The Blog

News and stories from the campaign to reclaim individual responsibility and liberate Americans from bureaucracy and legal fear.


The Evil in Investing in Litigation

Howard's Daily by Philip K. Howard

Abraham Lincoln was an accomplished trial lawyer. He also believed that litigation should only be used as a last resort: "Never stir up litigation. A worse man can scarcely be found than one who does this." Lincoln’s view of the role of litigation prompts me to reflect on the new trend of outside investors funding lawsuits, discussed in an excellent op-ed by Gerald Skoning in today’s Wall Street Journal.

Americans have always been more litigious than people in other countries. The can-do spirit that drove Americans to push the frontiers (literally and figuratively) also resulted in more human conflict. 

Only in the last 50 years or so, however, has litigation turned into a for-profit industry. A side effect of the 1960s rights revolution was the idea that people had a right to sue for anything. Human suffering became an opportunity to get rich. Entrepreneurial plaintiffs lawyers like Dickie Scruggs, Mel Weiss, and John Edwards congregated at the intersection of human tragedy and human greed, and became tycoons. It was easy work for anyone with a knack for sales. Just find any human suffering—a baby born with cerebral palsy, a company that went bankrupt, smokers who got sick—and sue for the moon. It was all about emotion: "How much would it be worth to you to have emphysema?" The families of victims got rich. The lawyers, skimming a third or more out of multiple verdicts and settlements, got really rich. Class actions were the pot at the end of the rainbow. Scruggs reportedly got a billion dollar fee for settlement of mass tort claims on behalf of the State of Mississippi. With this much money slopping around, the temptations were too great to resist. Asbestos cases were rife with fraudulent doctors’ reports. Stakes were just too high to take the risk of losing—better just to pay someone off. Scruggs and Weiss ended up in jail. 

But there are deeper flaws than fraud in this get-rich-through-litigation idea of American success. I forget whether it was Walter Olson or Dan Popeo who observed that "America can’t sue its way to greatness." When plaintiffs get rich, defendants get poor. Asbestos litigation has driven a hundred companies into bankruptcy, costing over 100,000 jobs and causing a decline in value of investments by pension funds and others. Southern hospitals who paid several hundred million dollars in 16 cerebral palsy cases brought by John Edwards had to raise prices, directly or indirectly, to pay those verdicts. Oh, not that it matters in today’s system of justice, medical studies show that in over 90% of cerebral palsy cases, nothing the hospital or doctor did could have caused it.

These direct costs of sue-for-anything justice are only the tiny tip of a far larger cost—a pervasive fear of litigation has replaced a sense of freedom and spontaneity in social dealings. A tidal wave of defensiveness has washed over American culture. When anyone can sue for almost anything, people start going through the day looking over their shoulders. Doctors waste billions in "defensive medicine." Teachers no longer feel free to put an arm around a crying child. Businesses no longer give job references. Diving boards and seesaws disappear. Companies don’t take risks with innovative new products. Better safe than sorry. America’s can-do spirit turns upside down. Welcome to the culture of can’t do. 

The flaw in America’s litigation philosophy, as I have argued, is the notion that suing is act of freedom, like, say, free speech. No, it’s not: Suing is a use of state power, just like indicting someone. The mere act of filing a lawsuit puts a sword of Damocles over the head of the defendant. That’s why everyone is so defensive. Moreover, a lawsuit doesn’t just affect the immediate parties. What people can sue for establishes the boundaries of everyone else’s freedom. If a school in California gets sued when a child falls off a seesaw, you can be sure that schools in Massachusetts will remove seesaws. A laissez faire approach to litigation profoundly corrodes the fabric of freedom. The solution—the only solution—is for judges and legislatures to draw the boundaries of who can sue for what as a matter of law. Every claim should first go through a legal gatekeeper, asking whether this claim might erode the legitimate freedoms of people in society. These rulings of law should affirmatively defend the freedom of people to take reasonable risks—like, say, children on a seesaw. Rulings of law establishing boundaries of lawsuits are not somehow un-American. The role of the jury is to decide disputed issues of fact, not legal boundaries of a free society. They’re called "lawsuits," not "claim-anything-suits."

