Chamber attack on state’s rules
When the U.S. Chamber of Commerce issued a 116-page report last spring ranking California dead last in the nation in the impact of state laws on both hiring by private businesses and creation of new businesses, it was good for a belly-laugh.
Now the Chamber is out with another lengthy study purporting to show that California has lost at least 104,000 steady jobs because of its legal climate, which allows wronged parties to sue both companies and individuals.
The newest study doesn’t specifically compare California to Mississippi, as the spring report did. Back then, the business group claimed California’s rules limiting air and water pollution put it behind impoverished Mississippi when it came to new business creation. And yet, only 139 new businesses opened in Mississippi in 2009 (the most recent year the Chamber examined), compared with 10,087 in California.
California, then, accounted for 19.5 percent of all new businesses in America, but had only 12 percent of the nation’s population. Mississippi accounted for a miniscule .00026 percent, but the Chamber liked it better.
The new report on legal climates can best be understood as part of an effort by the Chamber and its state affiliates to free businesses from as many obligations and liabilities as possible. It’s all done to the mantra of “new jobs,” even though there is scant evidence that loosening regulations or lowering business taxes causes businesses to increase
That’s especially true today, when many of the Chamber’s member businesses have outsourced millions of jobs once held by Americans to Third World countries where they can pay what would be poverty wages in America.
The newest Chamber effort assails what it calls a “tort tax” on California businesses, claiming lawsuit settlements and judgments in this state in 2009 amounted to just over $32 billion.
Putting that into perspective, it amounts to about one-third of the cost of the proposed California High Speed Rail System going to legal costs each year. The Chamber claims that businesses pay $4.47 in legal insurance premiums for every $1,000 of revenue, which it says amounts to a .45 percent tax on every dollar taken in by California businesses.
Of course, the Chamber’s own study indicates that less than half the cost of lawsuits in California involves anything at all commercial.
“Personal tort costs” – one person suing another, divorce settlements and the like – amount to almost as much as commercial torts, while medical malpractice suits account for 12 percent of all legal settlements and judgments.
The Chamber hastens to say that its newest study “does not provide a guide for specific legal reforms,” but it has often pushed to limit punitive judgments against companies that build faulty cars or sell rotten food or pollute drinking water.
Doing that, the Chamber report says “could add hundreds of thousands of jobs in California,” but there is no proof that claim is true. Nothing in the new Chamber report proves California’s legal climate is a major cause of the state’s economic malaise.