Ethics and Social Responsibility: Ford Pinto - Term Paper Example

Ethics and Social Responsibility: Ford Pinto The Ford Pinto case is a famous case in the history of social responsibility and represents a classic case of ignorance and negligence of human welfare on the part of management. The case also sheds light on the faulty design of products and the havoc they create in terms of deaths and causalities. The case has been justified and criticized on various ethical grounds, considering various ethical theories. The company’s reaction is discussed along with discussion on whether it was ethical or not. The case can be traced back to 1972 when several Pinto cars caught fire in accidents or collisions (Birsch & Fielder, 1994). The number of such incidents started becoming rampant, such that notice was taken of these incidents and a case was filed whereby the causes were investigated. A flashback reveals that Ford was on the verge of losing its market share to various Japanese companies that were engaged in the production of energy saving and fuel-efficient vehicles (Birsch & Fielder, 1994). Ford’s president, Lee Lacocca decided to recover the market share by designing a small car named Pinto. The Pinto was a small, fuel-efficient car which would weigh few thousand pounds and cost well under $2,000 (Birsch & Fielder, 1994). The car would be introduced in the market just within a span of 2 years, as opposed to the conventional 4 years (Birsch & Fielder, 1994). It seemed that it was more of a rush project, and the company had not dedicated enough time to its design as was necessary. The styling factor took precedence over all other engineering concerns, so much so that the company decided to position the gas tank behind the real axle. This was considered to be riskier and more prone to damage and fire during collisions. The model went for crash-testing and at that time the test revealed that if the collisions were made at a speed of more than 20 miles, the tank would leak and result in the gas leaking into the car where the passengers were sitting (Birsch & Fielder, 1994). However, the situation would be worse in real-life scenarios where any such collisions would result in fire and death of the occupants of the car. Surprisingly and contradictory to what the results suggested, the company’s management made the decision of continuing with the production of Pinto (Birsch & Fielder, 1994). This was based on several considerations. Firstly, the equipment in Ford’s assembly line was already functional and geared towards the making of this car; thus, by not producing it the company would bear significant loss. Secondly, the design complied with the basic minimum that the government and legal standards required. The requirement at that time was that the tank needs to be in place only if the collision is at a speed of less than 20 miles per hour (Birsch & Fielder, 1994). Thus, at any speed over 20 miles per hour, the government did not requirement the tank to be intact. Third, the company’s management was of the view that the car’s design matched with the design of comparable cars produced by other manufacturers. The final reason pertains to the Utilitarian line of reasoning. The company had conducted a cost-benefit analysis whereby it discovered that the cost of altering the gas tank would amount to $137 million whereas the benefit was only $49.15 million (Birsch & Fielder, 1994). This cost benefit analysis has come under scrutiny in various literatures. Firstly, it was rather erroneously assumed that the number of deaths caused by burns and the number of injuries caused by burns would be the same (Dowie, 1977). This is contrary to research which suggests that for each individual that dies from fire in car accidents, the number of casualties caused by burnt hands, faces and other body parts is always greater (Birsch & Fielder, 1994). The ratio assumed by Ford was 1:1, whereas, the ratio demonstrated by research is 10:1, a stark difference (Dowie, 1977). This has an impact on the company’s calculations also since Ford assigned a value of $67,000 to burnt cases as opposed to $200,000 for the deaths (Birsch & Fielder, 1994). Another deceptive calculation was that of the $11 assigned to the cost of a device that prevents fire (Dowie, 1977). The company’s confidential document which was not exposed to the concerned authorities states that the fire prevention could cost less than $11 per vehicle (Dowie, 1977). This is because of the “heavy rubber bladder” that was invented by Goodyear and was already available in the market at a mere cost of $5.08 per bladder (Dowie, 1977). The purpose of this bladder was to prevent spillage of fuel in the event of rupture of the tank. The final line of reasoning is highly debatable. In order to delineate on the critical aspects of this reasoning, it is important to note what utilitarianism is. The Utilitarianism ethics is based on the premise that individual’s course of action should be evaluated in terms of the costs and benefits that will be imposed on the society as a result of those actions (Mill, 1963). Thus, according to Utilitarian view, the correct course of action is one that maximizes the net benefit to the society (Mill, 1963). This is done when the costs are minimized and the benefits are maximized. According to this theory, individuals are seen as rational and utility maximizing entities. Several business decisions today are based on this principle; that is, the correct business decision is one that maximizes the net benefit to the society. Thus, the decision which is in the best interests of the society is one that maximizes the net benefit to the society. The founder of traditional Utilitarianism, Jeremy Bentham, argued that best and most valuable judgments are those that are based on objective considerations (Scarre, 1996). Thus, the