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Reopening the Economy Will Require Lawsuit Protection – National Review

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A deli closed due to the coronavirus outbreak in Brooklyn, N.Y., March 26, 2020. (Stephen Yang/Reuters)

There are plenty of ways to give litigation-wary businesses and institutions the reassurance they need to reopen, though none of them is perfect.

What will it take to reopen the U.S. economy and civil society? One obstacle that may stand in the way is the fear of lawsuits. State legislatures and Congress should act now to limit the threat of lawsuits so as to encourage economically and socially necessary activities that are bound to carry some risks. Doing so is a legitimate exercise of the power to make laws that allocate liability and decide what kinds of commerce, schooling, and public gatherings can proceed without government interference.

Defensive Lawyering

The chief reason to act in advance to head off civil lawsuits is to avoid the danger that businesses, schools, and other institutions will be excessively cautious and risk-averse in reopening when it is in society’s interests for them to do so. Right now, many institutions are shut down by direct order of the government; others closed voluntarily before government orders were issued, or have closed without being required to do so. Eventually, government restrictions will relax, and that will leave business leaders, school administrators, church leaders, sports-team owners, and others with decisions about when it is safe to open up again. Most of them, however, will be told by the government what they can do, not what they should do.

In making that decision, they are almost certainly going to talk to their lawyers and worry about legal risk. They will be told that they have some defenses, particularly if they can claim they were relying on the guidance of government leaders and public-health experts. Public schools may have additional defenses based on their status as government entities. Cruise ships are protected by federal laws limiting certain liabilities for deaths on the high seas. Still, uncertainty will linger. Small businesses such as barber shops and nail salons are less likely to have lawyers handy for consultation.

Consider the colleges. Cal State Fullerton has announced that it plans to go to online-only classes for the Fall 2020 semester. Harvard is still publicly mulling the same step. When Harvard sneezes, the university system catches a cold; it was Harvard’s closure that triggered the domino effect that closed most of Massachusetts’s colleges and universities within days. If you’re a lawyer for a California or Massachusetts college, do you want to be defending a lawsuit over reopening the college’s campus when there are other schools in your area saying they don’t think it is safe to reopen? Decisions should be based on the circumstances: A small, isolated, rural campus such as Williams College, in western Massachusetts, presents a very different calculus than an urban campus such as Boston-based Northeastern, which is heavily integrated into the surrounding business community. But in a lawsuit, plaintiffs’ lawyers would argue that the standard of care is set by peer institutions.

What about factories? The outbreaks at Smithfield meat-packing plants led to charges that the company had not provided adequately for employee safety from the virus, and the plants have lately been shutting down despite being classified as essential food-producing businesses under state laws. For factories, plants, or shipping hubs, it is not unreasonable for the state to require some enhanced safety procedures during a pandemic. But social distancing will be impossible for a lot of factories without huge, expensive renovations or massive reductions in the workforce on duty.

The Lawsuits Have Already Started

The plaintiffs’ bar is already circling workplaces and schools; two class-action firms have announced that they are forming a 30-lawyer “Coronavirus Litigation Task Force.” Some suits have focused narrowly on businesses and schools that closed without providing refunds to customers. Drexel and the University of Miami have been sued for providing allegedly inadequate remote instruction. Uber and Lfyt have been sued in California by workers claiming entitlement to sick pay. Producers of protective gear have faced lawsuits for alleged product defects. Target has been sued by people claiming that hand sanitizer does not kill the virus. Some of these types of suits may be justified, while others are frivolous. None of them deters the reopening of the economy.

Others, however, do. Cruise ships have faced suits for failing to adequately disclose whether previous passengers got sick, or for claims that they contributed to outbreaks by sailing. Nurses have sued hospitals for not providing adequate gear. A wrongful-death suit brought against Walmart by the family of an overnight stock and warehouse employee alleges that the company “failed to clean and sterilize the store [where the employee worked] properly, failed to promote and enforce social distancing guidelines, failed to provide personal protective equipment (PPE), and failed to address the health concerns of employees with COVID-19 symptoms and warn other workers.”

