Lawyer GNP (or “Why Is My Baseball Yellow?”)

Bob Woodward’s fascinating book, Shadow, is a riveting account of how Watergate has begun a legacy of suspicion and constant independent investigation of the presidency and those associated with high office. In his book, he relates just how much time and energy has to be diverted from actually governing in order to deal with the legal battles. What I find fascinating is the financial toll that occurs in this story, and, subsequently must be taking place in our ever more litigious society. Has anyone ever stopped to understand what percentage of our national product is siphoned away by legal fees?

Throughout the story of five presidents, there are multiple parties of lawyers involved. There are all the attorneys in the justice department, along with dozens of lower level attorneys and supporting staff. There are the independent counsels and their staffs appointed to look into alleged misconduct. I believe there were three separate independent counsels for Clinton’s administration. And finally, there are the legal counsels for the Clintons, plus all the personal lawyers for all the staff members who ended up with subpoenas by the independent counsels.
I used to have disdain for the idea that the Clintons would have the gall to set up a legal defense fund and ask the American citizens to contribute. But now I realize that it was the only way for them to avoid complete personal ruin as their personal legal fees ran into the millions. Regardless of how I may feel personally about the integrity of the Clintons, it is still a travesty of the highest order that such a move was necessary for their financial survival. Let’s consider, though, how much greater the travesty of justice that millions of citizens face who must “lawyer up” and who cannot appeal for relief as the Clintons did.
The legal system has become the single most effective way of keeping the rich rich and the poor poor. It has also created its own financial boom which feeds on itself and grows ever larger. In its wake has been a perceived boom of other industries, such as the criminal justice field and the paralegal field, not to mention to boom of the accounting field. Then, of course, there is the need for all the new courthouses and attendant staff quarters, which benefits the construction industry. And the paper manufacturers have certainly been blessed by monumental increase in the need for supporting documents that need to be kept just in case a legal dispute arises. By the way, we need to store all those documents somewhere, so again hurray for the construction industry and the burgeoning personal storage industry.
I suppose we should be thanking the lawyers for creating so many jobs and stimulating so much growth in the economy. Except that the growth of all these “service” industries has all but destroyed the manufacturing industries that once made us the envy of all nations. This is fine until we reach the point where all we have is lawyers and poor people who can’t afford them. Then the house of cards must feed on itself until there is nothing.
I used to think that lawyers and judges went to law school to learn how to understand the constitution and the precedents set forth thereunder by the courts, so that they could be the safeguards of the innocent civilian. Now I realize that they really go there to learn how to speak legalese. Legalese is a language created by the legal system into which English must be translated so that the average citizen cannot understand what is being said in legal documents. Also, courts agreed to specify that only legalese could be spoken in court, and that only those familiar with “legal procedure” would be given any credence by the judge. This was done so that the interpreters, also known as those who passed the Bar, would be able to charge extortion-like fees to help the average citizen do what they normally could easily do by themselves. In this way, a legal system of entitlement was set up, in which lawyers and judges were given titles of nobility and the commensurate wealth that went along with the title. The average citizens became the serfs under these new feudal lords.
Let’s compare the cost of lawyers on our society to the VAT, or value added tax, that the current administration is considering enacting. A VAT is a tax that occurs several times over in the process of creating a manufactured good. Let’s use a baseball, for instance. First there will be a tax, say 10% on the cotton that is used for the string which is used for the winding (There will also be 10% added to the leather for the cover and the nylon string for the lacing.) The string maker also adds 10% when the string is sold to the baseball maker. He then adds 10% to sell it to the distributor, who adds 10% to sell it to the retailer. So, by the time the cotton in the field gets to the baseball on the store shelf, it’s cost to the retailer is 50% higher. He has to mark it up 100% to make enough profit to meet his expenses. So, instead of paying $2 per ball, he now pays $3.30, and you pay $6.60 instead of $4. Then you pay 33 cent for sales tax instead of 20 cents, bring the total increase in the cost of the ball to $2.73, or a 39.4% increase. Keep in mind this is a 10% VAT. A 15% in the same scenario would have yielded a 198% increase in the wholesale price of the ball, making your cost $8.95
So I suppose most people would be up in arms about having to pay $8.95 for for a $4 ball. But that is exactly what has happened because of lawyers and legalese. But it’s probably worse. Because of legal stresses and accounting practices need to appease the legal system, each link along the way probably has to devote 20% or more of their operating income to legal matters. These costs are passed along. So that $2 ball should already cost $5 to the retailer. But the retailer can get a baseball imported from China, where the peasants who make it work like dogs to produce it for 10 cents, and the materials can be had for 30 cents. The distributor gives himself a 100% markup and sells the ball to the American distributor for 80 cents. The American distributor marks it up another 80 cents to the retailer. The retailer can sell it to you for $3.95 and make $2.35 profit. The American manufacturers hope you will support them, but you say why pay $8.95 for a ball when you can have one almost as good for $3.95? So the manufacturer asks his supplier to give him a break. The string maker can’t sell the string cheep enough, so he cuts workers benefits and decreases salaries. He starts to lose employees, so he asks the cotton grower to give him a break. But the cotton grower can’t lower his prices and stay afloat, so he grows tobacco instead. The price of cotton goes up, the string maker goes under, the baseball maker goes under. They all go to work at Walmart, where they stock $4 baseballs made in China.
Of course, the story doesn’t end there. Those baseballs are very dangerous, so the owners of the teams need insurance, the owners of the cars the balls bounce off need insurance, and the homeowner through whose front window the stray balls fly need insurance. Since all insurance costs are sky-high because of heightened litigation, the cost of play baseball is doubled. That’s assuming that injured parties don’t get personal injury attorneys, in which case the cost is so high that baseball can no longer be played at all. This doesn’t bother the Chinese manufacturer. He will sell his balls to the Philippines, who will win the little league World Series. In the meantime, your little Johnny can play a harmless video game, and you can get back some money by suing the maker over its graphic content.
In the 1860’s, the original 13th Amendment to the Constitution was ratified. Its ratification was published in many state law journals at the time. But by about 20 years later there was no mention of it anywhere. How is this possible? During the same period, a little matter called the Civil War was winding down. Some of the original ratifying states joined the Confederacy, which means that their votes to ratify no longer counted. But by 1866 those states were all back in the Union and has reasserted their passage of the 13th Amendment. However, a few clever lawyers were able to rule that the original Amendment was not ratified after all. Why would these judges do this? Because the original amendment, in order to keep the legislature out of the hands of people with interests contrary to those of the people, forbade lawyers and judges from voting for or holding elective office!
I had to laugh to myself as I read about the Clinton’s legal troubles. Every time things got worse, the Clintons would hire more lawyers, many times at the request of the lawyers they already had. Every time there was a critical decision to be made, all the legal teams assembled for all day or night sessions to agree what to do. Given that some lawyers were billing almost $500 per hour, these session had to cost $5000 to $10,000 per hour! Lawyers love to have meetings, lots and lots of meetings. And lawyers never forget to bill. I wonder if, in the middle of these dark days for the Clintons, if the irony ever dawned on these two lawyers that the two great fleecers were being royally fleeced. I wonder, today, how many Americans really realize who are the real owners of this American plantation, and who are the new slaves.  At least the slaves still have freedom of speech, as long as they don’t offend the masters.

Leave a comment

Filed under Economics/ Book Reviews, Law and Politics

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s