Torts, week one (or, your first installment of boblawblog)

First week of real classes is over. Law schools is pretty freaking awesome!

So far, Torts seems very econ-driven.  I don’t know if it’s current trends, this textbook, or just the opinions we’ve read thusfar, buttt yeah.

Anyway, to get right to the point, in U.S. v. Carroll (1947), Justice Learned Hand (yes, real name, and yes, he’s famous enough that you’ve probably heard of him) proffers a formula to determine whether or not a party should take precautions to prevent accidents:

B < PL,

where B represents the burden of taking precautions that would prevent an accident, P is the probability of the accident occurring, and L is the injury caused by said accident.

If the burden is less than PL, it’s economically sound for the party to take those precautions.  If the burden is greater than PL, argues Hand (and, in the postgame analysis, the rightly famous and inescapable Richard Posner), it makes more sense for the company to NOT take precautions, because it will actually spend less money once it’s sued.

So, all this is well and good, and does make a lot of sense from a fiscal standpoint.  If my sole or primary interest is monetary, I want to take whatever action that will maximize my profits.

However, I have a big beef with Posner claiming that this formula always suits society’s best interests.

Take, for example, the fucking ridiculous BP oil spill.  Despite the spill, BP’s posting its greatest financial year and biggest profits EVER.  In the first quarter of 2010, BP spent $16 million per day on the oil spill’s aftermath; however, it brought in $66 million per day.  Assuming that BP is a rational profit-maximizing actor, as most strong companies are, BP’s decision to not take necessary precautions was economically sound.  In Posner’s* view, then, this decision also suited society’s best interests.

FAIL.  No, no, no, no, no.  Please tell the explosion’s victims’ families that this should be our controlling interest.  Please tell people whose jobs are fucked that this should be our controlling interest.  Also, please tell them that they should shut up and be happy since they’re getting puny-to-excessive checks, even when they just wish they were working.  Please tell an entire region’s coastline, wetlands, wildlife, and air supply that a single company’s profit is more important than their health and integrity.  Please tell the disenfranchised that they have to suffer being the official BP cleanup dumping grounds in addition to the banal slights and assaults that already come with their poverty.  Please tell a body of water half the size of the continental United States that its life system is less important than your shareholder profits.  Please tell three hundred million (give or take about five million) frustrated, angry, incredulous, impotent Americans that one company’s revenue and a few thousand shareholders’ profit is more important than our entire conception of how the world should be.

Like I’ve argued before, the law shouldn’t be hijacked by any one way of looking at the world.  The analysis and application of law should not be monopolized by economics or any other single paradigm through which people view the world.  Instead, it should exercise its luxury and responsibility to sift through competing perspectives to find a balance that creates the greatest overall benefit for its society.  Conflating economic (or any other sole) interest with legal judgment is sloppy at its best, and self-destructive at its worst.

Of course, a big problem is that even the language we use to sift through and judge implies quantifiable phenomena, which is a gross simplification of the wider world.  From a purely cognitive perspective, oversimplification and quantification seem quite necessary, as the world, or even my dining room, provides literally an infinite amount of information that I simply will never be able to process in my very finite lifetime, let alone in the hour I have before dinner, and then ten minutes before I give up and pour myself some Maker’s on the rocks.

Simply put, in the realm of torts, economic analysis does exactly what its name states: nothing more, nothing less.  Assuming that economic analysis leads to the best overall situation for society is ridiculous, for the glaringly obvious reason that societies are so much more than solely economic spaces.

*Posner has significantly shifted in some of his thinking over the past few years, especially in light of the financial crisis.  The essay to which I’m responding in this post dates from 1972, before he was even a judge!

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2 thoughts on “Torts, week one (or, your first installment of boblawblog)

  1. Sorry, I was rather unclear. Torts is basically the study of civil action related to harm — NOT violating a contract, but, instead, “ahh, my arm got cut off by your lawnmower,” or whatever. Anyway, of course Richard Posner is a law professor/judge, from the University of Chicago, so he’s sort of the biggest living head of the law & econ movement (although he’s been more “law” and less “econ” since the recession, interestingly enough).

    Anyway, Posner’s argument is that society’s best interest is maintained in encouraging parties to take whatever legal action that results in the most “efficient” economic outcomes for them. The formula above basically illustrates the idea that a party should take preventive measures against a tort (some sort of physical/emotional harm) only if the cost of taking the preventive measure is less that (the probability of the accident that would cause the harm) times (the injury actually caused by the harm). (They don’t really specify how they quantify the injury caused by the harm?) My argument is that, while that is the most fiscally reasonable argument, fiscal health is not the be-all-end-all of the good of society, as Posner claims in the essay.

    Thanks for keeping me on your toes! It’s always nice to have an expert’s opinion. My training, of course, is not in econ, so I really appreciate your feedback.

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