Sham

by Steve Salerno

  Such bold rhetoric invites skepticism on many grounds, the most obvious, perhaps, being the implication that just because people want power, they’re entitled to it, regardless of circumstances. But the most compelling flaw in arguments like those made by Walsh and Glater might be their assumption that people who know there’s something wrong with them are ipso facto the best ones to decide how they can be cured. The notion date backs, of course, to 1935, when a wire-rope salesman and a rectal surgeon convinced America that their new organization, Alcoholics Anonymous, had the answers to treating addictive behavior. Let’s take one final look, then, at alcoholism and its impact on a nation that, for seventy years, has put its faith in solutions for which little evidence exists.

  During the research phase of this book, I was struck by the words of Henry Kranzler, a psychiatrist at the University of Connecticut and a champion of new pharmacologic approaches to treating alcoholism, who gave an interview to Psychology Today in 1994: “There’s tremendous excitement, a watershed feeling, as if something is just beginning to happen. We’re really beginning to understand this condition, to develop promising medications and psycho-social interventions.” Something is just beginning to happen. We’re really beginning to understand this condition. This, six decades after the inception of Alcoholics Anonymous! Unfortunately, AA has consistently opposed attempts to assess its core beliefs and methodologies. So invested is the organization in its own socio-spiritual approach that it has issued repeated critical statements on chemical interventions, like the drug topiramate, that appear to show promise.

  Should it surprise anyone that alcohol abuse in America has been rising, not falling? The number of adults who either consume too much alcohol or have an outright dependency on it rose from 13.8 million in 1992 to 17.6 million in 2002, according to the National Epidemiologic Survey on Alcohol and Related Conditions (NESARC). The direct social costs of alcohol abuse are extraordinary. Figures differ somewhat depending on the source and the agenda, but U.S. surgeon general Dr. Richard Carmona says that each year alcoholism claims one hundred thousand American lives in various ways. Some forty thousand die from alcohol’s biochemical actions in the body. The substance works its mischief on every major system, particularly targeting the liver, heart, pancreas, kidneys, and arteries, and laying waste to important receptors in the brain. Those who evade the physiological damage itself may succumb to other tragic events incident to alcohol abuse.

  In April 2004 Carmona cited a Massachusetts General Hospital report showing that of the 108 million annual visits to U.S. emergency rooms, 7.6 million are alcohol related. Chillingly, that ratio is three times the previous estimate. Up to one-fourth of all hospital admissions are believed to be alcohol related in some way. According to the National Highway Traffic Safety Administration, automobile accidents are the leading cause of death for Americans ages thirty-four and under—and 41 percent of those accidents involve alcohol. In 2002, all told, 17,419 Americans died in alcohol-related traffic mishaps. Alcohol also is implicated in one-third of all suicides; for teens, the grim stat is 46 percent. About half of all people who die in house fires are found at autopsy to have had significant amounts of alcohol in their systems.

  Despite the effort and money expended on treating the problem—largely, to date, under the twelve-step model and derivative “talky” approaches—health-care expenditures stemming directly from alcohol abuse soared from $18.8 billion in 1992 to $26.3 billion in 1998. The latter year, alcoholism had a total economic impact, including lost worker productivity, of $184.6 billion. Throw in costs related to drug abuse (treated frequently through Narcotics Anonymous, Cocaine Anonymous, and like programs), and the figure soars to $276 billion—a sum exactly equal to the total customer assets on deposit at J. P. Morgan Private Bank, one of the world’s leading wealth-management institutions. Here’s another way to put that number in perspective: $935 for every man, woman, and child in America. Year after year after year.

  Corporate America, of course, must eat much of that lost productivity. And America as a whole must factor that lost productivity into its battle to remain competitive in an increasingly ferocious global marketplace, against other nations who take a less “enlightened” view of workers who abuse alcohol.

