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Business Day: G.M. Said to Face Criminal Inquiry on Safety Problems

Discussion in 'Up to the Minute' started by Steely Dan, Mar 11, 2014.

  1. Steely Dan

    Steely Dan Former Member

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    G.M. Said to Face Criminal Inquiry on Safety Problems

    The Justice Department has begun a criminal investigation into the decade-long failure by General Motors to address deadly safety problems in some of its cars before announcing a massive recall last month, according to a person briefed on the matter.

    The preliminary inquiry by federal prosecutors in New York is expected to center on whether G.M., the nation’s largest automaker, failed to comply with laws requiring timely disclosure of vehicle defects....

    It's my belief that even if they can prove that GM executives knew about this problem and didn't do anything because of costs, nobody will be charged with a crime. Companies can, literally, get away with murder and walk away unscathed. It wouldn't surprise me if this was another Ford Pinto case. (It was found out that Ford knew there was a problem with the Pinto. Someone in Ford sat down and calculated how much it would cost to fix versus how much they'd lose in lawsuits. It was determined that it would be more expensive to fix so they let it go. They knew full well it would cost lives.)

    This is about the Ford Pinto case;


    The cases involving the explosion of Ford Pinto's due to a defective fuel system design led to the debate of many issues, most centering around the use by Ford of a cost-benefit analysis and the ethics surrounding its decision not to upgrade the fuel system based on this analysis.


    Should a risk/benefit analysis be used in situations where a defect in design or manufacturing could lead to death or seriously bodily harm, such as in the Ford Pinto situation?


    There are arguments both for and against such an analysis. It is an economically efficient method which has been accepted by courts for numerous years, however, juries may not always agree, so companies should take this into account.


    Although Ford had access to a new design which would decrease the possibility of the Ford Pinto from exploding, the company chose not to implement the design, which would have cost $11 per car, even though it had done an analysis showing that the new design would result in 180 less deaths. The company defended itself on the grounds that it used the accepted risk/benefit analysis to determine if the monetary costs of making the change were greater than the societal benefit. Based on the numbers Ford used, the cost would have been $137 million versus the $49.5 million price tag put on the deaths, injuries, and car damages, and thus Ford felt justified not implementing the design change. This risk/benefit analysis was created out of the development of product liability, culminating at Judge Learned Hand's BPL formula, where if the expected harm exceeded the cost to take the precaution, then the company must take the precaution, whereas if the cost was liable, then it did not have to. However, the BPL formula focuses on a specific accident, while the risk/benefit analysis requires an examination of the costs, risks, and benefits through use of the product as a whole. Based on this analysis, Ford legally chose not to make the design changes which would have made the Pinto safer. However, just because it was legal doesn't necessarily mean that it was ethical. It is difficult to understand how a price can be put on saving a human life.

    There are several reasons why such a strictly economic theory should not be used. First, it seems unethical to determine that people should be allowed to die or be seriously injured because it would cost too much to prevent it. Second, the analysis does not take into all the consequences, such as the negative publicity that Ford received and the judgments and settlements resulting from the lawsuits. Also, some things just can't be measured in terms of dollars, and that includes human life. However, there are arguments in favor of the risk/benefit analysis. First, it is well developed through existing case law. Second, it encourages companies to take precautions against creating risks that result in large accident costs. Next, it can be argued that all things must have some common measure. Finally, it provides a bright line which companies can follow....

    Nobody went to jail on this case and nobody will go to jail on the GM case. Our priorities are all :censored: up!

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