The American Illness

The American Illness: Essays on the Rule of Law

Copyright Date: 2013
Published by: Yale University Press
Pages: 552
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    The American Illness
    Book Description:

    This provocative book brings together twenty-plus contributors from the fields of law, economics, and international relations to look at whether the U.S. legal system is contributing to the country's long postwar decline. The book provides a comprehensive overview of the interactions between economics and the law-in such areas as corruption, business regulation, and federalism-and explains how our system works differently from the one in most countries, with contradictory and hard to understand business regulations, tort laws that vary from state to state, and surprising judicial interpretations of clearly written contracts. This imposes far heavier litigation costs on American companies and hampers economic growth.

    eISBN: 978-0-300-19507-1
    Subjects: Political Science, Law, Business
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Table of Contents

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  1. Front Matter (pp. i-vi)
  2. Table of Contents (pp. vii-x)
  3. ACKNOWLEDGMENTS (pp. xi-xii)
  4. Part 1: Introduction
    • The Rule of Law in America (pp. 3-40)
      F.H. BUCKLEY

      Fifty years ago we thought we knew how to make a country rich: self-government, good education, free markets, and loads of World Bank infrastructure grants. Nothing very complicated, in short. We know better now. The gap between rich and poor countries, which we expected to shrink, has grown larger. What we failed to recognize was the role of intangible assets: the cultural values of thrift and industry, honesty in government, and the rule of law.

      What the rule of law might mean is, as we shall see, not always clear. But however one might define it, rich countries enjoy a...

  5. Part 2: Relative Decline
    • An Exceptional Nation? (pp. 43-66)
      F.H. BUCKLEY

      Most Americans subscribe to the idea of “American Exceptionalism.” When polled, 80 percent of respondents report that, because of its history and Constitution, America “has a unique character that makes it the greatest country in the world.”¹ A belief in American Exceptionalism is also a badge of faith in the country’s future. Whatever problems the country might have, it will surmount them, as it always has done in the past. For some, the label also means a belief in the special destiny of John Winthrop’s (and President Reagan’s) “city upon a hill,” an example to the world of a virtuous,...

  6. Part 3: Empirical Evidence
    • Are Americans More Litigious? SOME QUANTITATIVE EVIDENCE (pp. 69-99)

      Many observers suggest that American citizens sue more readily than citizens elsewhere, and that American judges shape society more powerfully than judges elsewhere. We examine the problems involved in exploring these questions quantitatively. The data themselves indicate that American law’s notoriety does not result from how we handle routine disputes. Instead, it results from the peculiar and dysfunctional way American courts handle particular legal doctrines such as class actions.

      Let’s begin with some stories.

      McDonald’s coffee.Stella Liebeck ordered coffee at a McDonald’s drivethrough and promptly spilled it on her lap. Because of her absorbent sweat pants, she suffered severe...


      The dean of the Harvard Law School once joked that by the year 2023 there would be more lawyers in the United States than people. I address the problem of too many lawyers by examining the number of lawyers in 33 countries, including the U.S. The international data reveals the surprising result that lawyers can be compared to Spam: not the unwanted email, but the cheap composite meat product. Using economic language, Spam is a normal good at low income levels (people buy more as their per capita income rises), but becomes an inferior good at middle to high income...

    • Regulation and Litigation: COMPLEMENTS OR SUBSTITUTES? (pp. 118-136)

      Michael Avery, Mark Covington, Sam DeFrank, Carly Vickers, and Todd Shadle were all involved in separate relatively minor traffic accidents in the early 1990s. Each of their accidents required minimal repairs to their vehicles. Their insurer, State Farm, had a policy of repairing damaged cars with parts that were not made by the original equipment manufacturer (OEM). The use of non-OEM parts would have reduced each individual’s bill between $45 and $155. Avery and Shadle opted for OEM parts and paid the cost difference themselves. The others had their vehicles repaired using non-OEM parts.

      In 1997 these five drivers, along...

    • Does Product Liability Law Make Us Safer? (pp. 137-156)

      Tort liability for personal injuries and property damage caused by products is known as product liability. Among the most prominent products associated with product liability claims are pharmaceutical products, medical devices, private aircraft, automobiles, and cigarettes. Damages awarded to injured parties raise the costs of providing the product, thus increasing the costs to the firm of selling unsafe products. Where the damages equal the value of the harm, the damages payment leads the firm to internalize the costs of the harm and creates incentives for the firm to produce safer products. In this article I focus primarily on whether American...

