It seems to me, the legal system is supposed to facilitate market interactions, but in reality the legal system more often than not, is a parasitic drag on the free market. Like a tape worm imparts some resistance to diarrhea when it is small, it eventually outgrows it’s host, and if it isn’t dealt with, the host eventually starves to death no matter how much food they eat. This is not to say that there should be no laws. It is to say that the legal system in most western countries has out grown their hosts, the economies, and is draining those economies the vital sustenance, capital, they need. Many people have pointed this out to no avail. The reason the legal system always overtakes the national good is because Lawyers are a defacto oligarchy. Our economic futures rest on our ability to prune back the parasitic nature of our legal systems, else we and our children will live in an economy that is being starved, by the very legal system that is supposed to protect it.
Market economies need standards, this is a basic fact of any study on market economics. People have to be able to make valid legal contracts, that are binding, we have to be able to sue for redress of economic harm visited on us… among a whole host of other valuable services a functional legal system provides. No economy can do without laws and standards. However, as Madison said in The Federalist Papers, when those laws become so abstruse, even a person knowledgeable in the law cannot possibly understand them all, you have tyranny.
The legal system is essentially a faction. This faction, like all factions, seeks the best interests of it’s members, no differently than a labor union. The legal faction is made up of attorneys. It is not coincidental that all governments have a large portion of their members as attorneys. Modern governments are broken into three branches, Executive, Legislative and Judicial. This was Montesquieu idea, to limit the source of most tyranny that ruins republican government, an overly powerful Executive. Break the authority from the Executive to adjudicate over law, and form it into a new, or third branch, the Judicial, (the lawyer’s exclusive branch). So, since all three branches are largely populated by lawyers, most legislators are attorneys, most Presidents have been lawyers, and with one branch exclusive to lawyers, the legal faction is overly represented in government. This makes the legal faction an oligarchy. They eventually rule, not in the interests of everyone, but in the interests of their faction, the classic definition of an oligarchy, ala Aristotle’s wrong forms of government.
Many learned people have suggested tort reform but it never gets anywhere. That is because the very people who would have to pass it, lawyers, would suffer real harm from it. The legal faction’s power would be diminished and the members of it, attorneys, would suffer economic harm. That is why tort reform is always dead on arrival whenever anyone offers it. Moreover, every time a new regulation is written, a new law is passed, a court finds a business has to pay a litigant for burning herself with hot coffee, or a judge rules a legal contract is null and void, along with many other legal abuses, the demand for lawyers goes up. Economics 101 is supply and demand, as the barrier to entry is raised by more and more stringent testing and pretesting requirements, lowering supply, while at the same time the demand for attorneys is elevated by absurd rulings and tomes of arcane regulations and laws, raising demand, the profit for lawyers must necessarily go up.
That is why the media and lawyers attack oil company profits in the tens of billions but no one decries the profits of law firms that run into the hundreds of billions. Doctors are vilified for charging what they do to save the life of a child but the absurd charges attorneys get away with are ho hummed. The legal faction controls the government and thus the conversation. The fees of lawyers goes up, along with the regulations they pass and society has to follow, in a Fibonacci curve while economic growth dwindles away. No matter to the legal faction however, their fortunes continue to rise. But, like the Roman empire was destroyed, in no small part by the stifling regulation and bureaucracy, their legal system built up, our modern societies are being eaten from within by the red tape worm of the legal faction. Most likely, we will end up like the Roman civilization, because we refuse to learn the lesson history teaches us.