From: thant@void.esd.sgi.com (Thant Tessman)
Newsgroups: alt.politics.marrou,alt.politics.elections
Subject: Regulation (Was: Andre Marrou on Larry King)
Date: 27 Jul 92 22:57:20 GMT
Organization: Silicon Graphics, Inc.  Mountain View, CA


From _Reason_ magazine, April 1989:


Courting Danger
The Risky Business of Liability Law
by Peter W. Huber


Some call it a safety tax, but its exact relationship to safety is
mysterious.  It is paid on many items that are risky to use, like ski
lifts and hedge trimmers, but it weighs even more heavily on other items
whose whole purpose is to make life safer.  It adds only a few cents to a
pack of cigarettes, but it adds more than the price of a football helmet
than the cost of making it.  The tax falls especially hard on
prescription drugs, doctors, surgeons, and all things medical.

The tax has closed, or limited the use of, city parks and school diving
and gymnastics programs.  Because of the tax, you can no longer buy many
American-made brands of sporting goods.  It has curtailed Little League
and fireworks displays, evening concerts, sailboard races, and the use of
public beaches and ice-skating rinks.  It temporarily shut down the famed
Cyclone at the Astroland amusement park on Coney Island.

The tax goes by the name of personal injury, or "tort," liability.  It is
one of the most ubiquitous taxes we pay, now levied on virtually
everything we buy, sell, and use.  It directly costs American
individuals, businesses, and government bodies at least $80 billion a
year.

It is collected and disbursed through litigation.  The courts alone
decide just who will pay, how much, and on what timetable.  Unlike
better-known taxes, this one was never put to a legislature or a public
referendum, debated at any length in the usual public arenas, or approved
by the president or by any state governor.  And although the tax
ostensibly is collected for the bublic benefit, lawers and other
middlemen pocket more than half the take.

For all practical purposes, the liability tax is a comparatively recent
invention.  Under legal rules that prevailed in this country for
centuries, and for centuries before that in the English common law from
which we inherited ours, courts viewed the barkeeper who sold Baker a
beer very differently from the drunk who took a swing at him.  The civil
law was in fact carefully divided into two distinct territories.
Contract law governed consensual dealings, and tort law governed
uninvited encounters.

Most accidents used to be covered by contract, not by tort.  Aside from
collisions on the road, mishaps between strangers are relatively rare.
Workplace accidents are preceded by a contract between willing employer
and employee; surgical accidents by a consensual doctor-patient
relationship; airplane crashes by the voluntary purchase of a ticket.
And the common sense of an earlier jurisprudence suggested that the
contingency of an accident should be addressed ahead of time, when
tempers are cool and minds clear.  Buyer and seller were allowed to set
the terms of their own deal, on questions of safety just as on questions
of price.  The courts viewed consumers as intelligent adults, whose
freely made contractual commitments were to be respected and enforced as
bargained for.

---

The law today could not be more different.  Contracts are no longer
sacrosanct; indeed, in matters of health and safety, contract terms count
for nothing at all.  The intervening revolution has been as profound and
far reaching as any in the history of the common law.

The shadowy beginnings of the revolution can be traced back to the early
1900s.  But the real action occurred much later, in the 1950s and early
1960s.  It was then that judges across the country set out to rewrite the
civil law of accidents, chapter and verse.  The movement was led by a
handful of thoughtful, well-intentioned legal academics at some of the
most prestigious law schools and by judges on the most respected state
benches.

Standardized contracts between a large corporate seller and a small
consumer, these new tort scholars reasoned, are not really agreements at
all; they are mere contracts "of adhesion" and should be dismissed out of
hand.  Joe Consumer never bothers to read the contract accompanying his
airline or bus ticket, his toaster, or his car; even if he did, General
Motors, General Electric, and United Airlines would laugh if Joe proposed
to renegotiate the terms.  So the consumer came to be viewed much as a
fly near flypaper, ever in danger of sudden death by glue.

The flypaper theory of contracts was infinitely powerful.
Take-it-or-leave-it contracts typify virtually all mass-market sales of
consumer products and services.  Used skillfully, the theory allowed
judges to get rid of almost any unwanted language they chose, anywhere
they might find it.  Adhesion theories could transform any deal, no
matter how seemingly consensual, into the legal equivalent of a car
accident.