So now let’s return to outside investors funding litigation. They should be barred, in my view, as they were under the common law prohibition against champerty. Litigation should always be about right and wrong. Investors care only about money. Litigation should strive to compensate for actual losses, not make people rich when tragedy occurs: "Gosh, it’s terrible your dad died. We’ll teach them a lesson. You can get a new boat." Legal claims should not be permitted to undermine broader social freedoms, and lawyers should be accountable for professional values that honor broader social goals. Investors have no professional obligations, and will have every incentive to game the system like it’s a casino. Turning litigation into a business is corrosive of almost every good value of the rule of law. Abraham Lincoln, if he were here, would make this moral case powerfully.

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The Worse Things Get, the More Cautious Experts Become

Howard's Daily by Philip K. Howard

Nick Kristof’s essay last weekend bemoans the growing distance between academic thinkers and the world of public policy. One point that rings true to me is the almost emotional aversion by academic experts to coming up with solutions. As he notes, “In the late 1930s and early 1940s, one-fifth of articles in The American Political Science Review focused on policy prescriptions; at last count, the share was down to 0.3 percent.”  Common Good's online policy forum series, NewTalk, has engaged expert academics who often show more interest in exhaustively analyzing problems than imagining potent solutions.

Government is broken. Everyone knows it. While there are a few experts out there actively pushing a new vision—for example, Harvard’s Larry Lessig with campaign finance reforms—they are the exception. The worse things get, the more reluctant experts are to go out on a limb to suggest new ideas.

Now, I don’t happen to believe that experts have a monopoly on wisdom. The more specialized they are, I’ve observed, the more likely their ideas will depart from good sense. But even a bad idea prompts debate and gets people thinking about change and innovation.

When things aren’t working, it’s easy to criticize. It’s even easier to throw up your hands and observe that nothing is politically feasible. After all, Congress can barely avoid national default by raising the debt ceiling.

But the current system is not fiscally sustainable. The time will come when America must make new choices. For these choices to be good choices—moral as well as practical, and consistent with America’s noble founding values—there must a new vision. Who is coming up with that vision?

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Rubbing Salt in the Wound

Howard's Daily by Philip K. Howard

A shipload of salt to deal with this year’s snow and ice on New Jersey’s roads has been detained in legal limbo in Providence harbor, en route from Maine. The problem, detailed in today’s New York Times, is that it’s illegal for a foreign-owned vessel to ship goods from one U.S. port to another. (There’s even a word for it, I learned. Domestic shipping is called "cabotage.") Now, there’s nothing apparently wrong with the ship, which had just finished unloading its cargo in Maine and was available to take on the salt immediately. But an obscure 1920 law known as the Jones Act requires a U.S. ship, with a U.S. crew, on all domestic routes. There’s a cottage merchant marine industry and union that exists just because of this law.

In this era of free markets, one would think that protectionist laws from almost 100 years ago would have gone the way of the horse and buggy. But laws have remarkable staying power (as we saw two weeks ago with the continuation of New Deal-era farm subsidies). The same onerous process for enacting a law applies to repealing it, with one additional, almost insurmountable, hurdle: the law now is surrounded by an army of special interests who will do anything to defend it (think campaign money and ad hominem attacks on would-be reformers). That’s why, in the strange culture of Washington, repealing laws is so rare as to be almost unthinkable. Getting rid of old laws violates the laws of legislative physics.

Laws pile up, year after year, like sediment in the harbor. Society, meanwhile, is increasingly paralyzed. The U.S. now ranks 20th in the world in ease of starting a business. This is because of thousands of laws like the Jones Act.

American democracy has a structural problem: there’s no political or legal imperative to clean the stables. The accumulation is so bad that, as I argue elsewhere, America should initiate a series of commissions, area by area, to recommend what are known as "recodifications" of law—new, simpler codes that reflect current national goals and priorities. Going forward, most regulatory programs should periodically "sunset," with an action-forcing mechanism (perhaps a constitutional amendment) that prevents Congress from simply re-enacting the same program in a midnight vote. 

It’s impossible to run a government, much less balance public budgets, under the weight of a hundreds of laws and programs that are obsolete in whole or part. The weight grows heavier every year. It will break, sooner or later. Perhaps it’s time to start thinking about to fix it.

