Dangerous when in power: does government protect us from hazardous products, or does it put us in harm's way?

GEORGE BARNES worked as a shipfitter at the Long Beach Naval Shipyard for 25 years, from 1967 to 1992. In 2005 he was diagnosed with terminal lung cancer, a condition he blamed on exposure to asbestos at the yard. A San Francisco jury agreed and awarded Barnes and his wife, both 60 years old, $10.3 million.

The jury attributed 15 percent of the legal responsibility for his illness to the Thorpe Insulation Co., the only defendant to go to trial in the case. It assigned a further 25 percent to other companies not present in the courtroom, and 5 percent to Barnes himself. And it found the predominant share of the blame--55 percent--to rest with the U.S. Navy, which operated the Long Beach Naval Shipyard from its wartime origins in 1943 through its closure in 1997.

The Navy may have been the most blameworthy party, but it was not in danger of having to write a check to Barnes or his widow. As it had done in thousands of other asbestos cases, it avoided any legal or financial responsibility through what is known as sovereign immunity--the government's freedom from being sued except in cases where it consents to let a suit go forward. Barnes was not legally barred from suing various private companies that supplied the shipyard with asbestos-related products, but many of them were defunct, often bankrupted by earlier asbestos suits. The Thorpe Insulation Co. happened to be one of the remaining still-solvent companies, but a lawyer for Barnes said the Thorpe firm would probably not have the assets left to pay even its 15 percent share of the verdict.

Asbestos exposure has been a genuine public health calamity, having caused much death and disability among exposed workers. Much of the early journalistic coverage, taking its lead from Paul Brodeur's early series in The New Yorker, has treated the episode as a case study in the callousness of private enterprise, which is said to have exposed workers to the lethal mineral for decades until at last brought to heel by the efforts of public-health activists, government regulators, and trial lawyers. That's consistent with the wider conventional view, which treats hazardous products as a sort of standing reproach to capitalism: Businesses foist such products on us in search of profit, the narrative goes, while government protects us from them. And there is much in the asbestos debacle that does reflect discredit on private companies' actions.

Yet the government, our alleged protector, has done much at all levels to promote products later assailed as needlessly unsafe, from tobacco to lead paint, from cheap handguns to Agent Orange. Often the state is at least as aware of the risks as the businesses that distribute the product, and in at least as good a position to control or prevent them. But--shaped and propelled by the incentives provided by our litigation system--our process of organized blame hardly ever puts the government in the dock.

Government Asbestos

Asbestos has been used at least since Roman times, and ancient medical authorities noted that workers whose job was to handle the fiber developed diseases of the lungs. By the early 20th century insurance companies recognized asbestos fabrication as among the occupations most dangerous to human health, and by the 1930s--that is to say, before the outbreak of World War II--workers' compensation systems listed asbestosis as a compensable condition. In short, contrary to what is sometimes imagined, the hazardousness of airborne asbestos fibers was in no way a secret somehow confined to the executive offices of asbestos-mining tycoons. It was very much common knowledge to those who took an interest in industrially caused disease, including the federal government.

From 1939 on, the U.S. government's Liberty Ship and Victory Ship programs turned the formerly sleepy American shipbuilding trade into the engine of perhaps the most intense construction program in history. In the words of the Cardozo Law School professor and asbestos-law expert Lester Brickman, "One hundred and thirty-one shipyards operated on a 24 hour a day, 7 day a week schedule, building 7,000 ships and performing 67,000 repairs." From first to last, speed was of the essence: The time needed to complete new ships was shaved to mere weeks. Asbestos to insulate the ships was deemed a vital war material, and naval officials tightly controlled the mineral's distribution, ordering it delivered to government specifications, using powers of requisition to direct its purchase from private companies, and stockpiling the results at the government's General Services Administration facility at Baton Rouge, Louisiana.

That sense of urgency helped supply Great Britain and win a two-ocean war. The same haste, however, also relaxed the sense of caution with which workplace asbestos exposures were approached. Like other experienced participants in industry, the Navy was under no illusion that the substance was somehow safe. "Asbestosis is an industrial disease of the lungs incident to the inhalation of asbestos dust for prolonged periods," observed the Navy's Surgeon General in a 1939 annual report on health conditions at the New York (Brooklyn) Navy Yard; the report pointed out that the yard's pipe-coverers and insulators were exposed to such dust. Two years later, with the Liberty Ship program in high gear, it was proposed to have an outside inspector visit the yard to look for health hazards. Navy brass vetoed the visit. Commander C.S. Stephenson wrote to an Admiral McIntire on March II, 1941: "I told him [a Mr. Bard] that I had spoken to you and that you had indicated that President Roosevelt thought that this might not be the best policy, due to the fact that they might cause disturbance in the labor element.... None of our foundaries [sic] would pass the necessary inspection to obtain workers' compensation insurance from any of the insurance organizations. I doubt if any of our foundaries would be tolerated if the State industrial health people were to make surveys of them."

