Mississippi is known for many good things: mud pies, magnolia trees and Elvis Presley, for example. And, oh, how those Mississippians can write! William Faulkner, Eudora Welty . . . even Tennessee Williams is really from Mississippi.

Too bad the state can't write laws as well as it writes gothic novels.

Recently the U.S. Chamber of Commerce fingered Mississippi as the home of "jackpot justice," and the worst example of tort lawyers run amok. Mississippi's soil is great for growing magnolia trees but it is even better for growing class-action lawsuits. Going by the stream of multimillion-dollar jury verdicts, you'd think every citizen in the state had either been poisoned by asbestos, tortured by their HMO or forced to choke on a chain of cigarettes.

The record is so bad that companies and industries, some of which haven't even come under scrutiny, are fleeing the state in dismay. On May 6 the American College of Obstetricians and Gynecologists denounced Mississippi for driving its practitioners out of business and out of state. Here's hoping no midwives have pockets deep enough to merit a stint in the defendant's chair.

Since 1995, seven separate Mississippi juries have banged the gong for $100-plus million dollar verdicts. And while Mississippi's story is in some ways just one more chapter in the ongoing struggle between tort lawyers and business, the state's floundering economy has made more apparent some of the real costs of chronic litigiousness.

In a recent statistical study, Robert Hahn of the American Enterprise Institute and I found that jackpot justice injures ordinary citizens by impeding economic growth. Frivolous lawsuits might even be considered a luxury good. Back in the late 1990s, when gross domestic product was galloping along at a record pace, we could afford to be cavalier about such impediments to the economy. But as jobs and growth are tougher to come by now, we have to take this threat more seriously.

States like Mississippi assume that business people are both evil and stupid. Somehow they figure that after being sued into virtual bankruptcy and given whiplash in the press, businesses will stick around for more of the same. Fat chance.

Yogi Berra said you can sometimes see a lot just by looking. A glance at a recent Harris Poll surveying senior litigators at public corporations asked "Corporate America" to rank the states on such issues as tort and contract litigation, discovery procedures, judges' impartiality, etc. Among the lowest ranking states were Mississippi, West Virginia, Alabama and Louisiana.

Not every Southern state performed badly. Virginia grabbed the number two slot (after Delaware), and Georgia made the top half. Other top-scoring states were scattered around the map, including Washington, Kansas, Connecticut, Arizona and Indiana.

Now, let's take a look at which states grew slowest during the boom years of 1995-1999, when per capita state growth averaged 14.2%. With such a rip-roaring economy, only nine states bungled their way to single-digit rates. Sure enough, among the infamous nine were Mississippi, West Virginia and Louisiana. Some of the other dogs brooding in the sub-10% kennel include Nevada, Montana, Alaska, Hawaii and Wyoming. All of them, with the exception of Wyoming, fell into the bottom quartile on the Harris survey.

The converse applies as well for the most part. Among those states that treated business well, growth was stronger. The top ten states in the Harris survey earned an average 15.72% growth score, beating the average, and smashing the bottom ten, which managed just 11.63%. Roughly speaking, by firing lethal legal weapons at businesses, states rob their citizens of one-third their potential income growth.

Consumers suffer, too, when businesses are frightened away. By cutting competition, litigation pushes up consumer prices. A surge in lawsuits against nursing homes has driven out many insurers, so that they refuse to insure the facilities. Facing fewer competitors, the remaining insurers may have more power to jack up the prices they charge to nursing homes.

The same thing happened to the U.S. vaccine industry during the '70s and '80s. Because vaccines trigger side effects in some people, the industry is vulnerable to lawsuits. A wave of litigation impelled about half of the vaccine manufacturers to flee the industry. And as the industry shrunk, consumer medical costs went up.

In our books, films and television programs, Americans have tended to glorify the plaintiff's lawyer, toiling alone to battle the Goliaths of American industry. Who could not sympathize with Hollywood's portrayal of Julia Roberts as Erin Brockovich, or be drawn in by the legal thrillers of John Grisham (who is, by the way, from Mississippi.) It's OK for entertainment. But it's not the way to make policy or law.

There are consequences, as the College of Obstetricians and Gynecologists warned Mississippi recently. Remember the scene in "Gone With the Wind" when Prissy says she "don't know nuthin' 'bout birthin' babies"? Soon, she won't be the only one.

Now, in a debate before the Econometric Society, I would have to admit that there are many explanations for a state's growth rate, quite apart from the legal structure. That is why business people also throw themselves into civic discussions of education, taxes, and infrastructure. Tort reform alone will not suddenly cure the Biloxi Blues or turn Picayune into bustling Portland, Ore. Nor is the Harris survey a definitive, rock-solid measure of courtroom fairness.

Nonetheless, the statistical evidence suggests that common sense is, well, sensible. If you handcuff businesses and haul them into kangaroo courtrooms, you do not attract as many businesspeople. And you do not create as many jobs, except as kangaroo keepers.

Mr. Buchholz is managing director of Enso Capital Management and the author of "Market Shock" (HarperCollins, 2000).

This article was originally published in the Wall Street Journal on July 8, 2002.