The GM Verdict and the Value of Your Life

The GM Verdict and the Value of Your Life

The GM Verdict and the Value of Your Life

Moneybox
Commentary about business and finance.
July 14 1999 6:38 PM

The GM Verdict and the Value of Your Life

When you look at Friday's verdict by a Los Angeles jury that ordered General Motors to pay $4.9 billion to six people who were burned after a rear-end crash blew up the gas tank in their Chevy Malibu, you have to wonder whether society's approach to the question of product safety isn't, in essence, disingenuous naiveté.

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Now, the verdict is unlikely to stand. The judge in the case prevented GM from introducing evidence on the overall safety record of the Malibu and allowed into evidence a 1973 memo from a GM engineer that tried to estimate how much burn-related deaths cost GM on a per-car basis. While the memo has irresistible shock value (the cost was $2.40, by the way), it was unrelated to the design of the Malibu, and GM in fact insists that the engineer wrote the memo of his own initiative. (Needless to say, this last argument sounds rather too convenient.) But when coupled with the plaintiffs' attorney's contention that it would have cost GM just $8.59 per car to fireproof the Malibu--a number that he said he got from GM "internal documents"--the memo seemed like stark proof that GM had made a cold calculation and sacrificed people's lives (actually, the plaintiffs didn't die, but they were severely hurt) for the bottom line.

What's disingenuous here is not the plaintiffs' introduction of the memo, of course. What's disingenuous is the idea that any kind of calculation of the cost of people's lives is somehow morally reprehensible and punishable. To be sure, $8.59 is not very much money, even though the cost is not $8.59 but rather $8.59 times however many cars GM makes (since GM can't just fireproof one car), and even if the chance of a fuel-tank fire is something like 1 in 200,000. But there wasn't convincing evidence in the case that $8.59 was really the magic number. What there was was evidence that GM might have considered the cost of making their cars absolutely safe, and then decided that it was too expensive. And it was this that the jury was attacking.

Now, I know this point is obvious, but we all make these kinds of calculations every day. We have speed limits that guarantee that tens of thousands of Americans will die every year, because it would just be too annoying to drive 30 mph everywhere. We don't have national health insurance because it would be too expensive or too unwieldy or too "socialistic." We don't spend all we could to make our homes or cars safer because it would be too expensive relative to the risks involved. Choosing between safety and cost, and between safety and convenience, is inevitable. That doesn't mean that always choosing cost is the right decision. The auto industry's foot-dragging on seatbelts and later on air bags does it no credit. But it does mean that there really are no free lunches and the constant pretense that there are--a pretense that propels so much product-liability law--is the very definition of willful ignorance.

The real irony is that we make these tradeoffs even in the most potentially apocalyptic situations. Take Richard Preston's article in last week's New Yorker, in which he basically argues that a smallpox epidemic could erupt at any time and that if it did, the United States would be devastated. One of the oddest parts of Preston's piece is his discussion of why a real program for vaccinating Americans hasn't been put in place. "At a series of meetings at H.H.S., a top Dynport executive said that forty million doses could be quite expensive," Preston writes, and then says that same executive explained that a study to estimate costs would have cost about $2.5 million dollars. The implication--not of Preston, but of those he quotes--is that the cost of the whole thing would be prohibitive.

Now, as far as I could tell from the article, a smallpox epidemic would be the end of the world, or at least of the United States. Wouldn't you want the government to pay, say, $300 million or even $3 billion to prevent that? Apparently, the answer is no, which suggests that even in the case of mass annihilation, there is a price we are not willing to pay. Next to that, I guess GM doesn't look so bad.