The death of contract created a daunting new challenge to the courts.
"It took but a few seconds to cut off Lavoisier's head,"  one of his
countrymen remarked in 1794, when the great French chemist Antoine
Lavoisier was led to the Paris guillotine, "It will take France a century
to grow another like it."  The judges who had sentenced and executed the
law of contract had not one head to replace, but a million.

Every sale of a car, toaster, or cigarette lighter, every hookup of an
electric or gas customer, every ticket for an ocean cruise or
roller-coaster ride, every college admission, hotel room rental, or
tonsillectomy, is based on contract.  The old laws depended on buyer and
seller to agree privately beforehand who would pay for what if an
accident befell.  If they failed to set out the terms of their deal with
sufficient precision, the law would of course supply presumptions of one
sort or another in the case of subsequent dispute.  But what was
critically important was that contract could prevail if the parties
wished.

All of this was to disappear.  When the courts abandoned contract, they
left a cavernous void that had to be refilled, bucket by bucket, with a
new set of public standards, rights, and responsibilities.  The legal
theorists set about rewriting liability law, with California leading the
way.  Traditionally, a seller's liability for goods or services was
modest and limited.  Fault, in some sense of that word, was a
precondition to any successful liability claim - malicious intent, or at
the very least negligence.  But in a 1962 landmark decision, the
California state supreme court declared that the new rule for product
manufacturers would be "strict liability" - liability for any and all
accidents caused by a "defect in manufacture" of their product.

Within a few years, California and other courts across the country had
extended this notion to "design defects."  This empowered judges and
juries to decide questions of engineering and pharmacology, medicine and
science, far beyond their experience or expertise.  Just how does one go
about locating a defect in a complex product?  Sometimes the job is easy.
Defects in manufacture are immediately apparent when we compare the car
without a critical bolt in the steering column to hundreds of others that
came off the same assembly line with it.  In effect, the mass
manufacturer establishes his own standards, by which any one of his
products can be guaged.  Manufacturing defect cases are straightforward.
They are also comparatively rare.  Far more difficult are cases in which
the product is said to be defective in design, where there is no such
simple point of comparison.  Fully 80 percent of product liability cases
today are of this kind.

How is a jury to decide whether a whole class of products - say, the
intrauterine device (IUD) contraceptive - is inherently defective?  The
new tort system has apparently reached the conclusion that it is, having
driven from the market not only the notorious Dalkon Shield but also its
far safer substitutes, the Copper-7 and the Lippes Loop IUDs.  The Food
and Drug Administration, Planned Parenthood, and the vast majority of
doctors do not endorse that sweeping verdict, but the verdict stands,
nonetheless.

It is not enough to identify a safety shortcoming; the jury must also
weigh the cost of remedying it.  In the early 1970s, the Ford Pinto was
to car-crashworthiness cases what the Dalkon Shield later became to
contraceptive designs.  The Pinto weighed under 2,000 pounds and cost
less than $2,000.  Ford's own tests revealed that its gas tank was
vulnerable to rear-end collisions, but the company decided not to spend
an extera $10 per car to reinforce the structure - a calculation on which
plantiffs' lawers subsequently grew very rich.  But did they really
deserve to?

Ten dollars is not much, but full-force rear-end collisions aren't
common, and there are innumerably equally rare hazards that could also be
averted for $10 or therabouts.  Protecting against every one of them
would cost thousands.  But people with thousands to spare don't buy a
Pinto, they buy a Mercedes.  What about other cars in Pinto's class?
Some certainly had safer gas tanks, but that is not to say they were
safer cars.  A jury later fined Honda $5 million for its "reckless" act
of using lighter guage materials than some other manufacturers in a
1971-model vehicle.  (The driver of that car admitted he had bought it
for its economy.)  Toyota lost a $3-million judgement on similar grounds.

The subtle message here may be that *all* economy cars are inherently
defective for tort purposes.  But millions of consumers, all major car
companies, and the government's safety regulators seem to view the matter
quite differently.