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Finding Infrastructure in the Stimulus Plan

Howard's Daily by Philip K. Howard

Yesterday’s White House report, claiming 6 million jobs saved by the $800 billion stimulus plan, predictably prompted partisan debate on fiscal waste. I will not tread into the foggy land of economic theory, except to note that spending more money intuitively always stimulates economic activity—but at the cost of economic health in the future if the money isn’t invested to stimulate future growth (which economists call a "multiplier" effect).  

Probably the wisest investment is in rebuilding America’s decaying infrastructure. This was the focus of the President’s push for the stimulus back in 2009, and also the headliner in the report issued yesterday: The stimulus "initiated more than 15,000 transportation projects, which will improve nearly 42,000 miles of road, mend or replace over 2,700 bridges, and provide funds for over 12,220 transit vehicles," plus improving 6,000 miles of rail. 

These all sound like good investments to me, but I was curious how much of the stimulus plan went to these transportation infrastructure projects. Towards the back of the report (Table 8 on p. 34) there’s a chart that gives the number: $30 billion. That’s a little over three percent of the total stimulus plan. 

Three percent!! American infrastructure recently received a D+ rating from the American Society of Civil Engineers. All those repair projects, listed above, only scratch at the surface of America’s decaying infrastructure. Why wasn’t more spent on this urgent need? Modernizing American infrastructure will improve competitiveness, create a "greener" footprint, and has a high "multiplier" on each dollar invested. We know that’s what President Obama wanted at the outset. Why didn’t it happen? 

Let’s break this down into two questions. First, how did the headline goal of the stimulus—rebuilding infrastructure—become a small footnote? Because, as Obama subsequently discovered, "there’s no such thing as shovel-ready projects." The approval process for any significant project (a new road, or power line, or pipeline) approaches a decade, and often longer. An impenetrable legal swamp stands between America and a modern infrastructure.

Second, if not infrastructure, where was most of the stimulus money spent? About $500 billion went to tax cuts, unemployment benefits, and "state fiscal relief" (shoring up insolvent state budgets). The remaining $300 billion was spent on actual projects, of which the big beneficiaries were: (i) subsidies for clean energy ($78 billion), (ii) subsidies for education and child support ($50 billion)(student loans, special ed, and support for disadvantaged children), (iii) health and health IT ($32 billion), (iv) transportation infrastructure ($30 billion, as noted above); (v) environmental cleanup ($28 billion), (vi) new buildings ($24 billion), (vii) scientific research ($18 billion), and a few other categories.

Look at where the stimulus money was spent. Virtually none of the stimulus categories require a significant government approval process. The conclusion is unavoidable: Government is unable to pursue vital public investments because government has lost the authority to approve them. It's pathetic: Government can't get out of its way. If America really wants to rebuild the economy with modern infrastructure, the first task is to rebuild its own authority structure so that approvals take 12 months, not 12 years. See here and here.

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Clueless in Washington

Howard's Daily by Philip K. Howard

You will laugh, or maybe cry, when watching Jon Stewart’s recent interview of House Minority Leader Nancy Pelosi. (You can see Part 1 here, Part 2 here, and Part 3 here.) 

Why is it, Stewart asks, that everyone talks about politics, and no one focuses on government’s inability to get things done sensibly? Pelosi: Republicans are obstructive.

Stewart: To make the Democrat’s case, wouldn’t it be helpful if government could actually do the job competently? Pelosi: Democrats need better messaging.

What about the failure of the Obamacare rollout? Pelosi: "I don’t know." Stewart, rising as if to leave: "Let me get the House Minority Leader here—I can ask her. … How do you not know?" Pelosi: "It’s not my responsibility."

Stewart: "Has the regulation become so onerous that government can no longer be agile?" Pelosi: "The procurement process…everybody knew about that."

Stewart: The Obama campaign computer genius wouldn’t bid for the Obamacare IT contract because he couldn’t figure out how to navigate the "300-page document" for bidding. Pelosi: "It doesn’t matter. … It should have been prepared for."

Stewart: "Do we have a foundational problem?" Pelosi: No. Stewart asks for an example of government’s ability to do its job "in an agile and efficient way." Pelosi: The Affordable Care Act.