  We also have SHAM to thank for the fact that alcoholism is regarded as a full-fledged disease. This forces companies or their insurers to assume billions of dollars in treatment costs and to look the other way when marginal employees relapse time and again. Firing workers for substance abuse, without taking every possible step to help rehabilitate them and reintegrate them into the corporate culture, can open a company to seven-figure civil lawsuits as well as other governmental sanctions. This also puts companies in the damned-if-you-do, damned-if-you-don’t position of having to employ ticking time bombs who—as a direct result of their alcoholism (or drug addiction)—may wreak havoc on society at large. Exxon learned this firsthand when it hired “recovered alcoholic” Joseph Hazelwood to captain the Exxon Valdez. One night in March 1989, after having a few, Hazelwood left the oil tanker in a subordinate’s hands. It ran aground. The result was one of the worst ecological disasters on record, which involved Exxon in a $2 billion cleanup and opened the company to a $900 million settlement of federal and state claims, as well as a $4.5 billion fine. Following the incident, when Exxon quite sensibly decided to bar those with substance-abuse problems from captaining its ships, affected workers sued, accusing the company of violating their rights under the Americans with Disabilities Act.

  An estimated 19.4 million Americans suffer from alcohol or drug abuse, says NESARC. Further, according to Hazelden, a nonprofit agency that offers addiction services and data, the typical substance abuser incurs twice the health-care costs of a nonaddicted employee, is three times more likely to report for work late, and is five times more likely to file a worker’s compensation claim. He or she is more likely to steal from his or her employer and be involved in, or cause, workplace accidents. As Joseph Hazelwood demonstrates, the addicted worker’s subpar performance may compromise the safety, productivity, and morale of fellow workers, as well as endanger the health and well-being of citizens outside the company. An ingenious online tool called the “Alcohol Cost Calculator for Business” (www.alcoholcostcalculator.org/business /calc.php), maintained by the George Washington University Medical Center, reveals that a typical midsized construction firm with 1,000 employees will likely have on its payroll 101 problem drinkers who each year miss 892 days due to injury or illness and cost the company an extra $265,762 in health-care costs and $152,009 in lost productivity. And thanks to SHAM and its fallout, corporate America is often powerless to do anything about this until such a worker crosses a line that no one wants to see crossed.

  Ask yourself: If the various SHAM doctrines can exert so much influence in fields dominated by well-credentialed professionals who are expected to depend on science and hard research to guide them, what happens when they infiltrate other areas of American life in which they have far fewer obstacles to overcome?

  THE SHAM EFFECT

  Although a complete accounting of all areas in which SHAM has shown itself defies compilation, consider a few examples that point to the magnitude of the phenomenon. If SHAM is the iceberg beneath the waterline, what follows represents just its shiny tip.

  US VS. THEM FACTIONALISM AND THE RISE OF BADASSE

  In America today, the first thing people do is unite under a common banner of victimhood.

  The second thing they do is hire an attorney.

  We tend to criticize the lawyers for this, and it’s true that lawyers exploit the system in devastating ways. They’re the force multipliers, taking the evidence for an existing malady and applying it in just about any situation. They have also worked tirelessly to block tort reforms that would curtail their ability to win multimillion-dollar awards from juries. But lawyers did not create the climate wherein people seek to collect millions for slipping on a wet floor or burning themselves with hot c
offee—or in which juries buy in. Lawyers did not invent the madness. (Are we no longer responsible for knowing that wet floors are slippery?)

  The costs of negligence lawsuits have been chronicled chapter and verse, and lawmakers finally are managing some legislative relief (over the ongoing objections of the powerful American Trial Lawyers Association, the American Bar Association, and other fraternal groups). But few recognize the hidden costs to society, in particular the chilling effect these lawsuits, as a class, have on innovation and—irony of ironies—safety.

