Filed under: Capitalism, Domestic Policy, Economy, Liberalism, Statism | Tags: Business-Friendly Climate, Texas Leads the Way, Tort-Reform in Texas
The best state in the country for business is, according the nation’s CEOs—Texas. And Texas just added another big welcome to their business-friendly climate.
In a unanimous vote last week, the Texas Senate adopted “loser pays” tort-reform legislation, which says that a plaintiff must pay the winning party’s legal fees if their complaint is judged to be groundless. On Wednesday the Texas House agreed. Governor Rick Perry, who has championed the legislation from the beginning signed it into law on Monday night.
Texas has become the best state in the union for job creation. Reforms in 2003 and 2005 rewrote class-action certification laws and product liability laws, as well as instituted malpractice reforms.
It is hardly surprising that the Texas Trial Lawyers Association lobbied aggressively against the law, spending more than $13 million to defeat Perry and other tort-reform Republicans in the 2010 election. Before the reforms were instituted in 2003 and 2005, Texas was an ambulance chaser’s paradise. Lt. Gov David Dewhurst guided the measure through to a 31-0 vote in the Senate.
The National Federation of Independent Business estimates that tort litigation costs small businesses over $105 billion annually., and far from all of that is covered by insurance. After Governor Perry’s earlier reforms, the number of physicians applying to practice in Texas rose by 60 percent. It would be interesting to see what percentage of those physicians came from Massachusetts.
New Republican Governors in South Carolina, Pennsylvania, Florida, Oklahoma and Alabama all ran and won while proposing similar legal-reform issues. All too often, businesses are assumed to have deep pockets, and have to face constant frivolous lawsuits. Note that “loser pays” tort-reform only takes effect when the complaint is judged to be groundless.
Many states, facing budget deficits, have looked to higher taxes, fees, and regulations to raise money from business. A recession is hard on businesses as well as ordinary people, and adding unnecessary costs to their operations means more lost jobs.
To battle our way back to a solvent economy, we need a little austerity; and some efforts by governments to create a climate friendly and welcoming for business. Misguided stimulus, bailouts and subsidies do not create permanent jobs, nor does a government intent on regulating everything and anything. Just this year, the federal government has issued more than 4,000 new regulations.