Americans reassure themselves about their country’s competitive future by invoking the U.S. legal system. Americans think that they need not worry about corporations deserting the protection of the U.S. legal system merely to gain access to cheap labor abroad. Americans believe that cheap labor countries are legally undeveloped and cannot compete with the rule of law and protection of contracts and property that the U.S. provides.
Fifty years ago this argument was valid. Today the U.S. legal system has been laid low by: a great profusion of law and regulation, much of which is contradictory; class action and plaintiff civil suits that blame deep pocket defendants for the plaintiffs’ mistakes; unscrupulous prosecutors who abuse their powers; asset freeze and forfeiture laws that have destroyed the security of property; and Benthamite legal influences that have stripped away the individual’s protections, which were once the glory of the Anglo-American legal system.
Today not even lawyers know what the law is. This is due not only to the law’s sheer bulk, but also to the ability of prosecutors and regulators to create law on the spot by interpreting statutes and regulations to suit their purposes. In effect, law has become a kind of silly putty out of which prosecutors and police fashion bills of attainder.
Most “white collar crimes” are based on nothing more than the fact that a businessman or his attorney interpreted a complex regulation differently from the way a regulator or prosecutor chose to interpret it in order to bring charges.
Can law become more arbitrary than this? Mexico and China, where difficulties that arise can be handled with a bribe or a political understanding, have fewer legal unknowns and risks than the U.S. There is ample evidence that the once-vaunted U.S. legal system has lost its worth. Look at the number of U.S. corporations that are moving production and R&D to China, and the number of firms that are reorganizing as offshore foreign entities.
Attorneys point out that in the U.S. it is much easier and less risky for prosecutors to frame a wealthy white collar defendant than to frame a poor minority. Common law crimes associated with the poor, such as theft, assault, and murder, are well defined. Frame-ups for these crimes require prosecutors to withhold exculpatory evidence, suborn perjury, and coerce false confessions. In contrast a white collar victim can be framed merely by how a prosecutor interprets a regulation.
The Exxon Valdez oil spill is a prime example. The U.S. Department of Justice chose to interpret an accident as a deliberate criminal intent to dump refuse (valuable crude oil) without a permit and to kill migratory birds without a license. To get the criminal charges dropped, Exxon had to pay the DOJ hundreds of millions of dollars more than China or Mexico would have extorted.
In the U.S. today, law is so absurd that an American lawyer, A. James Clark, has filed suit against the U.S. government for $41 million on behalf of families of 11 Mexicans, who died of thirst while illegally attempting to enter into Arizona from Mexico. The plaintiffs’ legal claim is that the U.S. government was negligent for not leaving water tanks along the route to aid the immigrants in their illegal entry.
Any day now a burglar, injured while breaking into a home, will sue the homeowner for not leaving the key in the lock. (I will not be surprised if I receive 100 letters asking: “Where have you been? It has already happened!”)
Microsoft’s rivals can use political donations and an ambitious federal prosecutor seeking name recognition to immobilize the software giant with an antitrust suit.
President Clinton can use the IRS to audit his opponents.
Financial privacy is ceasing to exist. It is even illegal to use the official legal tender to make a cash purchase of a $10,000 used car.
These complaints just scratch the surface.
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