Book Reviews

388 BOOKS Phantom Risk: Scientific Inference and the Law edited by Kenneth Foster, David Bernstein, and Peter Huber MIT Press, 1993 • 457 pages. $39.95 Reviewed by Doug Bandow S ocialism has been defeated almost ev erywhere in the world-except in the United States. And nowhere is the collec tivist impulse stronger than in the environ mental movement. The intellectual case against the apoca lyptics has long been overwhelming and is finally receiving serious media attention in the establishment press. Among the more recent books detailing the environmental lobby's fraudulent claims are Ron Bailey's Eco-Scam: The False Prophets of Ecologi cal Doom, Michael Fumento's Science Un der Siege: Balancing Technology and the Environment, and Dixy Lee Ray's and Lou Guzzo's Environmental Overkill: Whatever Happened to Common Sense? Unfortunately, ecological alarmists like Vice President Al Gore continue to domi nate the political process. They also enjoy ready access to the courts. The result is "two intersecting problems," write engi neer Kenneth Foster and attorneys David Bernstein and Peter Huber. "The first is the great disparity between the ease with which a controversy about a suspected hazard can begin and the difficulty in resolving the nature of the connection, ifany, between the suspected hazard and a health effect. The second is the havoc the resulting confusion wreaks in the courts."

Phantom Risk goes on to address these two issues in detail, utilizing contributions from biochemists, toxicologists, physicists, doctors, and other experts. Although the book is not directed at a popular audience, its objective analysis and measured tone should make it a powerful entrant in the ongoing environmental debate. The first set of issues addressed by Foster and his colleagues are the most dubious "hazards whose very existence is somehow in doubt." Despite the modestness of the risks, however, the public concerns have been enormous. For example, many household appli ances, such as hair dryers, give off electro magnetic fields and have been blamed for causing cancer. Given the pervasiveness of such gadgets, many Americans have be come quite frightened by everything from utility powerlines to electric blankets. Ken neth Foster of the University of Pennsylva nia surveys roughly four dozen studies, finding ambiguous evidence "of a slight increase in cancer risk that is somehow associated with electromagnetic fields," but worries "that 'something is there' might be just the accumulated effect of scientific noise." In fact, scientists have yet to iden..

tify any specific hazards. Moreover, even the worst case risks pale compared to those people regularly undertake voluntarily: smoking, for instance, or failing to wear automobile seat belts. Of particular concern to the contributors to Phantom Risk is the distorting impact of such issues on the court system. Writes Foster: "In science one can draw no con clusions from unexplained phenomena or inconclusive studies. But in the courtroom it is sometimes enoughjust to raise questions. And these studies have done that very well." Similar is the controversy over video display terminals, which also put off elec tromagnetic fieldsand have been blamed for causing miscarriages. The reports, writes Foster, "have been overwhelmingly-but not totally-negative, finding no links be tween use of VDTs and spontaneous abor tion or birth defects." This doesn't mean that VnTs don't cause problems; rather, the difficulties are much more mundane, what Foster calls "ergonomic and psychoso cial," particularly the fact that "many cler ical workers using VDTs simply have lousy jobs. " Alas, these issues are not amenable to judicial solutions.

Bendectin, sold to treat nausea and vom iting during pregnancy, has also been blamed for birth defects. Evidence of cau sation was dubious. Observe Louis Lasagna and Sheila Shulman of Tufts University, "the scientific evidence seems sufficient to rule out the possibility that Bendectin is a powerful cause of birth defects." But that didn't stop three juries from blaming Ben dectin, effectively forcing the drug off the market. The problem here, Lasagna and . Shulman explain, is the legal process, par ticularly the inadequate review of scientific evidence and the "all-or-nothing" nature of litigation, which ignores "the subtleties of causation. " Indeed, the legal process is·at fault in all of these areas. Appellate courts refused to overturn a finding of liability, despite· the contrary evidence, in a celebrated spermi cide case. VDTs have so far generated only a handful of cases, but many more are in the offing.In contrast, thousands of claims were filed against Bendectin, which led Merrell Dow Pharmaceuticals to withdraw its prod uct, despite winning most of the court cases.

