- The Washington Times - Saturday, February 19, 2005

SHAKEDOWN: HOW CORPORATIONS, GOVERNMENT, AND TRIAL LAWYERS ABUSE THE JUDICIAL PROCESS

By Robert A. Levy

Cato, 334 pages, $22.95

REVIEWED BY WILLIAM H. PETERSON

Worry over security played a big role in the presidential campaign — and plays it still. For persisting in and out of D.C. is the naive if popular opinion that government is “on our side” — that it is an impartial protector, one even seeing to it that we shall not want. Sure.

In “Shakedown” Robert A. Levy, a senior fellow in constitutional studies at the Cato Institute, says such opinion leaks. Our Framers were far above such leakiness. Thus did their constitutional checks and balances seek to stem abuse of power. They knew that Brutus still lurks about, that as Thomas Jefferson noted in 1788, “The natural progress of things is for liberty to yield and government to gain ground.”

That gain is tracked by the author. He sees Washington, D.C.’s leading industry as not tourism but special interests milking a giant, most cooperative cash cow, with consumers and taxpayers getting hit by many “baseless lawsuits.”

Apart from antitrust, the extortion lobby works three routes: one, through victimizing smokers and a badly socked tobacco industry; two, through anti-gun advocates circumventing the Second Amendment and state legislatures by suing in court and in the process victimizing gun manufacturers and potential gun owners; and, three, through seductive tort liability and antitrust systems hobbling our economy via perverse “regulation through litigation.”

Mr. Levy titles part one of his two-part book “Tort Law as Litigation Tyranny” and part two “Antitrust Law as Corporate Welfare for Market Losers.” This libertarian pulls no punches.

But what about the rising tide of tort cases that push up, among other things, medical malpractice insurance premiums to six-figure heights and force many doctors, such as gynecologists and obstreticians, out of business? Up go the costs of of office and hospital visits, hurting many family budgets.

The author supplies a neat reply. As a federalist as well as a libertarian, he believes in states’ rights, in the 10th Amendment: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

He adds, “There is no constitutional right to health care.” He sees state medical malpractice reform as ubiquitous. He cites more than three dozen states with damage caps, with all 50 states passing or considering some kind of malpractice reform.

Mr. Levy decries the fact that many congressional Republicans as well as liberal Democrats milk an extortion lobby. The author would invoke the 14th Amendment to check state tort laws which deny both procedural and substantive protection against quasi-criminal punishment. He writes that “the federal government not only may but must intervene. Otherwise, federalism becomes a pretext for constricting rather than enlarging liberty.”

When it comes to antitrust, Mr. Levy declares it “obsolete,” anti-consumer. Like economist Ludwig von Mises and his idea of “consumer sovereignty,” Mr. Levy says consumers with their overwhelming power of the purse rule markets, not producers. Consumers can and do unseat any product or firm, no matter how “powerful.” The author charges that antitrusters here and abroad harm economic growth, foisting on consumers less innovation, fewer jobs, inferior products, higher prices.

The author cites the Federal Reserve Chairman Alan Green -span view in 1967 of antitrust laws as a “jumble of economic irrationality and ignorance.” Today, almost four decades later, Mr. Levy calls for repeal of antitrust laws, “root and branch.” After his more than 100 pages on the Microsoft case, he draws lessons learned, as follows:

Antitrust debases private property. Its laws are fluid, nonobjective, often retroactive. It is based on a static view of ever dynamic markets, the more so in our high-tech world. Its “remedies” are designed by lawyers and judges who but dimly understand how markets work. Antitrust is wielded most often by uncompetitive “competitors” and their political allies. It fails to see that barriers to entry are created by government, not by private firms.

The author recalls President Richard Nixon, out to whip the then three major networks, considered antitrust prosecution to get better TV and radio treatment. He cites a study showing other recent U.S. presidents similarly out to get the Justice Department to bend its antitrust rules for political ends.

Concludes Robert Levy, “Antitrust is bad law and bad economics.” Hear, hear.

William H. Peterson is an adjunct scholar at the Heritage Foundation and the Ludwig von Mises Institute.


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