David is correct. I would bring up this example: Estes, Ralph W. 1995. Tyranny of the Bottom Line: Why Corporations Make Good People Do Bad Things (San Francisco: Berrett-Koehler). 166: From 1971 to 1976, the fuel tank in the Ford Pinto was located only six inches from the rear bumper, was liable to be punctured in even a minor rear collision by bolts protruding from the differential housing. And then any spark from a cigarette, ignition, or scraping metal, and both cars would be engulfed in flames." Dowie, Mark. 1977. "How Ford Put Two Million Firetraps on Wheels." Business and Society Review (Fall): pp. 46-55. 166: "Ford management chose the bottom line over customers' lives." Strobel, Lee Patrick. 1980. Reckless Homicide: Ford's Pinto Trial (South Bend: And Books): p. 117. 166-7: Ford designed the Pinto to be light and cheap. Ford president Lee Iacocca decreed "the limits of 2,000": under 2,000 pounds and under $2,000. 167: A rubber bladder inside the gas tank could have kept fuel from spilling when the tank was ruptured. Crash tests showed the bladder worked well. But its cost would have been $5.08, and it was rejected. Another change would have prevented gas tanks from breaking up so easily in rear-end collisions and in rollover accidents that would have cost $11. It was rejected. Ford produced a cost-benefit analysis showing that the deaths and injuries avoided would not justify a cost of $11 per car.
On Sat, Jan 23, 2010 at 05:09:20PM -0800, David B. Shemano wrote: > Michael Perelman writes: > > >> Sadly, the author was correct -- at least in so far > >> as the current courts are concerned. In the eyes of some judges, the law > >> goes even further than ruling that corporation that violate the law lack > >> a guilty mind. They insist that corporate managers, who should possess > >> a mens rea, have an ethical responsibility to violate the law when doing > >> so will prove profitable for stockholders. For example, Frank H. > >> Easterbrook and Daniel R. Fischel, the former a federal judge as well as > >> a senior lecturer at the University of Chicago School of Law, wrote: > >> > >> It is not true, however, that there is a legal duty to enforce every > >> legal right .... Managers do not have an ethical duty to obey > >> regulatory laws just because those laws exist. They must determine the > >> importance of these laws. The penalties Congress names for disobedience > >> are a measure of how much it wants firms to sacrifice in order to adhere > >> to the rules: the idea of optimal sanctions is based on the supposition > >> that managers not only may, but also should violate the rules when it is > >> profitable to do so. [Easterbrook and Fischel 1982, pp. 1171 and 1177 n]" > > You are being very misleading. The quote is not about criminal laws, but > non-criminal regulatory rules. The point is that if the penalty for > violating a rule is X, but the economic benefit of violating the rule is 2X, > it is economically efficient to violate the rule. This is a derivation of > the law and economics argument that if A contracts to sell B a widget for a > $1, and C then offers A $3, it is economically efficient for A to breach the > contract with B, force B to mitigate his damage by going to the market and > buying the widget from D for $2, and then have A pay B damages of $1, which > is why the common law favors as a remedy consequential damages instead of > punitive damages or injunctions. If you want to argue that there is an > overriding moral obligation to obey rules and agreements no matter what the > economic cost and no matter what the rule or agreement (in which case you > should be opposed to all monetary fines and insist upon imprisonment for all > violations, even for going 75 in a 65 zone), so be > it, but make that clear. > > David Shemano > > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