  In a 1991 article for the American Legion magazine, “The High Cost of Product Safety,” I wrote of the aviation industry’s earliest attempts to develop equipment that might alert pilots to the atmospheric peril known as wind shear, which can send a jet hurtling earthward as efficiently as a Patriot missile. Thankfully, such warning equipment is now standard on commercial jets, and wind-shear-related incidents have plummeted to almost nothing since 1985. But implementation was stalled for years by developers’ concerns about the huge negligence awards that would surely result if the detection equipment ever failed. (Everything fails eventually.) To many research-and-development executives, it didn’t seem worth the risk. No matter how much good the product would have done or how much initial revenue it might have generated, some companies saw it as a path to certain ruin. Other products that needed inventing entailed far less liability exposure.

  As 20/20’s John Stossel explains in his excellent book Give Me a Break, “Tort lawyers attack the very people we need most in order to be safe: innovators, companies that make safety devices, hospitals, drug makers, paramedics, those who stand on the front line between life and death. The lawsuits threaten the people who make us safer.” Stossel describes how, during the 1980s, trial lawyers made a mint by suing vaccine manufacturers for neurological damage those vaccines supposedly caused in children. “It’s impossible to know whether these problems were caused by the vaccines,” Stossel writes. “Some kids get terribly sick after vaccinations, but in any group of millions of kids, some will get sick. And the FDA had approved the vaccines.” Still, the onslaught of litigation savaged the industry. Whereas once America had twenty-five companies doing this vital research, says Stossel, now there were five. He quite reasonably asks, “In an era of AIDS, anthrax, SARS, and who knows what bioweapon might come next . . . [a]re we safer with five vaccine makers instead of 25?”

  Lawyers and lawsuits play an essential role here, as Stossel documents, but step back for a moment and consider the consumer mind-set that spawns them: My kid is sick. Someone is to blame. Hey, he got vaccinated last week. I will blame THEM.

  Years ago there was a popular bumper sticker that read SHIT HAPPENS. It’s a lowbrow way of communicating the sentiment, but it embodies the (perverse) optimism that got us through the day, once upon a time. Shit happens. Life is life. Deal with it and move on. Because of SHAM and allied influences, however, Americans now operate under a quite different bumper-sticker mentality, one that forms the acronym BADASSE—Blame All Disappointments And Setbacks on Someone Else. Whatever goes wrong, we must run through the entire cycle of causation until we find someone else to blame. Ideally, someone else with deep pockets. Like, say, corporate America.

  Clearly, some corporations have been guilty of selling unsafe products or otherwise harming consumers, as in the case of the Ford Pinto, the Dalkon Shield, or Firestone’s Wilderness-series tires. But too often litigants pin the blame on corporations even when all the evidence indicates that the companies were doing nothing to willfully harm people and that they couldn’t possibly have prevented the chain of events that led to tragedy. The fact that people would even think to sue in such cases—and expect to find jurors who will sympathize—is a direct result of BADASSE.

  In the mid-1990s I profiled attorney William Lerach for a long magazine piece. Lerach’s specialty was the so-called strike suit, which he would file against high-tech companies that had experienced precipitous drops in their stock prices. These class-action suits accused management of fomenting unwarranted public optimism, and thus seducing investors, with full knowledge of a coming reversal. (He was so identified with this type of litigation that executives called being served in such an action “getting Lerached.”) Lerach would file his suits based on something he found in a company’s published materials or in public statements by executives that appeared to hint at rosier results than the company delivered. Some of these statements took the form of those blustery, we’re-gonna-knock-’em-dead! rallying cries executives always issue when trying to boost morale among the troops.

  In these post-Enron, post-Martha days, there’s natural sympathy for any attempt to hold companies accountable for false promises made to investors. But overall, even though evidence existed that in a few cases, a few executives Lerach sued may have acted willfully, his strike suits had a frightening influence on the scientific culture. To a man or woman, everyone I interviewed on the technology side told me the same story: When you’re working at the cutting edge, you can’t really promise results. You can hope—you can sketch for people your grand visions of the wondrous things this new technology might do, someday—but you can’t promise anything. That is the nature of the bargain in vanguard research: a few spectacular successes, lots of heartbreaking failures. Everyone, they said, knew this and accepted it.