The American College of Obstetrics and Gynecology complained that the result was "a significant therapeutic gap.'.' Litigation over electromagnetic fields, including the mere fear of harm, has led to million-dollar judgments. Perhaps even worse have been the abuses surrounding substances that pose serious dangers in high concentrations but little risk otherwise. Phantom Risk demonstrates that they are even more susceptible to the in flammatory claims of the apocalyptics. Particularly illuminating is the chapter by Bruce Ames and Lois SwirskyGold, both of the University of California at Berkeley. They survey eight major misconceptions regarding the risk of cancer from pollution. Contrary to popular myth, for instance, cancer rates "are steady or decreasing," they write. Animal testing at fantastically high rates of chemical contamination is of little value in predicting the actual risk to normal people. Ames and Gold also point BOOKS 389 out that most carcinogens are natural, not synthetic, and that the natural ones are more toxic. Finally, technology brings benefits as well as costs, and campaigns to control pollution, such as pesticides, have to con sider the very real tradeoffs involved. As Ames and Gold point out, "Efforts to pre vent hypothetical cancer risks of one in a million could be counterproductive if the risks of the alternatives are greater."

While much of the discussion in Phantom Risks may at first seem abstract and aca demic, the chapter by Harvard University's Ralph D'Agostino and Richard Wilson on asbestos helps demonstrate the book's rel evance. Many school systems, like that in New York City, for instance, are struggling with expensive asbestos removal programs. Litigation, too, has become an ever-present nightmare. There is no doubt that asbestos, long used as a fire retardant, increases the risk of asbestiosis (fibrosis of the lung) and lung cancer, among other diseases, though smok ing remains a far more important cause and the issue is quite complicated. D' Agostino and Wilson do a good job of helping the reader sort through the morass. For exam ple, there are different types of asbestos fibers; some are less harmful than others. Equally important, it is level of dosage, not mere exposure, that creates the risk. As for schools, they argue, "the risks in question are in most cases exceedingly small," be tween one-fifteenth and one-two hundredth that of the annual risk of driving a car. At the same time, extensive removal efforts have "led to unnecessary fear and expense to the public." Finally, there are risks from asbes tos substitutes, such as fiberglass.

PCBs, or Polychlorinated Biphenyls, are chlorine compounds. High doses have proved toxic to some animals, but do not appear harmful to humans. In short, con cludes Renate Kimbrough of the Institute for Evaluating Health Risks, "claims of association, based on epidemiologic stud ies, of chronic health effects such as cancer and trace exposure to environmental levels of PCBs are unjustified." Not surprisingly, given the hysterical nature of much of the 390 THE FREEMAN • JULY 1994 environmental debate, writes Kimbrough, "People have overreacted to possible haz ards from PCBs at typical environmental levels. " Dioxin has become even more controver sial, leading the EPA to evacuate the entire town of Times Beach, Missouri. Dioxin has been one of the leading causes of the apoc alyptics, making any reassessment of the risks particularly sensitive. Writes Michael Gough of the Office of Technology Assess ment: Any change in popular perceptions of dioxin would be a sharp challenge to the idea that cleaning up tiny amounts of chemicals in the environment will signif icantly improve human health. After all, if some scientists and many others were mistaken about the worst of carcinogens, perhaps they are also mistaken about other chemicals, for which evidence of carcinogenicity and human exposure is far less certain.