Let’s pause for a minute. Here we have the top House Democrat who, apparently, doesn’t understand that government doesn’t actually work very well. Not that Republicans would get to the point either. They would be quick to jump on government’s failures, but rarely offer solutions to help government work sensibly.

Political leaders apparently see all issues through the lens of partisan debate, not whether government actually works. In the hermetically sealed bubble that is Washington, our would-be leaders fight about ideology. Dysfunctional bureaucracy, as Pelosi put it, "doesn’t matter. … It should have been prepared for."

Oh, ok, who is in charge of making government work? Pelosi says it’s not Congress’s responsibility. The President is neck deep in decades of statutory and bureaucratic accumulation, like the 300 pages of procurement regs, and lacks legal authority to clean it out. So ask yourself again: who’s in charge of fixing government?   

Change will only come from the outside, as retiring Sen. Tom Coburn recently noted. Fixing broken government will require a popular movement to force change. Someone recently asked me what the rallying cry might be for a movement. Maybe we could sponsor a contest. Should we demand that every member of Congress resign? Or call for a constitutional convention? 

The moral here is not that Pelosi looked ridiculous. She has the wrong idea of her responsibility. She doesn’t know what her job is. That’s a flaw in America’s political culture. The only way to fix it is dramatic intervention from the outside.

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The Flaw of Regulatory Perfection

Howard's Daily by Philip K. Howard

There’s a wide chasm between those who write regulations and the humans expected to abide by them. Real people don’t have the capacity or time to understand, much less comply with, scores of regulations. This is a reason why regulation so often is counterproductive. People preoccupied with rule compliance no longer act sensibly. Focus on A, as sociologist Robert K. Merton put it, and you cannot see B.

Healthcare delivery in America has been suffocated by bureaucracy. How this affects the daily choices of physicians is described by Victoria McEvoy from Harvard Medical School in today’s Wall Street Journal. Regulations presume to guarantee proper care by forcing doctors to go down checklists of every possible treatment associated with, say, an obese child. The problem, of course, is that all this time checking boxes "takes precious time away from doctor-patient communication. Not one of my patients has lost a pound from my box checking."

Like marionettes in a dystopic puppet show, all day long physicians are jerked away from sensible patient care by regulatory mandates written without any concern for human bandwidth. But doctors aren’t computers. Sometimes the box needs to be checked—did the surgeon double-check all requirements?—but most regulatory requirements are in service of a form of central planning, as often requiring useless activities as those that make sense.    

Follow all these rules, regulators think, and health care will be perfect. But regulations can’t honor the complexity of the actual patient situation that the doctor is facing. So, when "one metric is off," regulations compel doctors to take certain actions, even where those actions make no sense.    

The fee-for-service reimbursement bureaucracy multiplies the box-checking and skewing of sensible judgment (doctors spend 30% of their time on paperwork). Regulatory overload in health care causes various forms of failure—unnecessary cost, grotesque inefficiency, corrosion of professional judgment, and a palpable degradation of professional spirit.   

Then pile on top of this the ability of any sick person to bring a lawsuit against a doctor in almost any amount, without any reliable decision maker, and—voila—you have the world’s most expensive healthcare system, by almost a factor of two, and perhaps the most dispirited medical professionals in the developed world.  

The solution is not getting rid of regulatory oversight, but re-humanizing it. Box checking should be restricted to high-risk activities. Ideas for dealing with this or that disease should be placed in a reference manual as guides, not as a mandatory compliance regime. Accountability should be determined after the fact, by periodic reviews based on the judgment of professionals who understand the complexities, not by rigid metrics.   

The quest for regulatory perfection, like the quest for legal certainty, does not avoid failure, but causes failure.

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Feckless Democracy

Howard's Daily by Philip K. Howard

For those who enjoy clinical dissection of America’s democratic dysfunction, the sharp scalpel of Ruth Marcus at the Washington Post today lays out the putrid parts piece by piece.

Basically, Congress just abandoned one isolated act of fiscal cost-cutting—trimming cost-of-living increases for working-age veterans by a tiny fraction—because the veterans’ lobby doesn’t like it. The necessary consequence, as four retired officers noted in a report from the Bipartisan Policy Center, is to "crowd out other important [defense] investments that support training, readiness and modernization."

