Can we trust company executives to police themselves?
Why we need regulation for companies like GM: Company executives can’t be trusted to police themselves. They sometimes blindly pursue a “business case” as it kills us, writes syndicated columnist Nicholas D. Kristof.
Speaker John Boehner blasts “job-crushing regulations.” The U.S. House majority leader, Eric Cantor, prefers a variant: “job-destroying regulations.” That mantra has been repeated so much that we might think that all regulations do is crush, destroy, annihilate, maim, gut, crucify and extirpate jobs.
Yet think about Amber Rose, a 16-year-old girl in Maryland who was driving a General Motors car (way too fast, while drunk) with an ignition switch the company knew was faulty. She struck a tree and, because the ignition fault had switched off the electrical system, the air bag didn’t deploy. Amber was killed.
While GM says that 13 people died in connection with the faulty switches, a consumer group called the Center for Auto Safety says it has found 303 such deaths. GM has said it knew about this problem for a decade. It even devised a fix but chose not to implement it because of the cost, which would have been about 57 cents per car, according to congressional hearings. As an internal GM memorandum put it, there was no “business case” for preventing crashes.
And that’s why we need regulation: Company executives can’t be trusted to police themselves.
I’m sure those GM executives were good people who helped out their neighbors and donated to churches and charities, but they also had a moral blind spot.
That has been the history of business. Companies have achieved staggering productivity and vastly raised global living standards, but they have also repeatedly privatized profits while socializing risks.
In this century, it is estimated that 1 billion people will die prematurely because of tobacco use, according to “Lethal but Legal,” a new book about corporate irresponsibility by Nicholas Freudenberg, a professor of public health at City University of New York.
Put that 1 billion in perspective. That’s more than five times as many people as died in all wars of the 20th century.
Freudenberg notes that smoking grew in part because of deliberate manipulation of the public by tobacco companies. For example, tobacco executives realized that they could expand their profits if more women smoked, so they engineered a feminist-sounding campaign to get females hooked: “Women! Light another torch of freedom! Fight another sex taboo!”
In effect, tobacco companies manufactured not only cigarettes but also demand.
In recent years, with fewer cigarettes being sold in the United States, tobacco companies seem to have been targeting women and young people abroad. Philip Morris acquired an Indonesia tobacco company in 2005 and began marketing cigarettes as young, cool and trendy. This has been very successful, in part because Indonesia does not much regulate tobacco and in practice even children can easily buy cigarettes.
One 2-year-old Indonesian boy, Ardi Rizal, appeared in news reports a few years ago, puffing away and going through 40 cigarettes a day. His mom said he was addicted. Embarrassed at the reporting, officials intervened and helped Ardi quit, but plenty of other Indonesian children still smoke.
All this makes Indonesia a lucrative market for Philip Morris. Meanwhile, 400,000 Indonesians die annually from tobacco-related illness.
In the United States, industry is turning to its own new market: electronic cigarettes. These were originally conceived of as a way to help people quit smoking. As a result, they have largely avoided regulation, and even children can often buy them in the U.S.
But companies seem to be marketing e-cigarettes to young people in hopes of establishing new addicts. E-cigarettes are sold as e-hookahs, hookah pens or vape pipes, and they often have flavors like bubble gum, blueberry or grape.
Overall, sales in 2013 were double those of 2012. As my Times colleague Matt Richtel has reported in his terrific coverage of the issue, the liquids in e-cigarettes are powerful neurotoxins, and poisoning cases tripled in 2013 from a year earlier.
The Food and Drug Administration recently proposed rules for e-cigarettes, including a ban on sales to children. Is that “job-crushing regulation”?
Critics are right that regulators are sometimes too zealous and bureaucratic. Sometimes regulations do curb profits and undermine job creation.
But, on the whole, we need regulations to guard against human nature. The truth is that bad things usually aren’t done by evil people but rather by essentially decent people who go to work and get so wrapped up in the “business case” that they sometimes lose their moral compass.
So the next time you hear people denouncing “job-killing regulations,” remember that if there had been tighter regulations, smokers might not be dying every 6 seconds, and Amber Rose might still be alive. Wouldn’t that be worth 57 cents?
© , New York Times News Service
Nicholas D. Kristof is a regular columnist for The New York Times.