The plan for dealing with homeowners struggling to pay mortgages could in an instant reverse a lot of the psychology of fear that has gripped many people —if the terms of the plan are clear and the promise of timely assistance is specific and believable. Simple, direct explanations of who is eligible for what would be a wonderful change from the many plans over the past year that few understood and fewer used. Anything that helps build the bottom on housing powers the recovery. But a repeat of last week’s ambiguity about the banks will add another layer of evidence to the president’s growing reputation for overpromising and underdelivering.
With the car companies, a quick decision to throw in with them or cut them off is much preferred to a long round of deliberations prior to a bankruptcy filing. Again, we don’t need another Hamlet-like performance bemoaning how awful it all is and how it is going to take superhuman effort etc. Get on with it. Quickly.
With Brian Wesbury and others, I expect the recovery to arrive sooner and with more energy than most, but I also believe the starting gun has to go off in millions of minds via clear government signals about the rules of the road. The stimulus was a botched attempt to deliver such a signal because a sophisticated public understood it to be an exercise in rewarding constituencies of the Democratic Party, not a growth measure.
Assistance to homeowners and the car companies are much more clearly non-political interventions and could earn GOP support in Congress –provided the Administration’s proposals don’t attempt to pick winners and losers based upon voting patterns, and provided that the UAW shares in the pain of the restructuring. President Obama gets a second chance to fashion a bipartisan approach to part of the economic problems, and we should hope he doesn’t whiff again.
Yesterday’s Presidents Day Special with Richard Norton Smith allowed me to lawyer all day rather than just in the morning. My practice requires that I stay up-to-date on some pretty strange things such as perchlorate clean-up, the land-use implications of a pika listing as an endangered species, and the tidal wave of plaintiffs’ litigation against certain plastics manufacturers.
All of these areas of current controversy require armies of lawyers battling over pretty obscure stuff –who pays to get the perchlorate out of the ground, who will pay to mitigate for the impacts of global warming on the pika, and should plastics manufacturers get tagged with the alleged costs of the alleged illnesses or disabilities their products have produced? Huge dollars are involved in each area, so the litigation surrounding each of them goes on and on. All of those costs and all of those settlements or jury awards get passed right back to the consumers of goods and services.
These are just three of the hundreds of relatively new controversies that have entered into our court system in the past decade. Many new controversies are ahead –and they will all be litigated because that’s just how our system has evolved. We divide up and reallocate the profits of productivity via the courts, and reassign the negative externalities of growth via trials.
The massive costs associated with this approach cannot be quantified, but as the economy struggles to return to real growth, the litigation burden is the unseen hundred-pound pack on every CEO’s back. What this economy could do if the tort system and environmental laws were rationalized is amazing to contemplate given what it can do even while carrying those extraordinary costs.