With lawn mowers, kitchen appliances, airplanes, and safety valves, the
conclusion is almost always the same: safety is no exception to the
golden rule that buyers can pay more and get more.  Design is an
infinitely variable and subtle process.  It is always possible to
strengthen an airplane wing or a column in a building; it is always
possible to reduce the dosage of a drug or change the method or timing of
its administration.  But the follow-up questions are the difficult ones.
There are questions of function"  Will the plane still fly?  Will it fly
as fast?  There are questions of cost: at what point is an incremental
benefit in the car's safety no longer worth the price increase it would
entail?  There are questions of safety itself: has the therapeutic drug
really been improved, or has one risk just been traded off for another,
possibly a more serious one?

All that is certain, in modern design defect lawsuits, is that any result
is possible.  Today, a product can be legally "defective" because a
safety device has been omitted (a paydozer without rear-view mirrors) or
because certain parts are not as strong as they might have been (a car
roof is not strong enough to withstand the impact of a runaway horse that
lands on the roof after a front-end collision).  A jury can find that a
single-control shower faucet is defective because if one turns it on all
the way to one side, it will allow only hot water to spray, or that
children's cotton sleepwear is defective because it has not had
flame-retardant chemicals added.  Juries across the country somberly
weigh the designs of lawn mowers, electrical switches, bottles,
pesticides, contraceptive pills, vaccines, morning sickness drugs, and
intrauterine devices.

The courts thus slipped gently from enforcing private agreements to
redesigning products.  But the courts soon discovered that condemning
"defects" in the abstract is very much easier than identifying them in a
particular case.  The law journals published endless, impenetrable
articlses, by people woth no training whatsoever in science, engineering,
or pharmacology, on the nature of product "defects."  The increasingly
amorphous new legal standards attracted litigants, lawyers, and expert
witnesses and inflated product liability trials beyond all prior
recognition.

Strange verdicts became commonplace.  The FDA recommends the Sabin polio
vaccine over the Salk, but juries have issued verdicts - including
punitive awards - on the strength of the opposite conclusion.  In the
face of overwhelming scientific evidence indicating no such link, a jury
concluded that a spermicide, Nonoxynol-9, caused birth defects in a child
born after her mother had stopped using the product.  In a 1978 decision,
the California supreme court decided that recognizing design defects was
so difficult that the task should be simplified (for plantiffs, at least)
by reversing the burden of proof, leaving it to defendants to prove (if
they can) that their products are *not* defective.

The disarray in the system was hardly surprising.  The people who dreamed
up this new occupation for the courts didn't know the first thing about
designing a car, a contraceptive, or an airplane engine.  And unlike the
consumer who whould weigh risks and benefits ahead of time, they lacked
even the discipline that comes when one is spending one's own money and
risking one's own life and limb.

The inventors of the new tort law should have been the least surprised by
the mounting randomness and incoherence of jury outcomes.  A central
tenet of their faith was that the consumer is unqualified to make
intelligent choices about safety for himself.  Private choice, in short,
was to be replaced by public prescription.  Whose public prescription?
Not that of the pharmacologists at the FDA, or toxicologists at the
Environmental Protection Agency, or mechanical engineers at the Federal
Aviation Administration, but that of the juror, pulled off the voter
lists at random, solemnly sworn to his duty, and instantly educated in a
contest of courtroom experts also solemnly sworn, of course, and paid by
the hour for their particular form of swearing.  The member of the public
judged incompetent to make wise choices in the marketplace for himself
was now being called upon to make wise choices in the jury box for
others.

---

The authors of these bizarre rules sincerely believed, nevertheless, that
they would adbance safety by adopting them.  They focused single-mindedly
on the demand side of things: if the liability courts infliced enough
verdicts on people - especially well-insured people - found near the
scene of an accident, accidents would decrease in frequency and severity.

