 percent of health care spending.
Relying on a questionable interpretation of federal power, the Bush Administration sought to use federal regulations as a way to trump state environmental, health and safety laws that it regarded as too costly to industry.
For decades, corporations intent on avoiding accountability for the illness and injuries their products sometimes cause have waged a fierce campaign against citizen access to state and federal courts. Now they've got a new gambit: a federal bill that effectively alters the rules of evidence in state courts. Read CPR's January 2014 Issue Alert.
Protecting Health, Safety and the Environment from Irresponsible Corporate Activity
The conservative argument that regulation and accountability by means of litigation are unnecessary because the marketplace is "self-correcting," ignores reality. Manufacturers routinely pollute without paying a price at the cash register, and stories of unsafe products made and sold by longstanding businesses are an almost daily occurrence, current laws and regulations notwithstanding. In the absence of legal safeguards to compel manufacturers to recall unsafe products or to respect certain environmental standards, market forces would be a poor guarantor of health and safety. Progressives, CPR Member Scholars among them, argue that current federal regulations are sometimes too lax, and that they are frequently under-enforced.
Nevertheless, the effort to “protect” corporations from “burdensome regulations” and from “unnecessary” health, safety and environmental laws has been a recurring theme in American politics for a quarter of a century or more.
Two arenas in which this effort has played out in recent years are attempts by regulated industries and their allies to impose severe restrictions on citizens right to sue for damages when industry’s excesses do them harm, and a corresponding effort by the Bush administration to “preempt” or trump state laws with weaker federal regulations.
In recent years, various industries have lined up before state legislatures and Congress seeking legislation granting broad immunity from litigation resulting from their tortious behavior. In 2012, for example, the federal “Domestic Fuels Act” (DFA) sought to grant immunity to purveyors of ethanol and other fuel additives. Such bills are the next wave of the attack on corporate accountability. CPR Member Scholars Thomas O. McGarity and Sidney Shapiro, with CPR Policy Analyst Nicholas Vidargas, explored the phenomenon in their March 2013 white paper, Sweeping Corporate Immunity for the Fuel Industry: The Next Front in the "Corporate Accountability" Wars(CPR White Paper 1303).