benefits and costs of each public policy should be weighed and then the policy should be executed only if the benefits outweigh the costs. One major flaw with this theory is that it inherently assumes that the costs and benefits can be measured (Scarre, 1996). Thus, the value of the costs can be subtracted from the value of benefits to arrive at net benefits. Applied to the Ford Pinto case, the company arrived at a cost-benefit estimate associated with the modification of the gas tank. As mentioned above, according to the estimate, the costs weighed up to $137 million, whereas, the benefits were merely $49.15 million. In doing these calculations, the company had assigned a value to individual’s loss of life- a rationale which is highly debatable. It is not surprising that this study of cost-benefits by Ford revealed that the modification would reap lower benefits than costs; hence, the company ought not to go ahead with it. Thus, keeping this reasoning in mind, the company decided to move ahead with the sale of Pinto. The company’s managers had effectively converted virtually all costs into economic ones by assigning arbitrary values. Ford did not take into account the ‘intangibles’ such as the pain to individuals caused by the accidents, the misery suffered by the family members and the pain felt by those who’d lost their loved ones (Birsch & Fielder, 1994). The company had thus considered only two alternatives; that of redesigning the car and that of leaving it the way it was. It can be argued that the company had assigned a value of $200,000 to a human life; was this justifiable? (Birsch & Fielder, 1994). Furthermore, there’s a different perspective to seeing this situation, that propagated by Rights Ethics. The Rights Ethics is based on Immanuel Kant’s Categorical Imperative that states that every individual’s right to freedom should be respected and that all individuals ought to be treated equally (Butler, 2008). According to him, each individual have a moral right to this and that this moral right of individuals translates into duties for other individuals. The first foundation of this imperative is based on the principles of “universibility” and reversibility (Butler, 2008). Thus, individuals must ask themselves how they would feel if other treated them the same way and how would they feel if everyone did the same. Therefore, according to Kant, the immoral decisions and actions were those that one wouldn’t want for oneself (Butler, 2008). The second imperative states that individuals ought not to be treated merely as means; that is, their capacity to choose freely for themselves must also be developed. This clearly demonstrates that while the Utilitarians imply an ‘economically rational’ justification for actions, Rights Ethics correctly captures the human values and goes beyond the traditional cost-benefit analysis. Thus, the Rights Ethics overcomes many of the flaws associated with the Utilitarian view. Firstly, the utilitarian view simplistically assumes that all the consequences of an action can be quantitatively measured (Smart & Williams, 1973). This is not always the case. For instance, how could one assign a value to one’s life as in the case of Ford Pinto’s case? Secondly, it deals insufficiently with rights, morals and justice (Smart & Williams, 1973). As outlined in the preceding part of this paper, the Utilitarian view had suggested that Ford’s managers go ahead with the faulty design, thereby ignoring the principles of justice (that deals with distribution of benefits and burdens) and rights (that deals with right to freedom and well being). Hence, the question raised by Rights Ethics is that whether people should have had freedom to know what they are buying at the time they are purchasing. Therefore, an application of Rights Ethics would imply that Ford’s managers consider two aspects of their decision- reversibility and universibility (Birsch & Fielder, 1994). According to the former, the Ford managers might want to consider how would they feel if they were treated the same way if they were customer? This means that if the managers were in the consumer’s place (and were not aware they are buying a faulty product) how would they feel? How would the managers feel if they’d lost their loved ones in similar accidents as Pinto’s, how would they feel? The answer is obvious; none of them would embrace the idea of loss of human life. Thus, the question is not whether only a ‘few’ lives will be lost (Birsch & Fielder, 1994). The fundamental aspect is that even one human life is valuable and no compromise should be made on that. By asking yet another question such as “what if every car manufacturer did that?” the managers would definitely not be morally willing to go ahead with the faulty design. Thus, according to the Rights Ethics, each individual has the positive right (the right to life and liberty) as well as the negative right (of not having their right to life taken away by others). By going ahead with the project, Ford was essentially violating both the positive and the negative rights of individuals. A third context for analyzing the Ford case and its relation to ethics and social responsibility involves dealing with justice. This is best explained by the Theory of Justice by Rawls. Rawl’s theory explains the principles of distributive justice by arguing that people in the original position would prefer the principles of justice, which includes equal liberty, equal opportunity and difference principle (Poel & Royakkers, 2011). Thus, Rawls theory succeeds because it preserves the fundamental human and moral values. Furthermore, it supports the market system and the employment of minorities and disabled by ensuring equality of opportunities (Poel & Royakkers, 2011). Thus, this theory goes further beyond the Rights Ethics and can be viewed as an extension