As federal judge Jack Weinstein put it in a ruling on later litigation: "The Navy, though aware of the hazards posed by asbestos dust, in its urge to build its warships as quickly as possible, did not inform workers of the dangers and neglected to make available protective precautions." Indeed, the judge noted, "The evidence produced indicates that these risks were known to Government officials at least as high as the highest Navy personnel and probably known to the President of the United States."

Unlike servicemen, civilian defense workers have no automatic right to public compensation for losses sustained in the course of serving the nation, nor can they sue the government itself given its sovereign immunity. When former Brooklyn Navy Yard workers began growing ill in considerable numbers they discovered as much, with Judge Weinstein ruling against them on the legalities, even though he said "there's no doubt" in his mind "that the Government is primarily responsible as a factual matter."

By that time trial lawyers had come up with what may be the most lucrative idea to have occurred at that point to any attorneys in American history: They would sue the companies that supplied the asbestos. It didn't matter that it had been the shipyards and not the suppliers whose workplace practices determined the extent to which workers would be exposed to asbestos dust. The lawyers would charge that the supplying companies had not taken adequate steps to warn downstream workers of the risks--despite the fact that it is unlikely that the Navy would have welcomed such warnings, or even necessarily permitted them to reach its workers. Indeed, asbestos requisitioned by the federal government from private companies in generic form for its GSA stockpile was shipped to final workplaces in burlap sacks bearing no warning labels whatsoever. Yet over the course of the litigation, the allegation that manufacturers should have slapped warning labels on asbestos-containing products has been enough to bankrupt dozens of private companies.

Eventually, two and a half million civilians worked in the wartime shipbuilding program, and a high percentage of them were exposed to asbestos in the stiflingly close conditions of ships' interiors under conditions that fell far short of safe industrial practice by the standards of the time, let alone today. Over the years, lawyers on both sides of the asbestos wars have estimated that of claimants who've fallen seriously ill because of exposure to the mineral, half or more may have encountered it while working on ships outfitted for use in World War II.

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The consequences did not end with the wartime emergency. As we well know now, sectors of private industry in the postwar 1950s were more careless in their use of asbestos than was justified by the scientific knowledge in place even by the 1930s. It is not hard to imagine one possible reason: Lax habits of industrial hygiene accepted during the war years were perpetuated in the veteran-staffed postwar civilian industry, as neither managers nor workers are likely to have treated with adequate respect a danger they had lately seen treated so lightly.

Not only did the Defense Department never shoulder any moral responsibility for asbestos illness, but it continued to prescribe the use of the substance long after the war had ended. Even decades later, when litigation had broken out and asbestos suppliers were fast fleeing the business, Pentagon procurement officials refused to consider the use of substitutes and turned down a manufacturer's offer to reformulate its product without the mineral.

By now, all the "primary" asbestos manufacturers have long since been forced into bankruptcy by product liability litigation, and the lawyers have moved on to bankrupt dozens of "secondary" defendants that did not see themselves as being in the asbestos business but used the mineral as an ingredient in flooring, wallboard, cement, or countless other building materials. They are moving on to demand billions from "tertiary" defendants whose connection with the substance was yet more remote. Meanwhile, the federal government steadfastly refuses to accept even moral responsibility for its central role in the tragedy.

Government Cigarettes

Then there's tobacco, a subject on which the federal government is, as they say, conflicted. Well into the 1990s, even as it ratcheted up its efforts to hector and badger smokers into quitting, and long after Surgeons General had begun to rail against the nicotine habit, Washington was still a major promoter of the worldwide tobacco trade. Until the Clinton administration finally curtailed the practice, the reds funneled aid to tobacco-related development projects abroad, subsidizing farmers' efforts to export the demon weed, sending diplomats on junkets to pry open markets for U.S.-based cigarette giants, and so forth. In doing so, they were pursuing a great tradition of government entanglement with--and promotion of--the nicotine habit.

Not long after the coffin nail was invented, government tax authorities around the globe began cutting themselves in as partners in its sale--reason enough for them to collaborate in a smooth flow of its product to customers. So vital was the tobacco business as a revenue source, in fact, that until recently it was common for governments to assert a state monopoly over it. Japan, for example, did not end its monopoly until 1985.

In general, state tobacco monopolies have not fallen over themselves in efforts to curtail access to their product on grounds of paternalistic concern for their customers. Some of the world's highest male smoking rates have been observed in countries where profit-making private enterprise was long excluded from the tobacco trade, including China, Russia, Japan, South Korea, and France. Anti-smoking activists in this country sometimes suggest that youngsters would never think of taking up the smoking habit were it not for the wiles of Madison Avenue, and yet--as reason's Jacob Sullum has noted--the parts of the world historically known for a relatively laissez-faire approach to tobacco promotion, such as the English-speaking countries, actually rank far down the list in male smoking prevalence.

