David B. Shemano wrote: > But in any event, the decision of where to install the Pinto gas tank was not > primarily driven by a narrow goal of profitablity, but by a strategic goal of > producing a car that was less than 2000 pounds and $2000 dollars. The > placement of the tank was primarily driven by the fact that any alternative > would have excessively reduced the trunk space in a car of that size. Ford > was aware that the placement of the gas tank created special risks, but the > placement of the gas tank anywhere would have created special risks (which is > also inherent in producing any smaller/less expensive car).<
In econ. textbooks, such strategic thinking doesn't fit with the marginal cost = marginal revenue vision of profit-maximization. But in the real world it does. Ford cares about profits über alles. > Ford did prepare cost-benefit analysis for certain changes to the tank >(which valued a human life at $200,000), but the analysis was not for internal >decision-making but for the NHSTA, which was considering a rule change for all >automobiles, not simply the Pinto, and Ford wanted to show the cost for >millions of cars vs. the expected life savings (the $200k number was used by >the NHSTA). The analysis did not take into consideration any possibility that >the tank placement would be deemed a defect and there would be jury awards. >Ford never thought the car was unsafe or had a design defect. [silly!] At the >end of the day, while the Pinto had special risks, it was no worse than other >comparable cars produced at the time.< I don't believe the last clause of the last sentence, but let that pass. I did not know that the NHSTA required c/b analysis at the time. It is better that they do so than if the policy of _laissez-faire_ were applied. That's not because c/b can substitute for democratic decision-making but because someone like I.F. Stone may be able to dig up the data that form the details of the c/b analysis and reveal the truth to the public. Of course, then the media system has to be set up in a way that allows the dissemination of that data. Currently, it's not (by and large). > The Pinto case is instructive because it shows the uneasy interaction between > cost/benefit analysis and a tort system. In the US fault-based tort system, > cost/benefit analysis in inherent in the very concepts of "negligence," > "design defect," "product liabillity, etc.," and the case law is explicit > that cost/benefit analysis is necessary in order to determine whether a > product is negligent, defective, etc. However, when you end up in front of a > jury acting in hindsight, and you have a "fault-free" victim sitting in the > courtroom, it is all but impossible for the judicial system to tell the > victim that precisely because the injury was predictable but outweighed by > theoretical benefit, he should receive nothing.< When I was on the jury for a civil case, the plaintiff's lawyer's expert presented a c/b analysis suggesting that the plaintiff deserved a certain amount of money. It involved a lot of smoke and mirrors (and I could spot at least one basic economic error). The good news was that the jury was smart enough as a group that we could separate the wheat from the chaff.[*] The plaintiff got something but it wasn't much at all, likely not enough to pay for the wasted time of hiring his third-rate lawyer (on contingency) and going through all the motions in court. (BTW, the defendants were businesses, including one large corporation with "deep pockets." But he plaintiff seemed to be in the business of raking in money by suing.) in another missive, David writes: >The revulsion toward cost/benefit analysis necessarily assumes that our >intuitive ethics are correct, and that a cost/benefit analysis should be >judged against whether it agrees with our intuitive ethics ...< FWIW, I presented a rejection of c/b analysis that didn't involve "revulsion." Instead, it involved the rejection of the way that costs and benefits are aggregated and argued for the subordination of c/b to democratic decision-making and democratic sovereignty. > I think the revulsion misses the point that (1) we have competing goods that > are often hard to reconcile, (2) our intuitive ethics are often based upon > incomplete and/or incorrect information, and (3) our intuitive ethics > necessarily has to come from somewhere outside of ourselves, at least in > part. Cost/benefit analysis plays a necessary party in addressing each of > these three issues and I find it almost impossible to comprehend how one can > determine what is ethical in any situation without incorporating cost/benefit > analysis.< As I said, we should see costs and benefits as both being _vectors_ (arrays of numbers) rather than as being _scalars_ (single numbers created via bogus aggregation). The individual numbers in the two vectors are the relevant data, not the sums. The only way to deal with competing goals, imperfect information, and subjectivity is to ground all decisions in democracy to the extent that it's possible. We cannot "solve" this political problem by simply assuming that market prices (or some other arbitrary set of prices) represents "true" costs and benefits and thus can be used to aggregate. Instead of solving the political problem, it's hiding it and sneaking in an agenda that involves market-worship. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. [*] Despite the presence of one idiot who was adamantly opposed to _all_ personal injury suits, that jury was impressive in its collective intelligence. That's been true with all the juries I've been on (including the presence of one idiot, the nature of whom varies with the case). _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
