The Supreme Court is not pro-business, it just looks that way after the fact

On the theory that one can never get too much of a good thing, I call to attention the fact that the very distinguished Richard Epstein has written this insightful piece, “The Myth of a Pro-Business SCOTUS: Commentators inaccurately condemn the five conservative justices as corporate shills.”  It is a criticism of an article and an op-ed piece in the New York Times suggesting that the Five are in the tank for corporations.

Consider the following, which I think is frequently missed by those who label the current Supreme Court as “pro-business,” that is:

Most important, it is always critical to distinguish between the ex ante and ex post effects of decisions. Under the ex post perspective, the question of who wins is asked after the dice have been rolled; here, commentators find it easy to classify outcomes as pro- or anti-business.

But that judgment is much more difficult to make when these cases are reexamined from the ex ante perspective, where the question is to figure out the overall social gains and losses that are likely to flow from the choice of any particular rule before any particular dispute arises. The stumbling block in the analysis is that any decision that benefits particular consumers, say, in the ex post state of the world, may well harm consumers as a broader class in the ex ante state of the world.

To see why this is possible, recall that much litigation benefits only a small fraction of consumers as a whole and that the costs of the decision must be absorbed into the overall costs for the firm to stay in business. In the ex ante state of the world, it is often difficult for business to know which consumers will be in a position to sue and which will not. Accordingly, the increase in costs will be passed back, at least in part, to consumers who do not benefit from the favorable outcome in a particular case. Why favor litigious consumers over others?

To the contrary, it is wise to remember that litigation always costs gobs of cash, which has to be paid by someone, for bad claims and good. The correct relationship between litigation and social welfare requires that the improvement in, say, accident prevention, must exceed, at a minimum, the administrative costs needed to secure that supposed gain. Often, however, litigation generates expensive errors that create perverse incentives. For example, in many product liability areas, excessive liability is often the norm. In those cases, where the consumer (or employee or tenant) is in a direct contractual relationship with some business firm, it is wrong to assume a priori that this burden is routinely met. Indeed, the presumption should always be in favor of upholding, not attacking, standard form contract terms.

(My emphasis)

I should be clear.  I do not (necessarily) adopt this view.  But, it is certainly more credible than much of what we see in the popular press.


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