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Clear The Court Of Economists, Please

In Business This Week


In the opinion of Judge James Zagel, the science of economics isn't just dismal, it's pseudo.

Zagel, a federal judge in Chicago, has refused to allow an economist to testify as an expert in a personal injury case. No economist, he says, can put an accurate dollar value on the life of an accident victim. "Expert" calculation, he suggests, is no better than a guess.

Economists, who agree on nothing else, have long insisted that their discipline is a science. Zagel isn't buying. "There is no unanimity on which studies ought to be considered. There is a lack of reliability," he wrote. "The risk to justice from pseudo-science is substantial." The judge even suggests that the jury's own forecasts are likely to be as accurate as that of a professional economist. Hey, maybe that's how the Bush Administration and Congress could settle their many economic disputes: Just pick 12 random citizens, and ask them.Edited by Harris CollingwoodReturn to top


It's game over in the spat between the Federal Trade Commission and Nintendo of America. On Apr. 10, Nintendo agreed not to fix the prices at which dealers can sell its popular video game systems. Under the agreement, Nintendo will pay $5 million in damages and costs and advise all its dealers that they're free to sell Nintendo products at whatever price they choose. The company also will provide $25 million in coupons to 9 million customers who have bought its popular products.

Nintendo didn't admit to any wrongdoing. Instead, it said it was settling the charges to end a costly battle that could turn off customers. The agreement settles price-fixing charges brought by the FTC and a few states, including New York and Maryland.Edited by Harris CollingwoodReturn to top


Edsel B. Ford II has finally gotten away from auto marketing. On May 1, the senior Ford family representative on the Ford Motor board will become president and chief operating officer of Ford Motor Credit, the carmaker's financing arm. He will be the No. 2 executive at an $82 billion unit that last year posted a net profit of $563 million, up 25%. The executive director of Ford's marketing staff for nearly two years, Edsel Ford had expressed his desire to show his managerial mettle at an operating unit.Edited by Harris CollingwoodReturn to top


Bank of Boston lost $395 million last year and is one of New England's weaker big banks. But that isn't stopping some of the region's wealthiest companies from helping their hometown bank attempt to buy its biggest competitor, failed Bank of New England. On Apr. 5, General Cinema, Fidelity Investments, Raytheon, and a slew of insurance companies agreed to invest $500 million in newly issued stock to help BoB bid for BNE, which is being auctioned off by the Federal Deposit Insurance Corp.

Cost savings of as much as $375 million may give BoB the edge over Bank of America and the tandem of Kohlberg Kravis Roberts and Fleet/Norstar Financial Group. But the FDIC may be wary of the management record at BoB. Moreover, it wants to avoid repeating its miscues in the Southwest, where it combined weak banks, only to watch them fail later.Edited by Harris CollingwoodReturn to top

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