Financial markets appear to have yawned over the nomination of John G. Roberts Jr. to the U.S. Supreme Court. They shouldn't have.

Roberts may well help tilt the scales in coming legal battles over tort reform that will have dramatic effects on corporate profits and the economy. That is, of course, assuming he is confirmed.

According to the futures market at Tradesports.com, the current odds of Roberts being confirmed are about 89 percent. He may be, but it will not be pretty. If the past is any guide, we are about to witness the political equivalent of a Mike Tyson boxing match. There will certainly be low blows, and there might even be biting.

The process will be so vicious because the stakes are so high. Democrats have in the recent past abandoned all standards of decorum when considering Republican nominees because the Supreme Court has become their primary weapon in the culture wars. Ever since the landmark decision of Roe v. Wade, which found a constitutional right to abortion, Democrats have made that highly questionable legal decision a litmus test.

Republicans have sought to nominate judges who adhere strictly to the words of the Constitution--which makes no mention of abortion--while Democrats have provided us with activists who base their decisions more on introspection than legal scholarship.
 
Negative Effect

All of this focus on the culture wars has had an important negative economic effect. While the court is highly attentive to social issues, economic issues receive less attention, and economic reasoning is rare. Justice Stephen Breyer, appointed by President Bill Clinton, lamented the problem in a 2003 lecture at the AEI-Brookings Joint Center for Regulatory Studies.

"Are there general reasons, related to law and to legal institutions, that have tended to inhibit the use of economics as an influence upon the law--at least in the Supreme Court? I think there are," he said.

A court designed by generals in the culture wars may not have the talent it needs to fight the economic wars. If that is the case, Roberts may be exactly the nominee the U.S. needs.

The Costs

While everyone has been paying so much attention to social issues, our legal system has turned into a monstrosity that makes the U.S. the laughingstock of the world legal community.

If someone crashes his car into a tree, he sues the car manufacturer. If your pants are too tight, you can sue the local restaurant for making its food too tasty. One lady spilled coffee from McDonald's on her lap, sued, and won millions.

A recent study by management consulting firm Towers Perrin Tillinghast projects that the costs of the U.S. tort system will be $278.7 billion in 2005. Another study by the same group also determined that only about 22 percent of tort costs actually go to paying victims' economic damages. The rest goes to lawyers, administrative costs and compensation for pain and suffering.

The scale of this waste is awesome. U.S. citizens pay more in direct tort costs each year than they do in corporate taxes. And the problem is unique to the U.S. Relative to GDP, tort costs are about three times higher than they are in Britain and about double the typical cost in the rest of the European Union.
 
Democrats and Plaintiffs

The numbers suggest that the plaintiffs' attorneys (rather than victims) are the chief beneficiaries of this tort largesse, and Democrats are the chief political allies of the plaintiffs' attorneys. In the 2004 election cycle, for example, the American Trial Lawyers Association donated almost $2.6 million to the political parties, with about $2.4 million of that total going to Democrats.

Republican legislative victories have meant new laws to curb tort abuses. For example, the Class Action Fairness Act, which Congress passed this year, will make it much more difficult for plaintiffs to bring frivolous suits in sympathetic jurisdictions.

In the past, lawyers could forum shop and bring their class-action suits against any U.S. firm in tiny hamlets in front of corrupt local judges. Big money class actions now must be brought in federal court. But legal analysts expect the trial lawyers to litigate these new laws all the way to the Supreme Court. Since many of the judges who will rule on these appeals were appointed by Democrats who are funded by the trial lawyers, there is a real chance that the courts could gum up the process of tort reform.

Trial Tactics

This is why Roberts's nomination is so important. He has worked as an appellate attorney for U.S. corporations. He has seen the unscrupulous tactics of the trial bar up close. He is almost certain to be sensitive to the enormous costs they impose on our economy when their protests reach the high court. By my experience, individuals who have engaged the plaintiffs' bar recognize the gravity of the threat they pose to our nation.

After discussing Roberts's judicial philosophy with a number of key players, Laurence Kudlow, an archbishop in the economic conservative movement, recently wrote that if Roberts is "someone who seems to believe in the importance of market forces that allow the entrepreneurial creative juices to flow, he is likely to make a huge difference."

Given the gargantuan costs of our current system, "huge" may be an understatement. If Roberts can help sustain and even advance the cause of tort reform, the benefits to the U.S. economy will be immeasurable.

Kevin A. Hassett is a resident scholar and director of of economic policy studies at AEI.