Economic Accountability

I don’t hate all lawyers. One of my best friends on the planet is a lawyer. They provide a useful service in a republic, clarifying rights and regulations as well as assisting people and companies that are entering and dissolving legally binding relationships.

With that being said, I am convinced that our legal system has run amok, and the hacking of Sony Pictures simply proves the point.

The Obama administration announced that they have enough evidence to prove that North Korea hacked Sony Pictures in retaliation for the filming of The Interview. The movie depicts the assassination of the current leader of North Korea, Kim Jong-un and it was set to be released by Sony on Christmas Day.

In response to the subject matter, North Korea infiltrated Sony’s computer system, stole confidential information including emails, payroll records, and even movies themselves, and then released the information to the public.

The hackers left threatening messages in the computer system, informing Sony that if the film was released, violence would ensue.

More threats from North Korean representatives followed, claiming that the production of the film was an act of aggression, and showing the film would bring about terrible consequences. These threats were aimed not just at Sony, but also at theaters and any other distribution network.

The broad theater release of the movie was canceled, and it was eventually slated for release over the internet on www.crackle.net as well as in select theaters around the country.

I’m sure that Sony executives were embarrassed by some of the emails that were released and furious at the distribution of stolen movies over the internet, but I don’t believe for a minute that Sony was quaking in fear at the thought of North Korea raining down missiles on their Los Angeles location.

It’s also implausible that North Korea could cause much harm on the many theaters where The Interview was going to be shown.

Who are You Going to Call?

It wasn’t the North Koreans that theater owners and Sony executives were worried about. It was lawyers.

Imagine The Interview being played in a theater when some nut case runs in, yelling in Korean and begins harming people. The attacker could be acting alone, with a long history of mental illness and outbursts, but none of that would matter.

Someone would sue the theater as well as Sony Pictures, claiming they knew, absolutely knew that something like this would happen, and therefore should be held liable in both criminal and civil court.

If someone can sue McDonald’s for serving coffee that’s too hot and win… it’s not a stretch to imagine that someone will sue a theater and a movie company if anything bad should happen, especially when the ludicrous threats were made publicly.

Whether the harm comes from North Korea or not wouldn’t matter.

Given that the movie would have been shown in hundreds of locations, there would be no way to provide adequate safety to guard against anything bad happening. With the threat of a multi-billion dollar lawsuit potentially following the release of what is reportedly a weak comedy, it’s easy to see how the decision to cancel the release to theaters made sense.

Even if the theaters asked patrons to sign a release of liability or some other form acknowledging the threats, that would not have stopped the lawsuits.

Pointing the Finger

In a broad sense, this situation mirrors our national retreat from personal responsibility. When something bad happens, we look for who is to blame, even if part of the blame belongs to us.

The financial crisis comes to mind, when millions of people claimed they were the victims of predatory lending. The term itself seems odd.

Were people forced to borrow? Was a gun put to their head so that they would sign on the hundreds of dotted lines that it takes to buy a home?

Fraud is a different story. If there was lying and cheating going on (Countrywide Mortgage and S&P Rating Services, I’m talking about you), then those cases should have been prosecuted.

But predatory lending? Where’s the lawsuit for gullible buying? This would be the one filed by the rest of America, people who paid their bills and did not take on debt far beyond their means, and yet still got clobbered financially in the downturn.

There’s a long list of people involved in the financial crisis who cried, “Not me!” when things fell apart. As a society, we let them off the hook, further cementing the notion that when something bad happens, you can always find a scapegoat, or at least someone who can be squeezed for cash to mitigate some of the financial pain.

Unfortunately, if we look out across the economic horizon, there’s a huge problem looming that could make the crisis of ’08 seem like a cakewalk.

It’s the long-term financial burden of the baby boomers. Their pension liabilities – both public and private – as well as their healthcare costs grow every day, and the boomers don’t have anywhere near enough funds in savings to maintain their standard of living.

The burden of fixing these problems won’t stay with the boomers, it can’t. They will look for someone to pick up the slack. Eventually, their gaze will land on the one class of people that always seem to end up paying the tab – the American taxpayer.

As we start the New Year, do your best to shrink your taxable footprint. Not only will it give you a raise, as I mentioned last week, but it could also diminish the amount you have to pay when other people get into financial trouble.

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Rodney

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Categories: Economy

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.