Safe Harbors

There is precedent for a legislative response to this problem. The National Childhood Vaccine Injury Act protects vaccine manufacturers from liability in order to encourage vaccine research, while providing a compensation system for people injured by vaccines. Gun manufacturers are protected from liability for shootings, on the basis of a legislative judgment that the blame for misuse of guns lies with the shooter. A variety of other laws offer safe harbors to protect businesses that comply with certain requirements or receive federal regulatory approvals. Some would object that this is government interference, but any lawsuit is government action; the only question is whether the rule of law being applied is made by a legislature or by a court. A more serious structural concern is federalism. A congressional response would be best limited to interstate operations or businesses of national scale. Most lawsuits would be filed under state laws in state courts, so the first line of defense for most of the economy should be state legislatures.

Lawsuit protection need not completely abolish lawsuits or legal safeguards. There are five ways to provide protection and guidance for decisions to reopen. The strongest protection would be an absolute bar of the sort given to vaccine makers, possibly coupled (as in that case) with a public fund for compensating those who get sick as a result. The second approach would be a rule-based safe harbor protecting any institution that follows a specific, measurable list of safety precautions from being sued. The third approach would create a permission-based safe harbor that protects any workplace that gets a green light to reopen from government authorities, perhaps after an inspection. The fourth, narrowest approach would be the creation of rules limiting the evidence that could be used against defendants (e.g. preventing the use of evidence that a neighboring school made a different choice). The fifth approach would be to eliminate certain categories of damages (e.g. barring people from suing over fear of infection or infections that did not lead to serious illness). Whatever path is taken, the key will be making the protection afforded clear enough that it can be planned around, and ensuring that it does not require extensive litigation before it kicks in.

There is no one, perfect answer; any approach to limiting lawsuits will involve a balance of interests. More lawsuit protection means more and faster reopenings, but also reduces incentives for workplaces to protect workers and customers from infection. Given the enormous economic and social importance of getting America back to work, however, the rules for filing such lawsuits should not be left to the courts to work out after the fact, with businesses stuck guessing what will happen and possibly overcompensating by staying closed. Lawmakers should lead the way.

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Economy

Britain's economy went into recession last year, official figures confirm – The Globe and Mail

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People walk over London Bridge, in London, on Oct. 25, 2023.SUSANNAH IRELAND/Reuters

Britain’s economy entered a shallow recession last year, official figures confirmed on Thursday, leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.

Gross domestic product shrank by 0.1 per cent in the third quarter and by 0.3 per cent in the fourth, unchanged from preliminary estimates, the Office for National Statistics (ONS) said on Thursday.

The figures will be disappointing for Mr. Sunak, who has been accused by the opposition Labour Party – far ahead in opinion polls – of overseeing “Rishi’s recession.”

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“The weak starting point for GDP this year means calendar-year growth in 2024 is likely to be limited to less than 1 per cent,” said Martin Beck, chief economic adviser at EY ITEM Club.

“However, an acceleration in momentum this year remains on the cards.”

Britain’s economy has shown signs of starting 2024 on a stronger footing, with monthly GDP growth of 0.2 per cent in January, and unofficial surveys suggesting growth continued in February and March.

Tax cuts announced by finance minister Jeremy Hunt and expectations of interest-rate cuts are likely to help the economy in 2024.

However, Britain remains one of the slowest countries to recover from the effects of the COVID-19 pandemic. At the end of last year, its economy was just 1 per cent bigger than in late 2019, with only Germany faring worse among Group of Seven nations.

The economy grew just 0.1 per cent in all of 2023, its weakest performance since 2009, excluding the peak-pandemic year of 2020.

GDP per person, which has not grown since early 2022, fell by 0.6 per cent in the fourth quarter and 0.7 per cent across 2023.