Gough's analysis suggests that, in fact, many people were mistaken about the risks of dioxin. Again, what Phantom Risk deliv ers is a detailed yet accessible review of the scientificdata. Gough's conclusion, not sur prisingly, is that early, hysterical charges were not backed up by later, serious re search. The book also devotes chapters to three celebrated examples of radiation exposure and their effects: the Three Mile Island nuclear reactor, U.S. nuclear testing, and the Ferwald uranium plant. All of these resulted in considerable fear, even panic; all also generated enormous legal controversy, particularly among veterans exposed to the fallout from nuclear tests. In all, the fears appear to have been overblown. Typical is the conclusion of George Tokuhata, of the University of Pittsburgh: "The study found no evidence of excess cancer deaths in the five years after the TMI accident. On the contrary, residents in the area within 20 miles of the plant had fewer cancer deaths than expected during the 5-year period."

Phantom Risk goes on to provide a sum mary round-up chapter of the legal status of these groups. There are a lot of cases, some good decisions, and many bad judgments and settlements. Hundreds of millions of dollars have been paid out by private firms and public agencies to compensate plaintiffs for harms that appear dubious at best. The book's final section involves ques tionable medical theories. Marvin Roms dahl of the University of Texas covers the now largely discredited cases where cancer was blamed on trauma, such as a blow to the head. The issue well illustrates the problem ofjunk science. Writes Romsdahl, "interest in the possible connection between trauma and cancer developed not because of any scientific breakthroughs but because of great social changes associated with the industrial revolution," including worker's compensation laws. Today's equivalent of traumatic cancers may·very well be "Multiple Chemical Sen sitivities" (MCS). Michael Luster, Gary Rosenthal, and Dori Germolec of the Na tional Institute of Environmental Health Sciences critique what has become one of the most extreme claims of some environ mentalists,that exposure to even otherwise seemingly harmless synthetic chemicals may cause neurological or emotional disor ders. The result has been the usual raft of lawsuits that the courts are ill-equipped to handle. Many MCS victims do indeed seem to suffer distress, but causation remains unclear.

The difficulty in trying to resolve these sorts of problems in court is ably demon strated by attorney Richard Cornfeld and Harvard Medical School professor Stuart Schlossman as they discuss the case ofElam v. Alcolac, which involved 31 plaintiffs claiming that chemical exposure severely depressed their immune systems. The result was a nearly $50 million verdict yet, com plain Cornfeld and Schlossman, "the court did not cite any evidence of damage which any competent immunologist would ac cept. " They argue that the litigation show cases the inability of juries to decide com plex scientific questions and should lead to the development of new rules of evidence to cover these sorts of claims.

All told, the intersection of law and sci ence has not been a pretty one. There are two separate problems, which, warn the editors, together create chaos: first, "much confusion, error, and ambiguity surrounds risk research, at least when searching for small risks"; second, we have "a legal system that sometimes raises more ques tions than it settles." Unfortunately, there is no way to avoid some problems of this nature. Science is uncertain, experts make mistakes, the courts are open to everyone, lawyers have an incentive to file speculative cases, and juries are usually authorized to decide the facts of legal cases. Still, the process could be improved. Write the volume's editors: Probably the best that legal reformers can do is to suggest ways to help improve the quality of the scientific evidence that is presented in court. The goal is not to raise standards of proof to levels so high that no plaintiff could hope to win, but rather to ensure that the scientific testimony that is presented to juries is as reliable as possi ble. Expert testimony needs to be verifiable, and, where possible, consis tent with a consensus of scientific opin ion. It needs to address at least three issues: the existence of a hazard, the plaintiff's exposure, and the risks associ ated with the exposure. In legal terms, it needs to be more probative than prejudi cial.

They go on to recommend eight specific changes, which deserve to be taken seri ously by judges and legislators alike. For even our wealthy society, they worry, "phantom risk remains a diversion that is too expensive." Phantom Risk is an important book-an indispensable reference for anyone desiring to confront the environmental apocalyptics who seem dedicated to litigating and regu lating our society into ruin. Rather than offering political polemics, the book's edi tors and authors let their abundant evidence speak for itself. Which is precisely why Phantom Risk presents a challenge that the BOOKS 391 environmental lobby will find difficult to ignore. 0 Doug Bandow, a Contributing Editor of The Freeman, is a Senior Fellow at the Cato Institute. He is also the editor of Protecting the Environ ment: A Free Market Strategy (The Heritage Foundation) and the author of The Politics of Envy: Statism as Theology, forthcoming from Transaction.