Democracy has become a one-way ratchet. It can add new programs and benefits, but never take them away. Last week we saw Congress continuing New Deal-era farm subsidies, this week we see Congress sprinting away with its tail between its legs after putting its toe in the water of fiscal responsibility, because of easy arguments available to any special interest. Are you against veterans? Are you against farmers?

The unavoidable truth is that Congress is against America’s future. Taking responsibility to set priorities, make tough choices, even to make easy choices (subsidizing corporate farmers?), is its worst nightmare.

Debate should shift away from arguments over policy and priorities—responsible choices are obviously hopeless with this political gang. We should focus instead on institutional design. Congress is broken. Most programs, to varying degrees, are obsolete and wasteful. America needs to rethink how democracy works. What structure will compel Congress to set new priorities? What authority does the executive need to adapt to changing circumstances? How can America introduce the fresh air of public wisdom into the self-contained bubble of Washington? The situation is not sustainable.

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Clashing Currents of Political Philosophy

Howard’s Daily by Philip K. Howard

Michael Gerson’s column today is the latest in a series of thoughtful essays on the meaning of conservatism prompted by Yuval Levin’s book The Great Debate, comparing the philosophies of Edmund Burke and Thomas Paine.

Burke believed in organic change, working with society as he found it. Paine wanted to rebuild it from the ground up, on rationalist enlightenment principles. Burke believed in family and community and the authority of social norms—certainly harmonious with certain modern conservative principles. Paine’s vision was one of radical individualism—not far from the Tea Party’s demand for deregulation. 

I am much more sympathetic to Burke’s vision, like most commentators. Tocqueville too warned against atomistic individualism (see Patrick Deneen’s excellent essay here). Burke’s warning against Paine’s utopian remake of society soon became real in the horrors of the French Revolution.

But there’s a second level conflict within conservative ideology: It’s impossible to achieve anything like Burke’s organic vision by using Burke’s organic methods. Modern government is structurally paralyzed. Bureaucracy is everywhere. No human has authority to make any judgment. Being practical, using common sense, acting on norms of right and wrong—all these choices are basically illegal.

The modern state is organized to avoid human choice. This too flows from philosophical premises, as I write elsewhere. Conservatives want to put officials in rigid legal shackles. Liberals want to put business in legal shackles. That’s why, as I wrote yesterday, we get thousand-page laws. Without the authority of humans to make choices it’s impossible to embrace Burke’s vision of an organic society.  

Incremental reform won’t work. That’s what Obama tried to do—bringing in the brilliant and enlightened Cass Sunstein to head the effort. But you can’t prune a jungle. There is a flaw in the premise—democracy is not supposed to be a jungle, but a governing process grounded in human responsibility and accountability. Mindless compliance with a bureaucratic instruction manual is not what our founders had in mind. 

The ultimate paradox is this: To achieve anything like Burke’s organic vision of organic state, we must embrace a Paine-sian approach to starting anew. The new vision is relatively easy to come up with. For example, streamlining environmental review—so that projects get approved in 18 months instead of (sometimes) 18 years—mainly requires giving an EPA official the authority to decide when there’s been enough review. (Common Good is building a coalition to try to achieve this. See here.)

Sometimes it seems to me that, on balance, philosophy causes more mischief than good. The human instinct towards rationalization and systems undervalues life’s complexity and nuance. Certainly the quest for certainty, both in philosophy and law, offers ample evidence of philosophical failures. But humans have a need for philosophy, so embracing the humanistic, organic philosophy of Aristotle, Burke, Tocqueville, Berlin, Havel, and many others is where I think individual and social fulfillment can be found. Ultimately, what matters is what works.

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The Perils of Legal Certainty

Howard's Daily by Philip K. Howard

You will profit by reading philosopher Simon Critchley’s recent reflection on Dr. Jacob Bronowski and the dangers of certainty. People who think they possess a final truth, driven compulsively towards their view of certainty, often cause evil, whether they're religious fanatics like Savonarola or, as Bronowski discusses, the officials who devised the Final Solution.

A responsible human must look life in the eye, open to the moral and factual uncertainties presented by many choices in human dealings. Critchley: "There is no God’s eye view, Dr. Bronowski insisted, and the people who claim that there is and that they possess it are not just wrong, they are morally pernicious. Errors are inextricably bound up with pursuit of human knowledge, which requires not just mathematical calculation but insight, interpretation and a personal act of judgment for which we are responsible."