It looked simple enough on paper.  Accidents are socially costly, and the
law should encourage accident prevention by the most economical means.
To that end, liabilily should fall not on the person most "at fault" in
some traditional sense, but on the one who could prevent any given
accident at the lowest cost.  And just who might that be?  Most often,
those who provide goods and services, not those who consume them.
Corporations, hospitals, city governments, universities, and other
institutions, unlike the individual consumer they serve, are accident
experts.  They could compile accident reports and discover recurring
safety problems that individual users might never suspect.  They could
warn consumers of likely hazards, redesign priducts, or keep dangerous
items out of the hands of irresponsible buyers.  Even when there was no
immediately feasible way to eliminate a hazard billing producers for
accidents would spur them to search constantly for improvements in their
wares.

By a happy coincidence, ultra-stringent producer liability would further
other desirable goals as well.  It would ensure compensation for injured
parties who can ill afford to shoulder the costs of accidents.  And very
strict rules would also be simpler to administer because they would sweep
aside distracting questions of individual right and wrong, care or
carelessness, innocence or fault.  By creating a new demand for safety,
in short, the courts would ensure that life did indeed get safer.

But there was a critical oversight in all of this.  The supply side of
the safety picture was not seriously considered at all; there was just an
easy presumption that suppliers would remain on the scene but conduct
themselves more carefully.

What has happened in practice?  The immediate impact of the new legal
rules has been a marked increase in price and a decline in the
availability of a wide range of goods and services.  If businesses know
they are going to be sued, the costs of the lawsuits, or the insurance to
cover them, become routine costs of production.  Producers either find
ways to incorporate those costs in the final sale, or they go out of
business.

That much was expected.  What was unexpected was the propensity of the
new tort system to fall where it is least needed and most difficult to
bear.  Hospital emergency-room services are perilous in liability terms
because emergency-room patients are in trouble to begin with.  Vaccines
are now risky (again, from the legal perspective) because the children
who receive them are susceptible to a host of diseases and reactions
often indistinguishable from vaccine side-effects.  Running a municiple
police department, ambulance service, town dump, or waste cleanup service
invites litigation, because these activities are aimed at situations that
are inherently risky.

How could a tort system so committed to increasing safety have landed
some of its first punches on the very persons who work on the front line
of helping others?  Why does this system so often fail to distinguish
risks that are part of the problem from risks that are part of the
solution?  The answers are complex.  For one thing, juries have often
(and quite understandably) proved unskilled at distinguishing the various
parties found at the scene of the crime.  Juries are too prone to arrest
the firefighter, so to speak, along with the arsonist, the amulance
driver along with the drunk who made the ambulance necessary in the first
place.

Another part of the reason lies in a slip between theoretical cup and
real-world lip.  The founders of the new jurisprudence were committed to
deterring hazardous practices.  But judges and juries were, for the most
part, committed to running a generous sort of charity,  If the new tort
system cannot find a careless defendant after an accident, it will often
settle for a merely wealthy one.  But the wealty defendant is more often
part of the safety solution than part of the safety problem.

---

The larger fallacy in the grand scheme of the new liability system was
more profound.  As our right to sue the butcher, brewer, and baker after
the sale has grown, our freedom to make the purchase in the first place
has declined.  The purveyors of meat, beer, and such withdraw only
partially, by demanding a higher price; the purveyors of rare drugs,
Yellowstone hiking, and rural obstetrical services have often been driven
from the market alltogether.  An unbounded and impossible-to-waive right
to sue necessarily overtakes and destroys the right to make deals with
people who place a high premium on staying in business and out of court.
While the consumer has indeed acquired a new and sometimes valuable right
to sue, he has done so only by surrendering an older right, the right to
contract, which in the long run is worth far more.

Who is it that flees the modern liability system most quickly?  Those
quickest on their feet, of course - the person of action, the company of
initiative, the mover, the shaker, and the doer.  When it comes to
liability, the bold innovatory are the most fleet-footed of potential
defendants.  More often than not, they adjusted to the expanding threat
of liability by doing less.  In the very markets where the legal pursuit
was the most intense - on the trail of exotic drugs, contraceptives,
pesticides, small planes and cars, hazardous waste disposal, and medical
procedures - the mood among suppliers became most sullen, hostile,
defensive, and then coldly stagnant.  Soon tired of running, the fox
retreated to its burrow and refused to come out.