of the Rights Ethics theory because it condemns the immoral activities of bribery, nepotism, corruption. It goes beyond the traditional Utilitarian line of thinking by arguing that individual’s freedom to enter into contracts would be reduced if activities such as bribery and nepotism existed in the society. The principle of equal liberty works towards this end of reducing social evils such as bribery. Thus, John Rawl’s theory of justice is based on the execution of decisions based on original position. However, for that to materialize, individuals must consider themselves behind a veil of ignorance which ensures that they make impartial decisions not based on self interest. As far as the Ford Pinto case is concerned, it is useful to think of the original position that characterized the Ford managers as well as the consumers. From the viewpoint of the managers it is clear that profit was the main motive, and considering the fact that the car has successfully passed all the legal requirements, the price of the car was kept at around $2000(Birsch & Fielder, 1994). This was also in the consumer’s interests as they would prefer a car that is affordable, safe and dependable. The question then becomes how much consumers are willing to pay for the car’s safety. Logically, the car was safe enough to endure a rear end collision at a speed of 30 mph (Poel & Royakkers, 2011). Thus, applying the veil of ignorance in this context would render the position profitable for both the managers and the consumers. The result of Ford’s negligence was that Pinto appeared on the black list of Forbes in 2004 (Vago, 2009). Subsequently, the company was compelled to withdraw this model from the market under the pressure of National Highway Traffic Safety Administration (NHTSA) (Birsch & Fielder, 1994). However, previously the NHTSA did not feel the need to call on Ford to recall Pinto simply because there was lack of sufficient evidence. According to NHTSA, 180 deaths by Pinto were caused by a transmission problem and not the fuel tank issue (Birsch & Fielder, 1994). However, subsequently it had to order Ford to withdraw Pinto due to demands by pressure groups and the public itself. In 1978, Ford withdrew Pinto from the market; albeit gradually (Birsch & Fielder, 1994). At the same time the company provided a protective shield made of plastic to customers that would reduce the likelihood of the gas tank catching fire in the event of collision. On the contrary, Gary T. Schwartz in his paper provides contradictory arguments that favor Ford’s position. According to him, the figure provided for deaths by Pinto were inflated and that the actual number was far below the stated figures (Schwartz, 1991). He compared this figure ( of 27 deaths) to the total number of Pinto cars produced ( 2 million) and then concluded that this was not a significant proportion and that it was a “normal” and acceptable figure at that time (Schwartz, 1991). He further went on to say that the number of fatalities caused by Pinto was actually less than those caused by comparable imported cars at that time (Schwartz, 1991). As for the memo that Ford had not exposed to authorities, he argues that this document has its roots in NHTSA’s valuation of a human life as opposed to being a hidden, internal document. Consequently, he claims that when plaintiffs attempted to use the memo during the hearing in the court, the judge ruled out its usefulness for this purpose (Schwartz, 1991). Therefore, advocates of Schwartz’ view would argue that one cannot expect much from a cheap car. The car met the regulatory requirements of its time and some safety would need to be compromised upon to keep prices low. Towards the end it is important to recognize the lawsuits railed against Ford in this respect. Not only did the company suffer non monetary damages in the form of lost goodwill, but it had to pay the price for its negligence in the form of lawsuits which ranged from punitive damages to criminal charges. An instance of one such case is the accident in Indiana whereby three teenage girls died in a rear end collision between the Pinto and a van. The most damaging and costliest of these lawsuits was that of Grimshaw vs. Ford whereby the company ended up paying $6 million. To conclude, no matter how costly or damaging these lawsuits are, the damage caused to human life cannot be compensated for. The pain, sufferings and grievances of those who lost their loved ones can perhaps even not be compensated for. Ethics has always been seen as a source of protection of human welfare. By applying two of the three ethical theories, the Rights and the Justice, the Ford Pinto case is not justified. As history has it, the company’s rush decision resulted in negative publicity, several deaths and a recall of the Pinto model. Thus, the Rights and Justice Ethics correctly imply that the decision in retrospect was immoral; Ford should not have gone ahead with the faulty design. References: Birsch, D., & Fielder, J. H. (1994). The Ford Pinto case: a study in applied ethics, business, and . New York: State University of New York Press. Butler, C. (2008). Human rights ethics: a rational approach. Purdue University Press. Dowie, M. (1977, September/October ). Pinto Madness. Mother Jones Magazine . Jeurissen, R. (2007). Ethics & Business . Netherlands: Royal Van Corcum. Mill, J. S. (1963). Utilitarianism. London: Parker, Son and Bourn. Poel, I. v., & Royakkers. (2011). Ethics, Technology, and Engineering: An Introduction. New Jersey: Wiley-Blackwell. Scarre, G. (1996). Utilitarianism. London: Routledge. Schwartz, G. T. (1991). The Myth of the Ford Pinto case. Rutgers Law Review , 1013-1068. Smart, J. J., & Williams, B. A. (1973). Utilitarianism; for and against. Cambridge: Cambridge University Press. Vago, S. (2009). Law and society. New York: Prentice Hall. Read More