Sterling was little changed against the dollar and the euro after the data release.

The Bank of England (BOE) has said inflation is moving toward the point where it can start cutting rates. It expects the economy to grow by just 0.25 per cent this year, although official budget forecasters expect a 0.8-per-cent expansion.

BOE policy maker Jonathan Haskel said in an interview reported in Thursday’s Financial Times that rate cuts were “a long way off,” despite dropping his advocacy of a rise at last week’s meeting.

Thursday’s figures from the ONS also showed 0.7 per cent growth in households’ real disposable income, flat in the previous quarter.

Thomas Pugh, an economist at consulting firm RSM, said the increase could prompt consumers to increase their spending and support the economy.

“Consumer confidence has been improving gradually over the last year … as the impact of rising real wages filters through into people’s pockets, even though consumers remain cautious overall,” Mr. Pugh said.

Britain’s current account deficit totalled £21.18-billion ($36.21-billion) in the fourth quarter, slightly narrower than a forecast of £21.4-billion ($36.6-billion) shortfall in a Reuters poll of economists, and equivalent to 3.1 per cent of GDP, up from 2.7 per cent in the third quarter.

The underlying current account deficit, which strips out volatile trade in precious metals, expanded to 3.9 per cent of GDP.

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How will a shrinking population affect the global economy? – Al Jazeera English

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Falling fertility rates could bring about a transformational demographic shift over the next 25 years.

It has been described as a demographic catastrophe.

The Lancet medical journal warns that a majority of countries do not have a high enough fertility rate to sustain their population size by the end of the century.

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The rate of the decline is uneven, with some developing nations seeing a baby boom.

The shift could have far-reaching social and economic impacts.

Enormous population growth since the industrial revolution has put enormous pressure on the planet’s limited resources.

So, how does the drop in births affect the economy?

And regulators in the United States and the European Union crack down on tech monopolies.

The gender gap in tech narrows.

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Economy

John Ivison: Canada's economy desperately needs shock treatment after this Liberal government – National Post

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Lack of business investment is the main culprit. Canadians are digging holes with shovels while our competitors are buying excavators

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It speaks to the seriousness of the situation that the Bank of Canada is not so much taking the gloves off as slipping lead into them.

Senior deputy governor, Carolyn Rogers, came as close to wading into the political arena as any senior deputy governor of the central bank probably should in her speech in Halifax this week.

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But she was right to sound the alarm about a subject — Canada’s waning productivity — on which the federal government’s performance has been lacklustre at best.

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Productivity has fallen in six consecutive quarters and is now on a par with where it was seven years ago.

Lack of business investment is the main culprit.

In essence, Canadians are digging holes with shovels while many of our competitors are buying excavators.

“You’ve seen those signs that say, ‘in emergency, break glass.’ Well, it’s time to break the glass,” Rogers said.

She was explicit that government policy is partly to blame, pointing out that businesses need more certainty to invest with confidence. Government incentives and regulatory approaches that change year to year do not inspire confidence, she said.

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The government’s most recent contribution to the competitiveness file — Bill C-56, which made a number of competition-related changes — is a case in point. It was aimed at cracking down on “abusive practices” in the grocery industry that no one, including the bank in its own study, has been able to substantiate. Rather than encouraging investment, it added a political actor — the minister of industry — to the market review process. The Business Council of Canada called the move “capricious,” which was Rogers’s point.

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While blatant price-fixing is rare, the lack of investment is a product of the paucity of competition in many sectors, where Canadian companies protected from foreign competition are sitting on fat profit margins and don’t feel compelled to invest to make their operations more efficient. “Competition can make the whole economy more productive,” said Rogers.

The Conservatives now look set to make this an election issue. Ontario MP Ryan Williams has just released a slick 13-minute video that makes clear his party intends to act in this area.

