As a litigator, I appreciate the sentiment, but litigation is ineffective at enforcing the rights of large numbers of people. Say there are no bank regulations, and a bank skims $100 of the accounts of ten million customers. The bank makes a lot of money, but it's not worthwhile for any given individual to sue. Your only recourse is the class action lawsuit, with all the limitations that entails.
The situation is even more problematic when the injured parties are not in contractual privity with the wrongdoer. If a coal plant in Chicago causes $1,000 of health damage to each resident, that's a multi-billion wrong. But unlike with a bank, the residents can't simply decide to do business with a different company.
There's a lot of money to be made doing two things: 1) selling people more risk than they think you're selling them; 2) foisting risk and costs onto third parties that aren't in a contractual relationship with you. So long as you do these things to a large number of people with a relatively small dollar value for each injury, you'll make a lot of money at it, and the legal system isn't great at stopping such behavior.
Not to mention that often the entities that caused the harm do not have the capital to pay back for catastrophic harm.
Also litigation takes for ever. That is doubly true for billion dollar cases.
I'm working on a case with a billion dollar verdict. It's been 6 years and not a dime was paid. We are going back for a retrial. This thing won't be done for several more years at the earliest.
What you are describing about banks is outright theft, which under any system would be punished.
Even if courts did not exist, very few business would be that dumb to steal from their customers, because once details of it were known to the public, all rational customers would take their money out of the bank and it would eventually go out of business.
There's lots of ways to steal a little bit from people in ways they don't realize or can't do anything about. Stealing $5 bucks outright is of course the obvious thing; disproportionate overdraft fees or ordering transactions to maximize overdrafts is another; selling something with apparent X% risk and real X+Y% risk is more subtle still.
Information asymmetry isn't a theoretical construct--it's the basis of a lot of different ways to steal from people without their knowing.
Comments
As a litigator, I appreciate the sentiment, but litigation is ineffective at enforcing the rights of large numbers of people. Say there are no bank regulations, and a bank skims $100 of the accounts of ten million customers. The bank makes a lot of money, but it's not worthwhile for any given individual to sue. Your only recourse is the class action lawsuit, with all the limitations that entails.
The situation is even more problematic when the injured parties are not in contractual privity with the wrongdoer. If a coal plant in Chicago causes $1,000 of health damage to each resident, that's a multi-billion wrong. But unlike with a bank, the residents can't simply decide to do business with a different company.
There's a lot of money to be made doing two things: 1) selling people more risk than they think you're selling them; 2) foisting risk and costs onto third parties that aren't in a contractual relationship with you. So long as you do these things to a large number of people with a relatively small dollar value for each injury, you'll make a lot of money at it, and the legal system isn't great at stopping such behavior.
Not to mention that often the entities that caused the harm do not have the capital to pay back for catastrophic harm.
Also litigation takes for ever. That is doubly true for billion dollar cases.
I'm working on a case with a billion dollar verdict. It's been 6 years and not a dime was paid. We are going back for a retrial. This thing won't be done for several more years at the earliest.
What you are describing about banks is outright theft, which under any system would be punished.
Even if courts did not exist, very few business would be that dumb to steal from their customers, because once details of it were known to the public, all rational customers would take their money out of the bank and it would eventually go out of business.
There's lots of ways to steal a little bit from people in ways they don't realize or can't do anything about. Stealing $5 bucks outright is of course the obvious thing; disproportionate overdraft fees or ordering transactions to maximize overdrafts is another; selling something with apparent X% risk and real X+Y% risk is more subtle still.
Information asymmetry isn't a theoretical construct--it's the basis of a lot of different ways to steal from people without their knowing.