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The Lighthouse is the weekly email newsletter of the Independent Institute.
Subscribe now, or browse Back Issues.

Volume 8, Issue 13: March 27, 2006

  1. JUDGE AND JURY -- New Book Puts American Tort Law on Trial
  2. Bad Timing for Unfair Oil Tax Hike
  3. Eradication Efforts Fail to Slow Latin Drug Trade
  4. Iraq War: Vietnam Redux

1) JUDGE AND JURY -- New Book Puts American Tort Law on Trial

Is the U.S. tort system, including product liability and medical malpractice, in crisis? Are juries too easily swayed by emotion? Should the United States replace jury trials and rely exclusively on judges, as most countries do? How does the method in which judges are selected affect tort awards when a defendant comes from another state? Do contingent fees create a conflict of interest between plaintiffs' lawyers their clients?

In their new book, JUDGE AND JURY: American Tort Law on Trial, economists Eric Helland and Alexander Tabarrok subject these questions to scrutiny -- and reveal several surprising findings. Here are a couple:

* Tort awards vary by county poverty rates and by ethnicity. As county poverty rate increases from 4.1% to 21.9%, the average award triples from just over $400,000 to just over $1.3 million. For every percentage point increase in the poverty rate, awards increase by about $34,000. A percentage point increase in black and Hispanic poverty rates raises awards by $20,000 and $78,000, respectively, but the same percentage increase in white poverty rates decreases awards by $8,644.

* Partisan elections encourage judges to rule in favor of larger awards. In cases involving out-of-state defendants and instate plaintiffs, the average award is $363,000 higher in states with partisan elections compared to states with nonpartisan elections. Approximately $230,000 of the larger award is due to a bias against out-of-state defendants, and the rest is due to generally higher awards against business in partisan states.

Helland and Tabarrok also find that contingent fees help reduce frivolous lawsuits because a lawyer on contingent fee is unlikely to take a case he thinks will lose. Finally, Helland and Tabarrok look at reform proposals, including the Class-Action Fairness Act of 2005 and limitations on judges and juries by statute and by contract.

Praise for JUDGE AND JURY:

"In their pioneering book, JUDGE AND JURY, Helland and Tabarrok are relentless in their pursuit of hard data to explain the behavior of the American jury. On a topic on which it is easy to become hyperbolic, their dispassionate analysis of the effects of race and poverty on jury behavior is a model for all intelligent discussion of legal reform. The authors are to be commended for the way in which they confirm some deep-seated perceptions of runaway juries while debunking other claims that do not survive their rigorous empirical scrutiny." --Richard A. Epstein, University of Chicago School of Law

To order JUDGE AND JURY: American Tort Law on Trial, by Eric Helland and Alexander Tabarrok, see
http://www.independent.org/store/book_detail.asp?bookID=62

For a detailed summary, see
http://www.independent.org/publications/books/book_summary.asp?bookID=62

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2) Bad Timing for Unfair Oil Tax Hike

The oil and gas industry will need to spend about $200 billion per year from now until 2030 to meet growing needs, according to the International Energy Agency. But if the misnamed Tax Relief Act of 2005 is passed in the version approved by the U.S. Senate, not only will those needs be harder to meet, a massive injustice against American suppliers will have been committed, according to Independent Institute Research Fellow William F. Shughart II.

"One of the bill's provisions would eliminate the ability of large oil companies to take a credit for corporate income taxes paid to foreign governments," writes Shughart in a new op-ed for the Memphis COMMERCIAL APPEAL. "Never mind that the same credit has been available to all American taxpayers since income taxes were imposed in 1913."

In addition to creating double taxation, the bill would require the five largest oil companies in the United States to abandon an accounting procedure used by all U.S. manufacturers for 70 years. This would raise the value of their inventories and their taxes by an estimated $5 billion over the next two years and reduce their ability to expand refinery capacity and develop new energy resources.

"Tax policies that tilt the playing field against major U.S. oil companies threaten our nation's security at a time when supply disruptions in any number of oil-producing countries could halt the flow of oil," Shughart writes.