Governments have also participated in the promotion of smoking in a less obvious way, through the management of their armed forces. Historians have observed that soldiers were early and hard devotees of the cigarette habit and did much to spread it into civilian circles. Never in American history did per-capita cigarette production rise as fast as it did during the Second World War--this at a time when expenditures on consumer frills and luxuries generally were being curtailed in drastic fashion.

At first blush, this might look like mere cultural happenstance. After all, military men are known for taking up all sorts of exotic practices frowned on by their parents back home, from jazz dancing to tattoos. Yet there may have been more to the military's generous provision of cigarettes to the troops. During World War I, General Pershing had famously proclaimed that tobacco was as critical an item of war materiel to be rushed to the front as food or ammunition. Were war authorities merely responding to the troops' spontaneous clamor for the commodity, or perhaps trying to prevent their enlisted addicts from having to go cold turkey?

Probably not. As was well recognized from early on, cigarettes confer psychopharmaceutical benefits of a sort long familiar to students cramming for finals: They temporarily focus the powers of concentration, they keep boredom and anxiety at bay, and they serve as a basis for sociability with comrades. These effects happen to have high potential value in counteracting the danger, monotony, and loneliness of combat missions. Even nowadays, with the military having joined civilian authorities in officially disapproving of the habit, service members' smoking rates soar when they are assigned to Iraq and other war zones, as they effectively take steps to self-medicate against the stress of combat. In days past the brass was happy to abet the self-medication. Hence the many subtle and not-so-subtle encouragements for wartime G.I.s to take up the drug, from the inclusion of cigarettes in even non-smokers' rations to the many "smoke'em-if-you-got-'em" breaks announced by the sergeant.

None of which kept the federal government from filing a lawsuit alleging that the smoking habits of millions of federal dependents including veterans--were tobacco companies' fault.

Since the state attorneys general settled their lawsuit against the big tobacco companies in 1998, state governments have become more deeply dependent than ever on tobacco revenues: They suffer financial losses if the share of tobacco sales held by "participating" tobacco manufacturers--that is, those in on the deal--drops substantially. One result is that the states are cooperating on measures designed to prop up the financial interests of the participating manufacturers. They have aimed punitive laws and legal actions, for example, against the companies' competitors.

Government Guns

When big-city mayors and some federal officials, notably Clinton-era housing secretary Andrew Cuomo, decided to sign up for a litigation crusade against the firearms industry, they floated two major themes. First, they said, gunmakers and dealers had improperly "flooded" the market with weapons, ignoring indications that some were likely to fall into the hands of bad guys. Second, they had refused to adopt various supposedly promising safety measures intended to reduce the rate of accidental or deliberate gun injury, including "smart gun" technologies, integral trigger locks, and child-proofing devices, among others.

By an amusing irony, the cities that filed suit also happened to serve as some of the nation's biggest suppliers of guns, especially of "personal protection" firearms--that is, the kind intended for use against people rather than critters. The resale of city-owned weaponry--police surplus, as well as guns seized from lawbreakers--is a prized cash cow for city administrations. New Orleans, for example, at the very moment of announcing its first-in-the-country suit against gunmakers, had just finished scoring one of the biggest gun-resale deals ever when it sold through a broker some 7,300 guns, including TEC-9s and various other semiautomatics whose importation and manufacture Congress had banned in 1994. Detroit unloaded a remarkable 13-plus tons of weaponry not long before filing its suit.

The cities' lawyers proceeded to argue that courts should find gun marketers legally culpable for not having instituted a series of safeguards, far over and above the requirements of applicable federal or state law, to make sure guns did not wind up in the hands of inappropriate users. But the cities themselves had followed few if any safeguards of this kind in their own sales. One way of lessening the risk that surplus police guns will fall into criminal hands, for example, is to stipulate that they be resold only to other police departments. But attaching such swings can cut by half the amount that used weapons fetch on the market, so the authorities in New Orleans, Boston, and elsewhere had not seen fit to do so. Were the lawyers' theories to be taken seriously, the cities might have to worry about winding up in court as defendants, not plaintiffs.

Meanwhile, the state of Connecticut, whose Attorney General Richard Blumenthal was a prominent cheerleader of the gun suits, as recently as 1990 had actually been in the business of subsidizing gunmaking, allocating $25 million in state pension money to keep the locally based company Colt in business.

To top it all, in their capacity as major purchasers of guns for police use, the cities had shown very little interest in the safety technologies their lawyers now claimed were so vital--the integral trigger locks, keypad codes, and so forth. Nor had they taken steps to add such safety devices for the protection of civilian repurchasers. Only two of the 7,300 guns that New Orleans sold, for example, were equipped with the safety locks now said to be morally obligatory for conscientious dealers to install.