  7. Part 4: Civil Procedure
    • The American Illness and Comparative Civil Procedure (pp. 159-174)

      Most comparative legal scholarship lines up along three different axes, each emphasizing a distinct relationship between two legal systems, cultures, or traditions. The first axis highlights similarities, shared traits, common assumptions, and, ultimately, convergence. It is most often connected to a reformist agenda, underlining the positive outcomes of a particular set of rules or practices that has emerged in a sister jurisdiction. The second axis highlights difference, distinctiveness, cultural specificity, and, ultimately, divergence. It is most often connected to a conservative or traditionalist agenda, underlining the incommensurability of rules and practices lying deep below the surface of superficial comparison. The...

    • The Proportionality Principle and the Amount in Controversy (pp. 175-200)

      As chapter 1 of this book suggests, the American legal system is unique in countless ways. Its system of civil procedure is no exception. Practices such as pleading rules and discovery norms set America apart from many foreign countries, including our common-law cousins. Over a decade ago, these differences prompted John Langbein to observe:

      Americans operate a system of civil procedure whose excesses make it a laughing stock to the rest of the civilized world. Our system is truth-defeating, expensive, and capricious—a lawyers’ tax on the productive sector. Some Americans do not want to admit the dimensions of our...

    • The Allocation of Discovery Costs and the Foundations of Modern Procedure (pp. 201-210)

      The Federal Rules of Civil Procedure are rapidly approaching their 75th birthday, which will come in the year 2013. Seventy-five years is a long time, and while the Rules have of course been amended significantly at various points over the years, their basic structure remains largely the same as in their original formulation. When first promulgated in 1938, the Rules had an immediate and dramatic impact on civil adjudication by replacing long accepted procedural practices with very different methods of resolving disputes. There can be little question that the new system, spearheaded by the genius of Advisory Committee Reporter Charles...

    • Does Increased Litigation Increase Justice in a Second-Best World? (pp. 211-226)

      The other articles in this book contain a wealth of evidence—both empirical and anecdotal—that something is amiss with America’s legal system.¹ The exact diagnoses, as well as the prescribed remedies, are varied, as one might expect when economists and lawyers have been tasked with diagnosis and treatment, but there is significant agreement that, as it pertains to our legal system, American “exceptionalism” has dramatically increased costs with minimal corresponding benefits. In blazing new trails to legal liability, America certainly remains exceptional, but not in a way that will engender the envy of the rest of the world.


  8. Part 5: Tort Law
    • A Tamer Tort Law: THE CANADA-U.S. DIVIDE (pp. 229-248)

      Tort law in its traditional forms has been under attack from a variety of perspectives for several decades. On the one hand, enormous damage awards are said to drive up the costs of engaging in certain socially useful activities—such as providing certain types of medical care or innovative products—to the point that those activities are driven out the market. On the other hand, critics charge that the tort system does a poor job of providing compensation to the vast majority of people who have suffered injuries. As such, the tort system is often characterized as an unjust lottery:...

    • The Expansion of Modern U.S. Tort Law and Its Excesses (pp. 249-269)

      Tort law in the United States was radically reformed over the past 50 years from a relatively minor mechanism for dealing with a small subset of accidents into, today, an institution that conceptually aspires to regulate all industries and social activities, making it the most significant regulatory body in American society.

      Other chapters in this book document empirically the extraordinary rise of the field. This essay attempts to provide an explanation of these developments. It will show that, in theory, the expansion of tort law was well intentioned and may have served a constructive purpose over some range. The essay...

    • Regulation, Taxation, and Litigation (pp. 270-288)

      Regulation, taxation, and litigation are three policy mechanisms that can be employed to influence individual and corporate behavior in order to advance societal objectives. These mechanisms often interact with each other, and not always in a favorable manner. As I will demonstrate, litigation by government entities may lead to settlements that impose excessive regulations and tax penalties. Notwithstanding the presence of strong regulatory requirements, weak regulatory compliance defenses offer inadequate shields against potential litigation liability. For concreteness I focus on how different social institutions address health and safety risks, but the principles involved apply to many other situations as well....

  9. Part 6: Contract Law
    • An English Lawyer Looks at American Contract Law (pp. 291-311)

      When dealing with contract cases, English courts make much of their commitment to contractual certainty.¹ This is likely a consequence of the fact that contract law has been shaped by major commercial transactions and not by small-scale retail transactions. The paradigmatic contract, indeed, might be said to be a voyage or time charter-party or a sale of commodities. English courts tend to be acutely aware that their decisions will have an impact on sensitive, market-driven contract activity. Moreover, they are very much alive to the importance of finance in the city of London, as well as its satellite activities in...


      Modern contract law is nominally unitary; that is, a single set of legal rules (and presumably governing policies) applies to all enforceable promises regardless of the status of the contracting parties. Unfortunately, there are significant inefficiencies in a system that interprets the contracts between sophisticated parties who negotiate multimillion-dollar agreements with the aid of competent counsel in precisely the same way as it regulates “click-wrap” contracts between individual consumers and merchant sellers over the purchase of $50 of products on the Internet. Prominent among those inefficiencies is the confusion that results from the fractious debate between textualist and contextualist theories...