Using the Monopoly board game as a prop, Williams, the party’s critic for pan-Canadian trade and competition, claims that in every sector, monopolies and oligopolies reign supreme, resulting in lower investment, lower productivity, higher prices, worse service, lower wages and more wealth inequality.

(As an aside, it was a marked improvement on last year’s “Justinflation” rap video.)

Williams said that Canadians pay among the highest cell phone prices in the world and that Rogers, Telus and Bell are the priciest carriers, bar none. The claim has some foundation: in a recent Cable.co.uk global league table that compared the average price of one gigabyte, Canada was ranked 216th of 237 countries at US$5.37 (noticeably, the U.S. was ranked even more expensive at US$6).

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Williams noted that two airlines control 80 per cent of the market, even though Air Canada was ranked dead last of all North American airlines for timeliness.

He pointed out that six banks control 87 per cent of Canada’s mortgage market, while five grocery stores — Sobeys, Metro, Loblaw, Walmart and Costco — command a similar dominance of the grocery market.

“Competition is dying in Canada,” Williams said. “The federal government has made things worse by over-regulating airlines, banks and telecoms to actually protect monopolies and keep new players out.”

So far, so good.

The Conservatives will “bring back home a capitalist economy” — a market that does not protect monopolies and creates more competition, in the form of Canadian companies that will provide new supply and better prices.

That sounds great. But at the same time, the Conservative formula for fixing things appears to involve more government intervention, not less.

Williams pointed out the Conservatives opposed RBC buying HSBC’s Canadian operations, WestJet buying Sunwing and Rogers buying Shaw. The party would oppose monopolies from buying up the competition, he said.

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The real solution is to let the market do its work to bring prices down. But that is a more complicated process than Williams lets on.

Back in 2007, when Research in Motion was Canada’s most valuable company, the Harper government appointed a panel of experts, led by former Nortel chair Lynton “Red” Wilson, to address concerns that the corporate sector was being “hollowed out” by foreign takeovers, following the sale of giants Alcan, Dofasco and Inco.

The “Compete to Win” report that came out in June 2008 found that the number of foreign-owned firms had remained relatively unchanged, but recommended 65 changes to make Canada more competitive.

The Harper government acted on the least-contentious suggestions: lowering corporate taxes, harmonizing sales taxes with a number of provinces and making immigration more responsive to labour markets.

But it did not end up liberalizing the banking, broadcasting, aviation or telecom markets, as the report suggested (ironically, it was a Liberal transport minister, Marc Garneau, who raised foreign ownership levels of air carriers to 49 per cent from 25 per cent in 2018).

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The point is, Canada has a competition problem but solving it requires taking on vested interests. Conservative Leader Pierre Poilievre has indicated he is willing to do that, calling corporate lobbyists “utterly useless” and saying he will focus on Canadian workers, not corporate interests.

“My daily obsession will be about what is good for the working-class people in this country,” he said in Vancouver earlier this month.

Even opening up sectors to foreign competition is no guarantee that investors will come. There are no foreign ownership restrictions in the grocery market (in addition to the five supermarkets listed above, there is Amazon-owned Whole Foods). When the Competition Bureau concluded last year that there was a “modest but meaningful” increase in food prices, it recommended Ottawa encourage a foreign-owned player to enter the Canadian market. It was a recommendation adopted by Industry Minister Francois-Philippe Champagne, to no avail thus far.

But it is clear from the Bank’s warning that the Canadian economy requires some shock treatment.

Robert Scrivener, the chairman of Bell and Northern Telecom in the 1970s, called Canada a nation of overprotected underachievers. That is even more true now than it was back then.

It’s time to break the glass.

jivison@criffel.ca

Get even more deep-dive National Post political coverage and analysis in your inbox with the Political Hack newsletter, where Ottawa bureau chief Stuart Thomson and political analyst Tasha Kheiriddin get at what’s really going on behind the scenes on Parliament Hill every Wednesday and Friday, exclusively for subscribers. Sign up here.

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