Theft at the Public Till
act, a way to monitor their behavior, and an apparatus to punish those who attempt to evade the commands. Creating the right incentives, by contrast, takes advantage of the detailed information that already exists in each per- son’s mind, requires little enforcement or monitoring, and is unlikely to pro- duce evasive actions. A property rights strategy works through incentives; government intervention relies on commands. Consequently, the property rights strategy is likely to produce better results, and fewer unintended consequences, than government intervention. We must reform our system of legal liabilities. This includes the con- troversial notion of limiting both punitive damages and damages for mental and emotional distress. Defendants should be exempt from penalty un- less culpability or negligence is proved beyond reasonable doubt. Further, courts, juries and regulatory agencies should be precluded from considering the availability of deep pockets to the defendant in liability cases. Judges and legislators have decided to hold manufacturers strictly liable for any damage from a product, even if no one knew it might be a problem and the product was produced decades ago. Asbestos and several drugs are in this category. Judges in several states have created implied contracts between employees and employers, so that ponderous legal procedures must be followed in dis- missing employees. Hiring is such a risk that many firms prefer using tem- poraries or overtime. Federal judges extended liability for environmental damages to lenders who had nothing to do with the event in question -- e.g. if you lent money to someone who then spilled toxic substances, you were liable, regardless of your knowledge or actions. This has terrified the banks and frozen some types of lending. Plaintiffs who have been shown to have contributed to the damage at issue should not be compensated or their compensation should be reduced commensurately. To the extent that juries, courts, and regulatory agencies have departed from this standard and, as is often alleged, have been prepared to impose penalties upon a defendant in the absence of strong evidence of culpability and negligence, they have undermined economic efficiency in at least three ways. First they have distorted the paces of drugs, medical ser- vices, insurance, and other products by imposing on the suppliers of these
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