When people suggest regulation as the solution to every problem, they imagine honest, competent, and diligent regulators doing whatever they should be doing in the public interest. But law is made and enforced by ordinary people, not saints. Ordinary people people look out for themselves, and are easily captured by special-interests. Here's a look at how state attorneys general decide to sue companies on behalf of their state.
New York Times: Lawyers Create Big Paydays by Coaxing Attorneys General to Sue
New York Times: Lawyers Create Big Paydays by Coaxing Attorneys General to Sue
Much as big industries have found natural allies in Republican attorneys general to combat federal regulations, plaintiffs’ lawyers working on a contingency-fee basis have teamed up mostly with Democratic state attorneys general to file hundreds of lawsuits against businesses that make anything from pharmaceuticals to snack foods.
The lawsuits follow a pattern: Private lawyers, who scour the news media and public records looking for potential cases in which a state or its consumers have been harmed, approach attorneys general. The attorneys general hire the private firms to do the necessary work, with the understanding that the firms will front most of the cost of the investigation and the litigation. The firms take a fee, typically 20 percent, and the state takes the rest of any money won from the defendants.
While prospecting for contracts, the private lawyers have also donated tens of thousands of dollars to campaigns of individual attorneys general, as well as party-backed organizations that they run. The donations often come in large chunks just before or after the firms sign contracts to represent the state, campaign finance records and more than 240 contracts examined by The Times show.
“This has gotten out of hand,” said Scott Harshbarger, a Democrat who was the attorney general of Massachusetts in the 1990s, when this practice first burst into prominence as a result of the litigation against tobacco companies. “And it seriously threatens the perception of integrity and professionalism of the office, as it raises the question of whether attorneys are taking up these cases because they are important public matters, or they are being driven more by potential for private financial gain.”
I am not claiming that the attorneys general should not be suing these companies. Maybe these are bad companies that ought to be sued. But the timing of the donations clearly tells us that there are variables besides company behavior that factor into the equation.
So when weighing how much regulation and what kind of regulation is needed for something--whether for banks or taxicabs or immigration--always keep in mind that these regulations are created and enforced by ordinary self-interested individuals, not tireless, incorruptible saints. A complex regulatory regime will provide greater opportunities for corruption. The simpler and more transparent the rules are, the less room there will be for a highly imperfect regulatory process to muck things up.
So when weighing how much regulation and what kind of regulation is needed for something--whether for banks or taxicabs or immigration--always keep in mind that these regulations are created and enforced by ordinary self-interested individuals, not tireless, incorruptible saints. A complex regulatory regime will provide greater opportunities for corruption. The simpler and more transparent the rules are, the less room there will be for a highly imperfect regulatory process to muck things up.