Government Culpability

It's not clear that there's a single grand moral to be drawn from these examples, or the others that might be added from other fields. It's not that government officials necessarily should be arraigned with having acted in bad faith or wantonly exposed the public to danger; you could argue in their defense that they were creatures of their time, or muddling along with imperfect knowledge, or doing their best to balance complex risks over the short and long term. What are we to make of the historical circumstance that government agencies long ago affirmatively specified the use of lead-based paint in many public buildings, despite dangers known even then of lead ingestion by children? Lead paint was perceived as offering sanitary advantages because it was easier to clean than cheaper kinds of paint. Maybe it seemed like a good bet at the time.

The temptation to assign blame to actions of the past, sometimes the distant past, based on today's up-to-date standards, is an invitation for unfairness, whether the actions being second-guessed are private or official. It's possible to argue that if there were ever a time to cut safety corners in pursuit of a greater goal, the Victory Ship era was that time. By the same token, though, many of the peacetime civilian uses of asbestos--the best known was in fireproofing--were also motivated by noble goals of saving and extending life.

What about sovereign immunity? Currently, government entities do waive their immunity to being sued in a variety of circumstances, including many "routine" sorts of accident settings (road crashes by public vehicles, slip-falls in office lobbies), employment claims, and some others. We certainly shouldn't jump to the conclusion that the government should waive immunity across the board and begin inviting any and all lawsuits. One reason is that the costs of such a waiver would chiefly fall on innocent taxpayers who might land on the hook for many dubious claims along with those that seem morally compelling. Another is that we do not necessarily want the courts to second-guess every policy decision or instance of lenity by a government agency: Imagine if after every air crash lawyers could sue the FAA demanding money on the grounds that it should have been regulating airlines harder in the first place. Even the sad asbestos saga does not settle the question--for which there are decent arguments in both directions--of whether the federal government should chip in to an asbestos-compensation trust fund in recognition of the Navy's role.

What's hard to escape is the feeling that we often judge private risk-creators by vastly more demanding standards than public ones. As we've seen, government generally cannot be held to account for exposing individuals to injurious products even when, as is so common, less lucky private parties are being made to pay damages over the same incidents.

Maybe it's time to discard the caricature still so much favored in some circles, in which profit-making entities wear the black hats and public servants the white. We shouldn't jump to the conclusion that governments necessarily do worse than businesses in preventing risk to the public. But there isn't much evidence that they do better.

Walter Olson ([e-mail]) is a senior fellow at the Manhattan Institute and the author of several books, most recently The Rule of Lawyers. His websites are Overlawyered.com and PointOfLaw.com.

Estimates of Asbestos Litigation Compensation ($ millions) Through
2002, in Constant Dollars

Year                  Total         Defense         Gross
                     Spending     Transaction    Compensation
                      by All         Costs
                    Defendants
                   and Insurers

1982 & earlier           549            203            346
1983                     306            101            205
1984                     376            204            172
1985                     479            212            267
1986                     658            391            267
1987                     950            400            550
1988                   1,370            540            830
1989                   2,055            550          1,504
1990                   2,859          1,325          1,534
1991                   3,169          1,588          1,581
1992                   3,373          1,391          1,983
1993                   3,475          1,766          1,708
1994                   3,560          1,020          2,540
1995                   3,956          1,277          2,679
1996                   4,511          1,510          3,001
1997                   4,934          1,635          3,299
1998                   5,330          1,731          3,599
1999                   5,775          1,141          4,635
2000                   6,314          1,209          5,106
2001                   7,480          1,496          5,984
2002                   8,907          1,781          7,126

Year                    Claimants         Net
                       Transaction    Compensation
                          Costs

1982 & earlier              135            211
1983                         80            125
1984                         67            105
1985                        104            163
1986                        104            163
1987                        215            336
1988                        324            506
1989                        587            918
1990                        598            935
1991                        616            964
1992                        773          1,209
1993                        666          1,042
1994                        991          1,550
1995                      1,045          1,634
1996                      1,171          1,831
1997                      1,286          2,012
1998                      1,404          2,195
1999                      1,808          2,827
2000                      1,991          3,114
2001                      2,334          3,650
2002                      2,779          4,347

Source: RAND Institute for Civil Justice

Who Profits From Cigarette Sales? *

States' Profit 39%   $1.53

Federal Profit 13%   $.50

Manufacturer's
Profit 5%            $.20

Estimated Average
Wholesale/Retail
Markup 7%            $.28

Manufacturer's
Cost 36%             $1.44

* National 2005 average retail price as of 11/05 = $3.95

Source: R.J. Reynolds Tobacco Company

Note: Table made from bar graph.