BUSINESS ADVISORY COUNCIL

For twenty-six years the Business Advisory Council of the College of Commerce and Business Administration, a group of approximately 100 business leaders in the state and nation, have met with college faculty and administrators twice a year to discuss issues of mutual interest. The spring meeting was held on March 29, 1995 in Chicago. President Stanley O. Ikenberry, who has enjoyed a warm relationship with this group during his sixteen-year tenure, was the luncheon speaker.

Dean Howard Thomas, in addressing the membership, called for a strengthening of the partnership between the college community. Outgoing chairperson of the council, Willard Bunn III, senior vice president and managing director of the Chicago Corporation, moved the council forward in this area during his tenure. Incoming chairperson, Larry L. Austermiller, partner at Arthur Andersen & Co., will focus council activities on the public image of the college - in Chicago, the state, the nation, and the world. The vice chairperson next year will be Wilma J. Smelcer, executive vice president of Bank of America.

Lt. Governor Robert Kustra, the keynote speaker, talked about "Accountability in Higher Education." He spoke briefly about the way the state used to appropriate funds to the university and how it is done now. As competition for focuses state dollars has grown, universities have found it more difficult to get the funding they need. Each governing board must meet strict accountability requirements for existing and new funds. According to Kustra, the increasing demands on the state pocketbook have been behind the recent restructuring of various college governing boards. One result of this restructuring is that Sangamon State will now be a part of the University of Illinois system.

During the question and answer period, council members expressed concern about the loss of a number of outstanding faculty as a result of successive years of poor budgets. There was also a fear expressed that present state policies toward higher education would result in a leveling of quality, which would work to the detriment of the University of Illinois.

Two faculty members, John Kindt and Thomas Ulen made presentations about their research. John Kindt, professor of business administration, spoke on the economic effects of gambling. The industry focuses on the positive, Kindt said, while ignoring the deleeterious effects of gambling. According to Kindt, ultimately the taxpayers support gambling. The ill effects of gambling are both social and economic. A Florida study has shown that 65 percent of the money spent on gambling in that state is spent by 20 percent of the gamblers, the hard-core, addicted ones. The majority, 80 percent, are recreational gamblers. They spend only 35 percent of the money and cause no problems. But because of the negative effects of gambling, Kindt says, new businesses tend not to settle in areas with gambling. According to Kindt, from an economic point of view, gambling has a negative impact on the economy.

Thomas Ulen, professor of economics and law spoke on Tort Liability. There is much talk in the media and Congress that indicates that the system is broken. But the data Ulen collected show that the system generally works well. What has changes is not the system but the public's attitude toward it. According to Ulen, despite conventional wisdom to the contrary, there aren't too many law suits; there are really too few. In evidence, he cited a Harvard study of medical malpractice cases which found that in the 1980s only 1 percent of all patients admitted to a New York hospital were injured by the hospital and only a small number of these filed suit -- 12 percent of the total and 33.3 percent of the seriously injured. Medical malpractice, however, is a main target of reform. The frequency of cases has risen from one per 100 physicians in 1960 to one in ten today. Similarly, liability insurance expenses have skyrocketed - from $90 million in 1960 to $90 billion today. These costs, and the fear of litigation which leads to the practice of defensive medicine, have increased the cost of health care.

The recent McDonald suit has been widely used as an example of what's wrong with tort liability. In fact, product liability cases are won by the plaintiff 50 percent of the time, plaintiffs in auto accidents win 60 percent of their cases, and medical plaintiffs win only 33.3 percent of their cases. Ulen pointed out that doctors rarely lose a case they think they should win and that there are very few repeat offenders among doctors. There are actually very few liability cases filed or won. But because plaintiffs who do win, win big, they get a great deal of media coverage.

Although the problem is not as large as one might think, Ulen does note that rising insurance costs and increased claims are world-wide phenomena. What can be done to stem the tide? Ulen suggests that we replace the current system with a no-fault insurance system. If an injury occurs, even without negligence, Ulen suggests that payment is in order. But, this system does not allow for pain and suffering.

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