    • Exit and the American Illness (pp. 336-360)

      Other chapters of this book extensively document problems created by regulatory, liability, and litigation inefficiencies in American law. Some of those inefficiencies are found in federal law, others in state law. Indeed, one who locates or conducts business in the U.S. could be exposed to the maladies of many jurisdictions within the U.S., compounding the problems of American law. Moreover, state laws that regulate business activities located elsewhere may not be subject to the same disciplinary pressures as are state laws whose ill effects are experienced only locally.

      Multiple jurisdictions could mitigate inefficient regulation, however, if they enabled firms to...

    • The Dramatic Rise of Consumer Protection Law (pp. 361-378)

      The past few decades have seen a dramatic rise in state consumer protection legislation. Beginning in the early 1960s, these laws arose from a perception that market forces, the Federal Trade Commission (FTC), and state common law did not protect consumers adequately. State legislatures responded by enacting a diverse collection of statutes, commonly referred to as Consumer Protection Acts (CPAs), most of which were originally intended to supplement the FTC’s objectives of protecting consumers from “unfair or deceptive acts or practices.”¹ By 1981, all states had their own version of a CPA.

      The federal government has returned to the field...

  10. Part 7: Corporate and Securities Law
    • How American Corporate and Securities Law Drives Business Offshore (pp. 381-404)

      The first decade of the new century was a tumultuous one in many areas of life, not least the business and financial world. The decade opened with the bursting of the dot-com bubble and confidence-shaking frauds at Enron and WorldCom, among all too many others. In conjunction with the economic fallout from the 9/11 attacks, these shocks brought to a halt the 10-year expansion that had begun in 1991.

      As the decade wound down, an even larger crisis was sparked when the housing bubble burst in 2007. The financial crisis that followed triggered the so-called Great Recession, which was one...

  11. Part 8: Criminal Law
    • Corporate Crime, Overcriminalization, and the Failure of American Public Morality (pp. 407-432)

      Corporate crime presents an unusual case of American legal exceptionalism. In terms of substantive legal doctrine, it is neither recent nor completely exceptional: the practice of holding corporate entities criminally liable goes back at least 150 years, in both the United States and other systems based on English common law, and has occasionally appeared elsewhere.¹ Where America is exceptional is in its enforcement efforts, and in the social and political context in which the idea of “corporate crime” was invented and promoted.

      Outside of the United States, corporate criminal liability as a legal doctrine appears to be gaining ground, especially...

  12. Part 9: How Nations Grow (or Don’t)
    • The Legacy of Progressive Thought: DECLINE, NOT DEATH, BY A THOUSAND CUTS (pp. 435-471)

      My task in this essay is to sum up the causes of the American Illness, which by all accounts seems to engulf our nation today.¹ Exactly when this illness began is a matter of genuine controversy. It seems clear that American power and prestige peaked at the end of World War II, only to follow an erratic downward course since that time. It is difficult to identify any single cause that accounts for that long-term trend in either domestic or foreign affairs. It is equally difficult to identify any one person who bears unique responsibility for the current condition. But...

    • Overtaking (pp. 472-486)

      The other articles in this book deal with economic pathologies in the American legal system. None of these essays discusses what economic goals the legal system should pursue. This article discusses what we consider to be the first economic goal of the legal system: sustained growth. We will explain why sustained growth should be the first economic goal of the legal system. We will also discuss pathologies in conventional legal reasoning about the economic goals of two areas of law—intellectual property and technology policy. Other articles in this book, such as those by Ramseyer-Rasmusen and Bainbridge on securities laws,...

    • The Rule of Law and China (pp. 487-502)

      The historical pattern of institutional development between the West and China differs significantly with regard to the rule of law. In the West, the rule of law was one of the first major institutions to emerge, preceding both the rise of the modern state and democracy by several centuries. In China, by contrast, a strong state coalesced early on, a state that did not feel normatively bound by any prior set of legal rules. As a result, law plays a very different role in contemporary China: While there are legal institutions, they are much weaker and less autonomous than their...

  13. Part 10: Changing Course
    • Reversing (pp. 505-526)
      F.H. BUCKLEY

      What can be done to slow the pathology I have described? That was Lucky Jim’s question. The essays in this book have found fault with and sought changes to American private and criminal law, and these changes, if they are to come, must come from either judges or legislators. Legislative reform would seem to hold the most promise, since courts, particularly courts with a conservative agenda that would be inclined to reverse pro-plaintiff rules, generally defer to legislators. Yet when one turns to the federal legislative arena there are little grounds for optimism. I explain why here.

      Two nations emerged...

  14. CONTRIBUTORS (pp. 527-530)
  15. INDEX (pp. 531-534)


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