Reform Facts

THE OTHER SIDE OF THE STORY
COMPETITIVENESS

Proponents of legal "reform" often argue that liability claims hurt America's competitiveness and stifle innovation. This oft-repeated myth is not borne out by the facts.

• The United States has the most competitive economy in the world, according to the 1994 World Competitiveness Report, which is put out by two Swiss organizations.
• The United States has "significantly strengthened" its position in a dozen important technologies and holds big leads in biotechnology, environmental technology, and computer and communications technologies, the Council on Competitiveness reported in September 1994.
• American industry is the leader, or is highly competitive, in virtually every major global industry, according to a column in The Wall Street Journal by Daniel Strickberger. American owners, managers and workers have competed and won, taking home 37 percent of sales and 48 percent of profits in world markets, he wrote. Daniel Strickberger, "The Other American Dream Team," The Wall Street Journal, Feb. 15, 1994, at A16.
• The U.S. pharmaceutical industry, contrary to its claim that experimentation is stifled by the civil justice system, reported in February 1995 that it would spend a record $15 billion on research and development that year.
• Our laws actually strengthen our competitiveness abroad. Professor Mark Hager of American University has written that American products "because of their superior reputation for safety, due in part to the efforts of products liability . . . have a superior reputation in the international marketplace." Hager adds: "[I]t would be a grave risk to our international competitiveness to toy with the tort system that helps bring about that competitive advantage."
• Foreign manufacturers who market and sell their products in the United States do not have a competitive advantage here. They are subject to the same liability laws as American manufacturers.
• Japan and the European Economic Community both have moved toward "American-style" products liability laws. If the critics of American civil justice are correct, these countries would be harming their own competitiveness by adopting such laws. But the fact is, Japan and the European countries know that such laws will not harm their position in the world marketplace.

Given the competitiveness of America's economy, why do proponents of these so-called legal "reforms" insist that our ability to compete is hampered by our liability laws? Our laws discourage the sale of unsafe products and hold wrongdoers accountable when they do.

Article Reprinted with Permission from
American Association for Justice

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