You're missing the social value of class action lawsuits.
There are basically three ways to have reasonably well run open markets: individual action, state action, and collective action.
Individual action often makes no sense. If a company shafts me for $10, I'm not going to spent the thousands or millions necessary to prove the error. I'll just write it off and be less trusting next time. But if a company can screw each American out of $10, they've made $3.2 billion, which is a great incentive, and also provides for fantastic legal defense. Net result: a lot of people have bad experiences, reducing consumer trust and making innovation harder.
State action is also often problematic. It's not bad at some things. But especially at HN, we don't want to encourage this as the primary means of market regulation. Governments are slow to move and risk averse. It's easier and safer for them to over-regulate, favoring incumbents and limiting innovation to what they can be persuaded to permit. (See, e.g., the car market.)
Class action, on the other hand, fills an important gap. Companies know that they can't just screw everybody without risking a big lawsuit and a big payout. But plenty of problems get solved without government having to intervene. Class action basically allows for a "forgiveness, not permission" model for regulation. As long as your customers are happy and you treat them fairly, your risk is low.
If class action stops working as a way of redressing grievances, we'll see a lot of people agitating for increased government regulation. As an entrepreneur, I'd hate to see that happen.
There are basically three ways to have reasonably well run open markets: individual action, state action, and collective action.
Individual action often makes no sense. If a company shafts me for $10, I'm not going to spent the thousands or millions necessary to prove the error. I'll just write it off and be less trusting next time. But if a company can screw each American out of $10, they've made $3.2 billion, which is a great incentive, and also provides for fantastic legal defense. Net result: a lot of people have bad experiences, reducing consumer trust and making innovation harder.
State action is also often problematic. It's not bad at some things. But especially at HN, we don't want to encourage this as the primary means of market regulation. Governments are slow to move and risk averse. It's easier and safer for them to over-regulate, favoring incumbents and limiting innovation to what they can be persuaded to permit. (See, e.g., the car market.)
Class action, on the other hand, fills an important gap. Companies know that they can't just screw everybody without risking a big lawsuit and a big payout. But plenty of problems get solved without government having to intervene. Class action basically allows for a "forgiveness, not permission" model for regulation. As long as your customers are happy and you treat them fairly, your risk is low.
If class action stops working as a way of redressing grievances, we'll see a lot of people agitating for increased government regulation. As an entrepreneur, I'd hate to see that happen.