Research expenditures by U.S. companies working on contraceptives, for
example, peaked in 1973 and plummeted 90 percent in the next decade.
Steroidal oral contraceptives in this contry underwent no significant
changes after 1976, and no truly new contracetpive chemical entities have
been intruduced since 1968.  A new and effective IUD, the Copper-T 380A,
won FDA approval, but no major firm was willing to market it for several
years.  "Who in his right mind," the president of a major parmaceutical
company asked in 1986, "would work on a product today that would be used
by pregnant women?"

The story has been much the same in other high-tech markets favored with
attention from the liability system in recent years.  Between 1965 and
1985, the number of U.S. vaccine manufacturers srank by more than half;
by 1986 the nation depended on a single supplier for vaccines against
polio, rubella, measles, mumps, and rabies.  In the 1960s there were
eight U.S. manufacturers of whooping cough vaccine; by 1986 there were
only two.  And only two major companies, Merck and Leterle Labs, were
still investing heavily in vaccine research.  America, once the world
leader in this technology so vital to the public health, was quickly
losing ground here, too.

Consulting engineers report that they systematically favor old products
over new ones in their design specifications, fearing - quite correctly -
that newer design options carry a greater risk of liability, whatever
real decrease in risk they might actually represent.  Liability-conscious
universities decline to liscense patents to small companies, despite the
fertile environment they offer for innovation, fearing that anyone suing
over a patent-related product would be sure to go for the university's
deep pocket, as well.

Monsanto decided in 1987 not to market a promising new filler and
insulator made of calcium sodium metaphosphate.  The material is almost
certainly safer than asbestos, which it could help replace in brakes and
gaskets.  But safer is not good enough in today's climate of infectious
litigation.

The demise of the prescription drug Bendectin marked progress of a
similar kind.  Bendectin had been used for 27 years, in 33 million
pregnancies, to relieve morning sickness.  The overwhelming scientific
concensus, in the FDA and in all respectable scientific circles, has not
moved an inch:  Bendectin does not cause birth defects.  But claims
against the drug's manufacturer nevertheless burgened in the 1970s.  In
1985, under the mounting pressure of litigation, the drug was pulled from
the market.  If you suffer from morning sickness, go see your lawer.
Your doctor has nothing left to prescribe.

Obstetricians and gynecologists have retreated, too.  Some of their
services have become wholely unavailable in rural and less-affluent
communities.  So women and children won ther expanded right to sue but
lost services essential to their health and safety.  The complication
that develops in the back seat of the car heading to the delivery room at
a distant hospital is not likely to yield a munificent tort award, even
though it is more likely to end in a tragedy.

Next in line on the slope toward less liability and less safety is the
do-it-yourselfer.  By 1985, the courts were levying a tax on stepladders
amounting to over 30 percent of their cost.  Economic theory tells us
that some consumers will then curtail their use of these hazardous
instruments.  But there remains the vexing problem of the light bulb and
the kitchen chair.  Light bulbs still go out.  People would still rather
replace the bulb than curse the darkness.  And if they cannot afford a
stepladder they use a kitchen chair, which is more dangerous.  Without
ever quite saying so, the creators of modern liability law had assumed
that everything would work out in the end, because kitchen-chair makers
would be sued, too, presumably even more often.  But even with all the
excess in the new law, light-bulb changers who fall off do not generally
think to sue kitchen-chair makers, and if they do they are likely to
lose.

In theory, expanded liability was supposed to deter only "defective"
products and such.  But practice turned out rather differently.  When it
encourages improvement at all, the new tort system promotes the trivial
and marginal change.  Today's oral contraceptive manufacturer does work
hard to fine-tune the warning, or microscopically adjust the hormonal
balance in the pill.  The drill press designer adds an extra hair guard
or hand shield.  The doctor administers more tests, shoots more X-rays,
and piles on a paper trail of his own.  Large comanies hire risk
managers, industrial hygenists, consumer psychologists, and quality
control experts in droves.  The individuals and institutions all
vigorously insist that they are working relentlessly to improve safety
and reduce their liability.