  Not Lerach and the people he represented. If investors lost money, someone had to be blamed.

  For a period starting in the late 1980s and extending into the 1990s, Lerach’s lawsuit machine ran with startling efficiency and horsepower. Most of the cases never saw the inside of a courtroom; merely seeing his name on a complaint would often induce top management to settle. Lerach’s considerable legal skills surely played a factor in this, but more important, his targets simply recognized that, no matter the evidence, too many jurors might be sympathetic to the plight of investors who lost money. As T. J. Rodgers, CEO of Cypress Semiconductor Corporation, told me then, if you’re not IBM or Hewlett-Packard, “you can’t gamble on what a jury might do. There are too many people today who buy into what he’s selling; the blockbuster jury award is too prevalent. So you pay your tribute.”

  They paid, and paid, and paid again. At the time I wrote my story, Lerach claimed to have recovered $5 billion on behalf of his class-action clients.

  Well, one might think, at least that money was coming out of the coffers of large corporations. But damage awards rarely come solely out of a company’s profits. They come from insurance companies or reinsurance companies, which lay off the tariff to others and/or raise premiums. Or they are passed on to the consumer in the form of higher prices on the company’s goods and services. Moreover, punitive verdicts and the attendant bad publicity drive down stock prices, which hurts millions of investors, few if any of whom had knowledge of, or responsibility for, the company’s misdeeds. Corporate America operates on the principle of homeostasis: As much as possible, the company will maintain a steady state of operations and profitability. If the company must pay $10 million to Joe Smith, that $10 million must be made up elsewhere. Or, worst case, the company goes under. That may throw thousands of people out of work, most or all of whom, again, bear not a shred of blame for whatever the company did wrong, or was accused of doing wrong. Many people, therefore, bore the burden of the $5 billion that William Lerach wrung out of corporations.

  Lerach’s “success” exacted other hidden costs. That $5 billion could have funded additional R&D, for instance. Furthermore, entire exciting-yet-speculative projects, like the wind-shear device, were scrapped because executives and the venture capitalists they relied on couldn’t figure out how to whip up investor enthusiasm without risking an encounter with the likes of Lerach. “There’s no doubt that there is risk aversion being built into the system,” Rodgers told me. “And in high tech, risk aversion is no good.”

  Here, then, we see the Law of Unintended Consequences: Companies must provide relief to those who supposedly have been wronged, but
in the process of providing restitution, they must put many other people at risk. We see the same effect, for example, when a small number of families who have suffered unfortunate experiences in child care band together and successfully sue or get legislation passed to address the problems. This should be good for society; it should make life safer. In practice, it does something else unintended: It makes child care not worth the trouble for many potential providers, largely by mandating cumbersome, intrusive paperwork or making liability insurance unaffordable. This gives families fewer choices in child care. It also prices some families out of the market entirely, resulting in more latchkey kids, with all the dangers of same. Is that good for America?

  Between 1986 and 1994 I coached Little League baseball, and during that time parents took a laissez-faire attitude toward the inherent, mostly minor risks of Little League. Our league thrived, as did leagues across America. More recently, there has been an inexplicable series of incidents, totaling under a half dozen, in which children hit in the chest with baseballs during games went into cardiac arrhythmia and died. As a result, leagues have had to purchase extra protective gear and more expensive liability insurance. This sounds like a good thing, until you consider leagues in the poorest neighborhoods, which can’t afford to make the accommodations. One might assume that those kids are “safer” anyway, because they now have zero risk of being killed by a pitched baseball. Not so. Some will continue to play on sandlots and street corners, probably without any equipment at all. And what of the ones who give up baseball entirely when the league folds? What are they now doing with their free time, in those poor neighborhoods, many of which are high-crime areas?