238. The Ford Pinto case
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On the other hand, history has proven that it is necessary to regulate business in at least one area - public safety.
There is ample evidence that consideration for the safety of the public is not always a priority in business decisions.
Back in 1912, the Titanic smashed into an iceberg, killing hundreds of people.
It was going too fast through a large collection of icebergs, while attempting to set a speed record.
Unfortunately, there were not enough lifeboats to accommodate the passengers.
Usually when such a tragedy occurs, the company is not found guilty.
Instead, safety regulations are enacted for future cases.
In the future, ships were ordered to carry a sufficient supply of lifeboats.
In 1978, the Ford Motor Company was indicted on the charge of homicide.
This was the first time such a charge had been brought against an American corporation.
It related to the deaths of three teenage girls who were burned up when their Ford Pinto was hit from behind.
The prosecution charged that the Ford Company knowingly manufactured a dangerous car.
Behind this story is the pressure on Ford to produce a small car to compete with imported vehicles.
The Pinto was rushed into production in spite of warnings that the gas tank was in a dangerous position.
It would have cost Ford an additional $11 per car to fix the problem.
Ford decided not to.
Later, Ford produced a cost-benefit analysis to justify their position.
Estimating that the faulty design would cause 180 additional deaths,
Ford valued these at $200,000 per person.
This cost was far less than equipping 12.5 million vehicles with $11 protectors.
So Ford felt that they had made the right decision.
Ford executives were acquitted on the charge of homicide.
Nonetheless, Ford had to pay out millions of dollars in out-of-court settlements.
These were paid to families who had lost relatives in Pinto accidents.
This case shows how far a company will go to protect its profits.
For more than eight years, Ford lobbied the government not to tighten safety standards on cars.
As long as the Pinto was profitable, Ford did not want to change the design.
Although Ford made a lot of money on the Pinto, their reputation was tarnished.
The Ford Pinto case is one of many which point to the need for governments to set safety standards.
No business wants to recall its products, or leave them sitting idly in a warehouse,
or expend large sums of money for upgrading and repairs.
No airplane company wants to have its planes in the hangar when they could be in the air making money for the corporation.
As a result, commercial companies are seldom motivated to look closely at product or service safety.
This is especially true today when the "bottom line" in business is seen as a justification for every decision.
For this reason, governments have to oversee issues of public safety.
Most businesses are too busy working on profits to have much time or concern for doing so.