Applying this principle of human responsibility for moral choices has applications throughout the range of human endeavor. (See this thoughtful essay by Roger Berkowitz of the Hannah Arendt Center at Bard College). Let’s look at law for a minute.

Legal certainty is accepted orthodoxy. Of course law should be certain, we have been taught. Only then will people know what’s expected of them, and not be fearful of arbitrary officials. In pursuit of certainty, laws have become ever more detailed. The new Volcker Rule regulating proprietary trading by banks is almost 1,000 pages long. The Affordable Care Act is almost 3,000 pages long. Nursing homes are typically regulated by 1,000 rules. In total, there are over 100 million words of binding federal law, and several billion words of state and local law. 

Do all these detailed dictates achieve certainty? Of course not. Law is an unknowable jungle. Does all this law safeguard us against arbitrary officials? No, it’s a legal minefield. No one can comply with it all. We’re at the mercy of the state. Does all this detailed law make government a well-oiled, smoothly-running machine? HELP!! There’s hardly any program, even the best of them, that doesn’t waste vast resources in bureaucratic nonsense.

Public solvency is basically illegal in America. All this detailed law prevents the president, and any governor, from making the choices needed for fiscal responsibility. 

Our obsessive quest for legal certainty has left our society, ironically, in a very uncertain state. The only cure is to abandon legal certainty and embrace human responsibility as the operating philosophy for most activities of government. 

Canadian management theorist Brenda Zimmerman makes the distinction between activities that are "complicated"—like engineering, or rocket launches, or surgery—and activities that are "complex"—such as raising a child, or running a healthcare system. Complicated activities profit from detailed rules, checklists, and protocols. Complex activities require balance, and tradeoffs, and moral choices. Detailed rules cause failure.

Law can support a free society, I argue in my new book (April), only when it abandons this obsessive quest for certainty. Law should instead set goals and principled boundaries, leaving room for humans to make practical and moral choices. Real people, not rules, make things happen. Automatic government is a false philosophy. Democracy is supposed to elect people to act on their vales, not to avoid them by mindlessly applying detailed rules. Of course people will sometimes abuse this trust. Look at the George Washington Bridge lane-closings. But officials there are paying the price. The worst system is one where things fail, and there’s no one to hold accountable. That’s what we have today: The Rule of Nobody. As Jacob Bronowski passionately explained, avoiding human responsibility is the root of much evil.

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Let Kids Play

Howard's Daily by Philip K. Howard

Notions of "appropriate" play are thrown out the window in this amazing video footage from New Zealand. Kids run around, tackle each other in a game called "bullrush," ride scooters over ramps, climb trees, and—gasp—point sticks like guns. Then they go back to class where, the principal says, they are able to focus on schoolwork. (Thanks to David Webb for finding this video.)

In America, by contrast, schools ban games like tag, or even running at recess. So it’s hardly surprising that there’s an epidemic of ADD. Playgrounds are stripped of any implements that might involve risk—such as merry-go-rounds and jungle gyms. Small wonder there’s a crisis of obesity when it’s more challenging to play video games on the sofa than to go to a playground with no challenge at all.  

Child development experts repeatedly say that it is vital for children, for mental as well as physical development, to deal with normal risks of childhood. (I compiled much of this material in "The Freedom To Take Risks" chapter in Life Without Lawyers.) Coddling children makes them less safe in the long run, because they will be less able to deal with real risks later in life. As the New Zealand principal points out, learning how to handle risk early on makes a young student less likely to take too much risk when he gets a driver’s license.

Letting kids in America play again requires an organized effort. Today, the most innocent accident can mean an expensive lawsuit. That’s why the school board in Broward County, Florida banned running at recess. And, worse, American culture has changed. Parents and educators no longer have an instinct for what's an appropriate risk. Avoiding risk has become an obsession. Safety is only half an idea; the question is what we’re giving up to get it. If children are raised without skills to cope with life, we are increasing risk, not reducing it.

Perhaps what’s needed is a presidential commission on the appropriate risks of childhood. By restating common sense principles, America could then empower judges (as well as parents) to affirmatively embrace healthy risks so that kids can, well, go back to being kids again.

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