"Stealth Tax on Oil Would Hit Investors, Nation," by William F. Shughart II (THE COMMERCIAL APPEAL, 3/24/06)
http://www.independent.org/newsroom/article.asp?id=1692

SPANISH TRANSLATION:
"El impuesto encubierto al petróleo afectará tanto a los inversionistas como a la nación"
http://www.elindependent.org/articulos/article.asp?id=1692

William F. Shughart II is the editor of TAXING CHOICE: The Predatory Politics of Fiscal Discrimination.
http://www.independent.org/publications/books/book_summary.asp?bookID=48

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3) Eradication Efforts Fail to Slow Latin Drug Trade

About one half of the $6 billion that the United States has given Latin American governments in the past six years for cocaine eradication has gone to Colombia. From 2001 to 2004, it seemed to work. However, a recent report by the Government Accountability Office stated that the supply of cocaine in the United States has not been reduced. As coca production fell in Colombia, it increased in Peru and Bolivia.

"Every time it looks like eradication is working, cultivation goes back up again," writes Alvaro Vargas Llosa, director of the Independent Institute's Center on Global Prosperity, in his latest op-ed. Some U.S. State Department officials seem to understand that pushing the eradication of coca growing in Latin America is unlikely to work and has contributed to the recent rise of anti-U.S. governments in the region.

"There are even signs that Washington may be amenable to some compromise with Andean countries like Bolivia that want to increase the number of hectares of coca allowed for legal uses," Vargas Llosa continues. "This reasonable attitude might avoid immediate diplomatic problems and help diffuse the tension that is brewing in the Andes with the rise of political caudillos critical of the U.S. who are allying themselves with coca growers."

"Those Stubborn Shrubs," by Alvaro Vargas Llosa (3/22/06)
http://www.independent.org/newsroom/article.asp?id=1691
SPANISH TRANSLATION:
http://www.elindependent.org/articulos/article.asp?id=1691

THE CHE GUEVARA MYTH AND THE FUTURE OF LIBERTY, by Alvaro Vargas Llosa
http://www.independent.org/store/book_detail.asp?bookID=61

LIBERTY FOR LATIN AMERICA: How to Undo Five-Hundred Years of State Oppression, by Alvaro Vargas Llosa
http://www.independent.org/store/book_detail.asp?bookID=55

Center on Global Prosperity (Alvaro Vargas Llosa, director)
http://www.independent.org/research/cogp/

Spanish-language Blog:
El Independent: El Blog del Centro Para la Prosperidad Global de The Independent Institute
http://independent.typepad.com

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4) Iraq War: Vietnam Redux

Three years into the war in Iraq, the Bush administration is "suffering for its shocking failure to learn the lessons of the tragedy of Vietnam," according to Ivan Eland, director of the Center on Peace & Liberty at the Independent Institute.

In his latest op-ed, Eland lists 10 major mistakes that U.S. policymakers have been repeating from the Vietnam War. Among them, according to Eland, are an underestimation of the enemy, the deception of the public about the progress of the war, the blaming of the news media for its predictable negative coverage, an initial downplaying of the need to win Iraqi hearts and minds to quell the insurgency, and a retention of incompetent policymakers. The most important mistake, according to Eland, was "starting a war with another country for concocted reasons, which did not hold up under scrutiny."

"Lyndon Johnson used a questionable alleged attack by Vietnamese patrol boats on a U.S. destroyer to escalate U.S. involvement in a backwater country that was hardly strategic to the United States," writes Eland. "Bush exaggerated the dangers from Iraqi weapons programs and implied an invented link between Saddam Hussein and the 9/11 attacks. In a republic, the lack of a compelling rationale for sending men to die in a distant war can be corrosive for the morale of the troops and public support back home."

See "Top Ten Mistakes the Bush Administration Is Repeating from Vietnam," by Ivan Eland (3/27/06)
http://www.independent.org/newsroom/article.asp?id=1694
SPANISH TRANSLATION:
"Las diez principales equivocaciones que la administración Bush está repitiendo de Vietnam"
http://www.elindependent.org/articulos/article.asp?id=1694

THE WAY OUT OF IRAQ: Decentralizing the Iraqi Government, by Ivan Eland
http://www.independent.org/store/policy_reports/detail.asp?id=16

THE EMPIRE HAS NO CLOTHES: U.S. Foreign Policy Exposed, by Ivan Eland
http://www.independent.org/store/book_detail.asp?bookID=54

Center on Peace & Liberty (Ivan Eland, director)
http://www.independent.org/research/copal/

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