What one finds, however, is that liability-driven safety management has
become a mirror image of the legal process itself - fussy, cumulative,
bureaucratic, and preoccupied with paper.  The risk-reduction initiatives
that are encouraged by liability undoubtedly do some good some of the
time.  But the threat of liability also postpones or prevents the sharp
break from tradition, the profound change in method or material, design,
or manufacture.  And the sharp break, the occasional bold leap forward,
is all-important in the quest for safety.

In net effect, the modern rules do not deter risk:  they deter behaviour
that gets people sued, which is not at all the same thing.  A victim's
consent to be left alone is much more likely to be treated as binding
than his consent to accept help. so doing nothing is safer legally than
doing something, even if more dangerous in all other ways.  Consent
aside, juries are far more prone to find fault with something that was
done and went wrong, than with something that was not done, though it
might have gone right.  And liability, for quite obvious reasons,
gravitates toward wealty targets.  The good thing about suing the wealthy
is that they can afford to pay; the bad thing is that people and
corporations most often become wealthy not because they do things that
are wicked and dangerous but because they do things that are valuable and
necessary.

---

"We are here on earth to help others,"  W.H. Auden once remarked, "but
what the other are here for I cannot say."  Today's liability lawers seem
to be of much the same mind.  They are not going to spend a great deal of
time worrying about just what drug manufacturers might or might not
contribute to the larger scheme of public health and welfare; the lawers'
business is to see to it that people who cause accidents pay and people
who suffer accidents get paid, and that is that.

Modern tort law is unchangeably poessimistic about the consumer's
competence and uduly optimistic about the prospects for universal
institutional care.  Courts and juries, the law assumes, must operate for
the consumer 'in loco parentis,' now and forever more.  This attitude
robs us of our most important economic freedom, the freedom to plan in
advance, to make commitments, and to arrange deals on terms mutually
atreeable to the parties involved.  Applied as it has been in recent
years, open-ended tort law serves only as an engine of social
destruction.  The freedom of contract is undermined, private bilateral
deals are curtailed.  Modern tort law abrogates our freedom to cooperate.

Worst of all, the courts are now openly at war with human individuality,
preference, and variety.  The new legal theories adopt a
one-size-fits-all theory of safety and product defects.  A small car is
either "defective" or it is not; it does not matter that a particular
buyer may not be able to afford any other car and deliberately chooses
the compact as best for her circumstances and needs.  In its
single-minded assumption of uniformity, not just among products but among
consumers themselves, the new tort jurisprudence is a compulsive
homogenizer.

And that, in the most subtle but far-reaching way, undercuts safety at
every level.  Safety ultimately lies in distingushing good risks from bad
ones and keeping them carefully apart in both thought and action, not
across the board but in proper context.  Lumping people, products, and
processes together is dangerous; safety lies in tailoring choices to
individual needs and circumstances, individual capabilities and
responsibilities, on both the consumer's side and the supplier's.

Not all consumers are alike; the prescription that is needlessly unsafe
for one may save the life of another.  In all but the simplest cases,
accidents originate not in defective designs but in the unwise
conjunction of a particular design with a particular use and user.  IUDs,
for example, are an inappropriate form of contraception for younger women
who have the self-discipline to use other forms of protection correctly,
but they are often the safest option for older women who smoke, among
others.  Oral contraceptives are safer for the former group and riskier
for the latter.  Botulinum is a paralytic poison, except when it is a
sight-saver therapy; penicillin is a miracle drug against infection,
except when it is a fatal allergenic; thalidomide a fearsome teratogen,
except when it alleviates the misery of leprosy.  Pure water is necessary
for life but can trigger seizures in epileptics when consumed in excess.
Similar user-specific risks and benifits inhere in every power tool, food
additive, transportation system or medical therapy.

It is precisely because we are *not* all equally tough or delicate,
cautious or careless, hardy or sickly, thin-skinned, or thick-skulled
that safety lies in individuation and differentiation.  Safety is not
improved by treating individuals as cookiecutter copies of each other or
as interchangeable parts in a mass-production assembly line.  Safety
depends on treating individuals as such, not as undifferentiated members
of a faceless public.  But the new tort system insists otherwise.  The
law itself has become hasardous to the public health.

