Even today, $50 million is a lot of money. When damages in that amount recently were awarded to a local brewery worker scalded over 40 percent of his body in his workplace, my eyebrows probably were not the only ones raised.
And many others must have wondered why the case was even in court — most such work injuries are handled under Minnesota’s Workers’ Compensation system.
The news struck me particularly hard though. Just the evening before, I had been reviewing familiar old papers detailing someone else’s burn sufferings: On Sept. 7, 1970, another man also suffered burns on 40 percent of his body, plus “surgical amputation, right leg” and “multiple fragment wounds both legs, chest.” Five of the other 10 people wounded that day also had burns. And then there were four with a terse “KIA — Burns 100% body.” That’s “Killed in Action,” by the way. One of those four would receive a posthumous Congressional Medal of Honor for saving others.
Moreover, news of the brewery scalding settlement came days after the obituary of Dr. Ronald Glasser, the HCMC pediatric nephrologist whose book “365 Days” is a classic of Vietnam War literature. Few can read its final chapter, “The Burn Ward,” without weeping.
No, this is not a diatribe about bad treatment of wounded veterans compared with others. Rather, it is a reflection on how terrible things happen in life to all sorts of people for all sorts of reasons, and how we deal with it as a society.
How, as a society, do we act to help those hurt, to enable their recovery and facilitate as good a life as possible going forward? What incentives do we construct to minimize horrendous injuries? Do we punish those whose lapses cause harm to others — and how?
Start by thinking that, to have a just society, most people would want mechanisms to reduce the frequency of injuries. Most would want medical and rehabilitative care for those injured. Many favor ongoing benefits so that those gravely harmed could still have rewarding lives. Some would like to see punishment for those whose decisions make such injuries more common.
But how do we reach these goals? What role can economic insights play?
It is obvious that liability lawsuits, such as the one just decided, provide a mechanism — large damage awards — to compensate those harmed, and incentives — judgments or high insurance premiums to be paid — to motivate safety measures. At times these can be “punitive” both in fact and in law.
Small-L libertarians, who value the insights of Nobel Laureate Ronald Coase, argue that if we could just get “property rights,” which include tort liability, just so, government regulatory agencies like the Occupational Safety and Health Administration are unneeded. Decisions by judges and juries would compensate those harmed, punish offending owners and managers and create incentives to not harm again. Accidents will still happen, but free markets will save the day.
That thinking, of course, depends on some key assumptions. One is that the financial and political power of both sides entering a courtroom is equal. Another is that all parties have inexpensive access to all relevant information, including on how to sue. Yet another is that there are no “transaction costs,” little details like hiring lawyers, interviewing witnesses or finding the right expert witnesses.
Moreover, there is an assumption that different cases merit different degrees of societal worth or value. Incinerate large parts of your body while running a meth lab and, unless you’ve saved up lots of dirty money, you should just die in pain. Be in the lead armored personnel carrier rushing out to try to catch those mortaring the LZ, and the nation’s taxpayers must pay for your care and provide modest help for the rest of your life. Such distinctions should seem obvious.
But what about the sophomore at the Christian college who thinks, “what a great prank! Break into the transformer vault, pull a lever and black out all the dorms!” Or the 70-year-old farmer who forgets to flip the breaker before climbing into the loft of his milkhouse to clean the refrigeration coils with solvent? What about the toddler who tugs on the dish towel under the kettle of scalding pasta water? And should the value distinction be any different if the toddler’s parent is a teenage drop-out single mom or a rising star at a prestigious law firm? If the teens around the campfire that someone throws gas on are singing Kumbaya or smoking weed?
The answer is that we, like most other industrialized nations, have a hodge-podge of safety regulations, public and private health care, disability benefits, insurance, tort suits and private insurance. These are not necessarily logical, just or efficient. Some are based on objective collective values, some based on the subjective circumstances of the victim and the liable party. In most cases, the phrase, “All things being equal … ” rarely rings true.
Our country is heavy on tort actions and damages, light on socialized health services. Taxpayer provided rehabilitation and disability benefits are more abundant in much of Europe, with liability suits difficult. Few other nations anywhere allow contingency fees for attorneys or for “punitive damages.”
There is much evidence that the liability-suit-friendly U.S. system creates incentives for actions that sap economic efficiency. On the flip-side, there also is much evidence that Japan’s legal hostility to actions for damages allows businesses in that country to abuse the public.
In the U.S., businesses hire thousands of lawyers to defend in such suits. And these lawyers increasingly devise ever more opaque ways to get customers to surrender their rights to sue with small-print clauses to which we often unwittingly consent by clicking an “I agree” box every time we order something online, download software or reading material, or apply for a credit card.
Things could be worse. They are in almost every developing economy. And they could be better. Government workers’ compensation systems were developed more than a century ago after it became apparent that existing civil tort liability solutions for workplace deaths and injuries had outcomes that were haphazard, drawn-out, often unjust and carried huge transaction costs relative to harms being settled. Workers’ comp systems are far from perfect, but better than we had in the days of Upton Sinclair’s “The Jungle.” However politically contentious, OSHA and other regulatory measures have sharply reduced workplace injuries and deaths, albeit, according to some, at an unnecessarily high cost in wasted resources.
“Citizen juries” or panels of experts can come up with sound recommendations for improvement. But our current political system is so polarized that meaningful reform of workplace and product liability law or of lax-funded rehabilitation services or of disability benefits seems impossible.
There are no clear answers here, just painful questions about which to soul search a bit.
St. Paul economist and writer Edward Lotterman can be reached at [email protected]