This seems to be the core reason why pure capitalism is a failed concept. There must be regulatory oversight to ensure that what is done MOST RIGHT and not CHEAPEST.
Thinking that "fuck it, we'll risk loss of human life and possibly having to shut down the company" isn't due to capitalism, it's psychopathy and I'm fairly sure that never happened.
Anything that goes wrong is due to dysfunctional management, not greed.
Ford literally did a cost/benefit analysis for fixing the Pinto versus societal costs of injuries and deaths, and went with the cheaper option. They actually put it to paper and sent that to the NHTSA to argue against fuel system regulations.
“Dysfunctional management” is a direct function of managerial incentives, which is generally capitalistic greed (aka “obligation to maximize shareholder value”)
They thought they went with the cheaper option, but in fact they only considered the value of a life as estimated by the NHTSA ($0.2M). In reality, the damages that juries tended to assign for each needless loss of life turned out to be more like $100M.
If Ford had accounted for those punitive costs in their calculation, then the outcome of the cost/benefit calculation would have overwhelmingly favoured a fix. The real business problem was not the empathy-free approach, but poor mathematical modelling.
> They thought they went with the cheaper option, but in fact they only considered the value of a life as estimated by the NHTSA ($0.2M). In reality, the damages that juries tended to assign for each needless loss of life turned out to be more like $100M.
That was in large part due to the disgust over the report they had penned.
> If Ford had accounted for those punitive costs in their calculation, then the outcome of the cost/benefit calculation
Would still have been a cost/benefit calculation rather than a moral or ethical one, aka capitalistic greed.
Every auto manufacturer does the same thing. The Ford Pinto case was particularly poorly handled. But for any given car design, it's always possible to further improve safety by making it more expensive. A Mercedes-Benz S-Class is far safer than a Nissan Sentra by any objective standard. Should we tighten safety requirements so that every car is as safe as the S-Class, and costs about as much? Where do we draw the line on safety regulations?
If we tightened safety regulations so that every car was as safe as the S-Class then cars as safe as the S-Class would dramatically drop in price, simply by virtue of there being more of them.
As for where you draw the line on safety regulations, the optimum answer is always “considerably past the point that business owners start complaining about excessive regulation”.
The S-class is a bad example, because it is expensive for other confounding reasons.
However, all else equal, a vehicle with more active and passive safety features and more safety engineering is more expensive. Even after you account for economies of scale.
For example, airbags are extremely mass produced and have just about as much economies of scale as possible. But, in countries where they are not mandated, you can still find cars offered without them, because they are cheaper. The same is also true for vehicles without UHHS safety cages, ABS, stability control, etc. All of these things cost money.
Take all the safety items that do actually contribute to the S-Class sticker price, now mandate them in all cars. The price of all cars goes up, sure, but also the cost of a car that’s as safe as the S-Class is goes down. What you’ve done is decreased the cost of having the more safe option while eliminating the less safe option, precisely because most of those currently premium / luxury items simply haven’t benefitted at all from economies of scale. The airbag example proves the point, inside any country that mandates them. Are there cheaper and more dangerous cars available without them? Sure… but not inside the borders of any country that cares about the survival of its citizens.
We should all live in countries that mandate extremely high safety standards and spend their time worrying about how to raise the average income to compensate, rather than in a country that accepts unreasonable risk just to keep wages unreasonably low.
Don’t make excuses. Putting psychopaths in the drivers seat is a precipitation of capitalism. Capitalism decides the ultimate KPI, and eventually things shake out this way. We don’t just get to say, yes, there goes another psychopathic executive, and wash our hands of the whole thing. Christ. We all make systems for a living. Look at indirect consequences.
Even psychopaths don't want to end up disgraced or in jail. So maybe it's the lack of punishment we dole out to these kinds of people.
Nowadays companies can seriously suffer by mishandling their "attitudes" over social justice issues, my gut reaction was that if that's true how could they get away with a plane falling out of the sky. Still a bigger deal than dozen people dying in cars with faulty fuel systems, perhaps just because of the optics.
> Even psychopaths don't want to end up disgraced or in jail. So maybe it's the lack of punishment we dole out to these kinds of people.
You're describing effective regulatory oversight. That is a manual control on capitalism, and something capitalism inevitably fights against. Psychopaths exist and look for ways to exploit capitalism, including "fuck it, we'll risk loss of human life and possibly having to shut down the company", which you said isn't due to capitalism. But it is: it's due to the combination of capitalism and human nature, but we can only control the former. The solution is regulatory oversight, as you just pointed out.
Also: realize that psychopaths will absolutely risk shutting down the company if they think they can exit with a personal profit before that happens. CEOs routinely fuck over the longevity of the companies they lead, knowing they won't be around for the fallout. In fact it's hard to find situations where this doesn't happen -- it's almost always private companies or companies where the CEO is completely entrenched.
> Don’t make excuses. Putting psychopaths in the drivers seat is a precipitation of capitalism.
That's a disingenuous take. There are plenty of examples where psycho apparatchiks of anti-capitalist regimes made decisions "for the common good" that resulted in loss of life and even genocide and still they hailed those results as a win.
GP said "System A doesn't work without controls" and you replied "that's disingenuous: System B also doesn't work without controls". Okay? That has nothing to do with it.
You missed the whole point. The point is that having psychos in charge is not a characteristic of an economic system. It's a characteristic of forming organizations manned by human beings.
It's terribly disingenuous to use that as a pretext to bash an economic system as if you don't have the exact same problem affecting organizations that are not ran based on that economic system. It's like claiming that the fact that water is wet is a precipitation of capitalism.
Anything that goes wrong is due to dysfunctional management, not greed.