Like people, nations tend to have faults that mirror their strengths. An example is the US legal system – it’s grown out of a laudable desire to elect judges rather than appoint them, and to give the little man his day in court. Sadly, it’s turned into a monster that consumes the little man and is bleeding the US economy.
The little man:
When attorney Roy Pearson filed suit demanding $67 million from the Chung family, whose Washington dry cleaners had mishandled his pair of trousers, he must have felt he was sitting pretty. Menacing a merchant who’s annoyed you with terrifyingly high legal penalties–that’s the way to show who wears the pants, right?
Mr. Pearson probably had no idea that his Great American Pants Suit–the trial of which just wound up in a Washington courtroom last week, with a verdict expected this week–would stir commentary around the world and come to symbolize the extent to which lawsuits in America can serve as a hobby for the spiteful and a weapon for the rapacious…
The Chungs offered Pearson $12,000, which he turned down. The family says the suit has run through their savings in legal fees and harmed their credit, to say nothing of their peace of mind; they’ve even considered returning to their native Korea, which they left in 1992.
The Chung family is screwed because in the US a successful defendant can’t claim their costs back, and hence a legal assault is risk-free. And that means defendants settle rather than fight. And that leads to tort lawyers who sue whenever a stock goes down. And that transfers billions from US companies to said lawyers.
It also (together with Sarbanes Oxley (SOX)) causes foreign companies to avoid listing in the US.
The end of the tale is this:
The cost of living in London has increased so much over the last year that the capital has become the second most expensive city in the world, according to a report out today…
London’s importance as a centre of finance over the last year – it has played host to countless multi-billion dollar deals – has helped bring in thousands of well paid international bankers and lawyers, all willing to bid up the cost of a luxury flat as well as many other services.
More business people will be based in London than in New York by the end of the decade if current trends persist.
With the Dems in power, present trends will persist – Dems get lots of money from trial lawyers, and love business-bashing laws like SOX.
Blair’s successor, Brown, is far to canny to shoot the London goose, so NYC’s only hope is the statist Tories win the next election then wreck the Brit economy.