Bankers and Regulators with an introduction by Hans F. Sennholz The Foundation for Economic Education, 1993 • 176 pages. $14.95 paperback Reviewed by Robert Batemarco "Money is different," we are told by practically every member of the economics profession, including many who stand tall against government intrusion in every other sector of the econoftlY. This difference, in their eyes, legitimiies govern ment provision and control of money as well as its regulation of those private institutions which create and lend money. The contrib utors to Bankers and Regulators, the eighth volume in the Freeman Classics series, however, find that line of reasoning unper suasive. So will the reader of this book, when faced with its revelations of not only the adverse consequences of those regula tions but also of successfully applied alter natives to government regulation. The book consists of a lengthy introduc tion and seventeen articles, all of which, at one time or another, appeared in The Free man. While one (a William Cullen Bryant piece critiquing usury laws) was written in 1836, most are of recent vintage, with over three quarters of them first published within the last ten years. The age of the pieces in this collection is of little consequence, as they are based on principles which remain as valid today as when they were first written.

Bankers and Regulators is divided into three sections, which roughly correspond to theory, history, and policy prescriptions.

392 THE FREEMAN • JULY 1994 By no means are these divisions airtight, however, as many selections provide the reader with all three. Hans Sennholz's ar ticle on the bailout of the savings and loan industry is a prime example. The longest piece in the collection, it is an extended narrative for which his mastery of economic theory furnishes a coherent explanation. How cartels inevitably break down, the distortions created by inflation, the moral hazard entailed by government' 'insurance" which defies every principle of insurance, and the ever-destructive impact of price controls (inthis case on interest rates) are all clearly illustrated by the events described here. Several themes crop up over and over again throughout this slim volume. Some, such as the destabilizing effect of restric tions on branch banking, are now commonly acknowledged in the mainstream literature. Where Bankers and Regulators stands out, however, is in its contributors' willingness to tread where no money and banking text would dare. Where else could you find a discussion of the impact of banking regula tion on the distribution of income (Senn holz's previously cited piece on the S&Ls and E.C. Pasour's discussion of the federal farm credit system) or evidence that impli cates the Fed in the deterioration of the financial condition of U.S. banks since its inception (Richard M. Salsman's analysis of the "too-big-to-fail" doctrine)? You won't learn that such universally accepted fea tures of our banking system as deposit insurance, reserve requirements, the exis tence of a lender of last resort, and central banking itself, are not only unnecessary on theoretical grounds, but have been absent from other banking systems with no ill effects (Donald R. Wells' comparison of U.S. and Canadian systems) in the pages of Business Week.

In addition to the topics mentioned above, the international monetary system and credit crisis (Ken S. Ewert, Christopher Culp), fractional .reserve banking (Morris Markowitz), abolition of the Fed (Ernie Ross, Elgin Groseclose), deposit insurance (Jeffrey Rogers Hummel, Kurt Schuler), free banking (Lawrence H. White, Donald R. Wells, and L.S. Scruggs), the gold stan dard (Joe Cobb), and electronic banking (Elizabeth Kolar) each rate at least one chapter of this collection. The volume is strong on -history, making it suitable as a supplementary text in money and banking courses, texts for which almost never con tain enough historical material for my taste. It is also infused with FEE's principled position that free markets are desirable for both practical and moral reasons. The reader of this volume will be well equipped to defend the position that money is no exception to the general case for free markets. D In addition to editing the book review section of the Freeman, Robert Batemarco is a marketing manager for financial analysis at J. Crew in New York City and teaches economics at Marymount College in Tarrytown, New York.

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