"Stossel, who often touts his belief in 'market magic,' attacks lawyers who represent consumers and others harmed by corporations, and wants instead to let corporate America police itself. This is the same corporate America that today is making the dreams of millions of Americans 'disappear' in the form of home foreclosures and job losses. ... "
That's what a class-action lawyer (who boasts he recovered "more than $2 billion in cash for average everyday American consumers") wrote to the Wall Street Journal in response to my op-ed about the parasite circus of class-action lawyers who practice legal extortion.
As I expect from litigators, his letter was aggressive, well written and convincing. And he was right about my belief in "market magic." That's the biggest lesson I've learned in 35 years of consumer reporting: The market performs miracles so routinely that we take it for granted. Supermarkets provide 30,000 choices at rock-bottom prices. We take it for granted that when we stick a piece of plastic in a wall, cash will come out; that when we give the same plastic to a stranger, he will rent us a car, and the next month, VISA will have the accounting correct to the penny. By contrast, "experts" in government can't even count the vote accurately.
That's why I talk about market magic.
But I digress. The class-action lawyer, like so many who go to law school, gets the big stuff wrong.
I have no problem with lawyers representing people who are truly harmed by corporations. I'm against a system that can encourage lawyers to enrich themselves by manufacturing grievances and allows them to force even innocent companies to surrender big bucks in settlements because the cost of litigation is so great. I'm against a system that doesn't require a losing plaintiff to pay the winning defendant's legal expenses -- a system used by most of the world because it weeds out frivolous litigation.
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The lawyer accuses me of wanting to let corporate America police itself.
Nonsense. Market competition polices companies -- and it does so far better than regulation and lawyers ever will. If GM offers shoddy or overpriced cars, competitors will clean GM's clock.
Nothing keeps a company honest and efficient like the threat of other companies coming along and taking its business away.
The lawyer's sophistry continues as he blames corporations for "making the dreams of millions of Americans 'disappear' in the form of home foreclosures and job losses."
This is more nonsense. Yes, some Americans (2 percent of those who had mortgages) suffered foreclosures, and some jobs disappeared (80,000 last month). But the lawyer and other anti-business hysterics in politics and the media never acknowledge that corporate America built those homes in the first place. It was corporate America that made homeowners' dreams possible by giving mortgages to the 98 percent of homeowners who haven't defaulted. It was also corporate America that created 25 million jobs over the past 15 years.
If the lawyers and eager regulators have their way, they might eliminate some of those bad mortgages. They also might prevent companies from firing 80,000 workers. But it's not worth it. Their freedom-killing "consumer-protection" rules and lawsuits crush innovation in a thousand ways. They stifle business creation and deter homebuilding. For every person they help, they hurt a thousand. If they got their way 15 years ago, most of those 25 million jobs would never have been created.
Yes, America now may face a recession. Maybe. But when people are free and capitalism is allowed, there will be "over-exuberance," followed by contractions. That's why it's called a business "cycle."
That creative destruction is what creates American dreams while, yes, allowing some to disappear.
Americans achieved a living standard that is the envy of the world. It is the direct result of the large degree of economic freedom we have enjoyed. Unleashing the lawyers to "protect" us will kill many, many dreams.
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