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Investor-State Dispute System (Original Post) rogerashton Jul 2015 OP
The kind of article I feel dumber for reading. Igel Jul 2015 #1

Igel

(35,320 posts)
1. The kind of article I feel dumber for reading.
Wed Jul 15, 2015, 12:49 PM
Jul 2015

1. Investors are governed by a lot of laws. They screw up, they get taken to court outside of this system. This is intended to be the way for investors to be able to pursue grievances, internationally, against those who otherwise enjoy sovereign immunity. This is especially true for countries in which the regulatory apparatus looks at issues beyond what I'd think of as legitimate regulation: They regulate for nepotism, favoritism, politics, bribes, not just reasonable enforcement of environmental or security regulations.

2. It's often the case that "win" means "not lose." If you win your case as a defendant, of course your victory = no defeat. Zimmerman won his case, most would say. This guy would have to argue that we're all deceived: Zimmerman won nothing, he just didn't lose. For most, "win" and "lose" are equipollent. This guy's shifting the definitions to a privative opposition. Governments are the defendants in this system. Why? See (1).

3. It would be really surprising if the verdicts went mostly against investors. It costs money to bring a case. If you think you're going to lose, not only do you think you've been wronged in the marketplace you also have to think throwing good money after bad is a good investment or business strategy. I know a lot of people who are convinced everything's just chance; I find that most educated people and most wealthy people don't buy this. Chance plays a role, but you evaluate risks and avoid those you can predict are bad while pursuing those you can which you think will turn out good.

4. Governments pay their own costs. Not all investors are huge. But a government--and this happens in criminal court fairly often, and certainly when regulatory agencies are involved--often brings huge resources to the court case and can drag things out for years. Meanwhile, the private citizen or company is forced to either bail or continue to bring more and more money to the litigation. This has a couple possible effects. You plead guilty because you know that any possible victory is pyrrhic--yes, you've defended yourself, but your business is gone, you've sold your house and belongings, and you're out of business ... long before a verdict that would award you court costs. So you settle up front and eat your losses, admitting no guilt and hoping that Moloch moves on.

Or you think you've been wronged, and you know that you can't afford justice. You lost $4 million but it'll cost $8 million to litigate. You walk away. Or worse, you lost $8 million but you know there's a chance that you'll lose, either on the merits or on technicalities, and instead of the litigation costing just $8 million you'll pay the government's costs--meaning the government not only has deep pockets but reasons to increase the costs--and you'll be on the hook for $16 million. Again, you walk away. Money trumps justice, and the government often simply has more.

Sure, people can find examples of incredibly wealthy investors that game the system and it's patently unfair. On the other hand, I'm sure given the right data set I can find examples of those in the bottom 5% by income and SES in the US making it into the top 5%, and using the same logic claim that there's great social mobility and income inequality isn't important. Either way, arguing by example leads to spurious conclusions.

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