Among the hottest regulatory issues today are these: How to prevent kids
from smoking cigarettes? What to do about the flood of handguns? How to
end sweatshop labor in the apparel industry? How to cope with new kinds of
market power in high-technology industries?
In the old days, state legislatures or Congress would enact laws, which
would be administered by regulatory agencies. But now the era of big
government is over. "Regulation" is a bad word. So how are these regulatory
issues being handled? Through lawsuits.
Consider tobacco. Last spring, Congress punted. It gave up on a bill to jack
up the price of cigarettes. But that didn't mean tobacco companies were off
the hook. The state attorneys general, who had sued the tobacco
companies, settled for $246 billion.
In his State of the Union Address, President Clinton announced he wanted
the Justice Department to sue tobacco companies as well, in order to collect
billions of dollars that Medicare spends caring for people with
Many legal experts doubt the federal government has the authority to launch
such a lawsuit. But that's irrelevant. The lawsuit would be a bargaining chip
for settling the case. The administration wants cigarette makers to agree to
a 55-cents-a-pack tax -- high enough to cause people to smoke a lot less.
Or consider handguns. Don't expect new legislation on this front. The Brady
Bill, which imposed some controls on who can buy them, barely passed
Congress. But now several big cities -- among them Los Angeles, Chicago,
Miami and New Orleans -- are suing gun manufacturers and dealers. They
aim to recoup hundreds of millions of dollars in medical and police costs that,
they say, could have been avoided if the manufacturers had equipped their
guns with effective safety devices, and if the dealers hadn't flooded their
cities with guns.
"All of us should consider filing lawsuits," Mayor Alex Penelas of Miami-Dade
County said recently. Other cities are ready to join the fray. The likely result
is a settlement as well, which will cost the gun industry a bundle and also
get them to take some preventive steps on their own.
Congress won't touch the subject of sweatshops.
Even a White House task force is having trouble getting the apparel industry
to take "voluntary" steps to clean up its act.
So how is America dealing with sweatshops? By hitting the courts. A coalition
of consumer, labor and religious groups is now suing major companies to
force them to take more responsibility for preventing garments from being
made in sweatshops.
Finally, consider market power in high technology. The old competitive rules
don't always apply. If a company becomes large enough to set an industry
standard, it can use its power to dominate all sorts of gadgets that depend
on that standard. But how big is too big? And what sort of standards are
most important? Rather than hash out these questions through regulation,
the U.S. is suing Microsoft Corp. Whatever emerges from this suit will set a
powerful precedent. In effect, we'll have a new set of rules governing how
the computer, semiconductor and telecommunications industries are
Lawsuits not the most efficient path
Regulating U.S. industry through lawsuits isn'tthe most efficient way of doing
the job. Judges don't have large expert staffs for research and analyses,
which regulatory agencies possess. And when plaintiffs and defendants
settle their cases, we can't always be sure the public interest is being
served. But perhaps regulating through lawsuits is better than not
regulating at all.
Years ago, the courts championed the cause of civil rights. That's because
legislatures, which decide things by majority rule, couldn't be counted on to
protect the rights of minorities. Now, the courts are determining the
regulatory responsibilities of U.S. industry. Maybe that's because politicians
-- more dependent than ever on industry for campaign contributions -- can't
be trusted to protect the rest of us from big business.
The era of big government may be over, but the era of regulation through
litigation has just begun.