---

What's to be done?  How do we encourage broader and more reliable
accident insurance coverage?  How can we rediscover a legal framework
that permits us, individually or collectively, to make the affirmative
chices that are needed if we are to end up with better drugs,
contraceptives, and vaccines, new and improved medical procedures, small
planes, football helmets, or amusement parks?  The guiding principle must
be to promote consent and agreement wherever possible - to prefer
contract over tort whenever the choice may be presented - and to elevate
direct insurance over liability-driven compensation.

Direct insurance, from whatever source, should always provide first
dollar coverage for accidents.  Before Congress intervened with expensive
and convoluted legislation two years ago, drug makers were prepared to
offer a fixed-sum insruance policy, capped at $1 million per injury, with
every dose of childhood vaccine they sold - provided that this advance
commitment would be truly binding and exclusive, with questions of cause
and effect reffered to outside experts.  But most providers remain
unwilling to offer any such direct insurance, and for good reason.  Under
current rules, most courts will find a way to take the guaranteed money
up front and then use the contemporary law of torts to demand more.

Insurance policies might not pay the astronomical amounts awarded by
juries.  But at the same time, direct insurance need not depend on costly
inquiries into negligence, defect, or fault, or the flypaper theories of
contract currently necessary to underwrite the rickety Mutual Tort
Insurance Company.

Insurance questions aside, we must categorically reject the notion of
contract as flypaper, the idea that to offer one's goods and services to
others is to entrap them  Whetever lawers may tell us, we each do have it
in our power to say no to the cigarette, the cut-rate lawn mower, the
contraceptive, and the ride in the propeller aircraft.  The theory of
adhesive contracts not withstanding, consumers in a free society are not
flies.  Of course, we cannot bargain one-on-one with United Airlines or
General Motors.  But we can do what amounts to the same thing by choosing
among different companies, different modes of transportation, and
different insurance packages that may be willingly offered by competing
companies.  Time and again, deals that could protect health, cure
disease, or improve safety - not to mention increase the stock of human
happiness in other ways - go unconsumated because the law will not allow
them to be settled on terms both sides would gladly accept.

The old law erred in the other extreme, elevating freedom of contract to
the point of enforing deals that were grounded on blind ignorance all
around.  Few would suggest returning to the day when a warning had to be
particularly sought out and paid for, and the unwary were simply out of
luck.  The answer is to reanchor the law of warning to its contractual
roots by applying the modern rules syummetrically, with a frim sense of
balance.  Full disclosure should be an ordinary and essential part of
fair dealing.  When it is - as it commonly is today - a deal should be
treated, once again, as a deal.

The courts may have to sort out the wreckage that reults from uninformed
choice.  But informed choice, deliberately made outside the courtroom and
before the accident, should count for everything.  Not because the
choices will always be wise - they surely won't - but because respecting
the right to choose, with the responsibility that mecessarily goes with
it, will advance overall safety more often than it retards it.

The most urgently needed correction here concerns warnings prescrbed by
regulatory agencies like the FDA and the EPA.  We should have one
inviolable safe harbor from liabiligy.  If the agency has weighed the
question of warning, and spelled out the language to be used in detail,
that should be a certain end to the matter for tort purposes.

A return to contract, built on open warning and informed consent, would
permit once again infinite calibration to the varying needs of individual
consumers.  No liability system, and no system of proader regulation, can
ever do better; rarely can they do anywhere near as well.  And the
individuality and flexibility that contract allows is the ultimate key to
the consumer's safety.

The path to a safer existence lies as much in beatifying good risks as in
exorcising bad ones.  It lies in the replacement of risks that are old
and grave with risks that are new and less grave.  The answer lies in
choice, in the affirmative needed to counterbalance every negative.
Aaron Wildavsky has made the point with customary eloquence.  Conceiving
of safety without risk, or progress without change, or freedom without
choice, is like seeking love without courting the danger of rejection.

---

Peter W. Huber, who has degrees in mechanical engineering and law, is a
senior fellow at the Manhattan Institute in New Yort City.  This article
is adapted from _Liability: The Legal Revolution and Its Consequences_
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