Case Ford PINTO

1. Was there something wrong with the analysis Ford management used?

The ethical theory that best fits the way FORD addressed the issue is the theory of utilitarianism. Ford makes a cost-benefit study to make the decision of making or not "Pinto" with detected faults.

Ford management decided that waiting for accidents and complaints from those affected was much cheaper than calling users to correct design errors, since this option cost three times more than the other alternative. So he decided to assume responsibility for any claims arising in that respect.

Ford decided to build the Pinto despite the results obtained in the tests saying:

1. The design complies all legal and governmental regulations in force. This occurred just because the government regulations required then only that the gas tank had to remain intact after a rear-end collision at a speed of 32 kph.

2. Pinto safety was comparable to other cars’ produced by other companies.

3. Internal cost-benefit study, the costs of modifying the Pinto would not be offset by the benefits. The study revealed that modifying the gas tank of 12,500,000 cars would cost about US $ 11.00 per unit; US $ 137.5 millions total cost.

Furthermore, the study indicated that if they didn’t use the safety device, it was estimated that 180 people would die, 180 people would be seriously injured and 2,100 vehicles would get burned. The cost of a dead person was $ 180,000, the one of a seriously injured person $ 67,000 and to repair a burnt car was $ 700.

Multiplying these costs, the total rises to $49.5 million, a number much lower than the $137.5 million that cost to include the security device pond.

Utilitarianism is born with Bentham and finds its best expression in Mill’s defense. It assumes that happiness is good itself. Mill proposes that the right action is the one that generates the greatest amount of happiness to the highest number of people. That’s why his theory is widely characterized as consequentialist: the approach is not on the agent and its intention, as in the case of Kant (ethics), but in action and its consequences. Utilitarianism does not imply selfishness: sometimes to promote greater amount of happiness to the highest number of people, happiness has to be put away. (It does not happen in this case as, in my opinion, Ford keeps a selfish position.

Ford thought that his decision would make more people happy than redesigning the car. Since due to this decision the company gains (lower cost) and so the society does (people can afford this cheaper car, but not the redesigned one).

This idea is reflected in Milton Friedman’s video. Most of the people is taking benefits from it, as buying a car is longer associated to the risk of having an accident.

In addition, buying a cheap car makes this risk increase. Customers who buy low cost cars assume to take more risks. This risk is price. In this case the risk is death and physical damages. However, not every buyer has accidents so the overall benefit to proceed with the construction of Pinto is greater than the cost of the number of dead people .Furthermore, if Pinto was redesigned, the number of dead people would decrease, but it would never be zero. (“A car is a killing machine” as it is common said)

Another utilitarian author as Adam Smith argues:

"... As we cannot be fully aware of the consequences of our actions, our only moral guidance to our disposal is the search of desires and our interests. According to Smith, it is acceptable for each person to pursue their own interests because it produces a morally desirable outcome for society, through what he called the invisible hand of the market. He said that in a free market with competition and good information, people will realize that the best way to satisfy their desires is participating in the market with good products and offers to win consumer preference. Thus, selfishness ends up producing social benefits "(Adapted Offprint UPC - business ethics -. 2008 )

Concerning to this theory, FORD just look for its own interests (rather pay compensation to redesign) and it is acceptable. The market itself will lead to good moral outcomes for society. If costumers consider a high risk in cars they will not buy .The problem we can find here is that Ford does not report the high insecurity and failures. Watching the advertisements, buying PINTO is all advantages. To FORD and Milton Friedman the fact that it is a low cost car means all this.

Other weaknesses of this theory are:

Is it worth wasting time on a cost-benefit analysis if your final model release Pinto is indirectly a murder? Companies cannot have within its agenda the power to decide people’s lives prices. How much it cost a human life? We can consider that, for Ford, a human life costs just the difference between paying compensations and redesign a car. A murder can’t be argued or considered as an option (From the legal point of view) .It is not just unethical but irresponsible, immoral and illegal.

It is illegal because of the indirectly guilt of someone’s death. FORD fulfill the law on minimum safety standards on cars in its early years but not if we analyze it in its generality. Also as we learnt in class, ethics goes beyond what is legal or not.

All companies, at least once, have been in situations where their managers must make decisions that do not always benefit everyone involved in the case. It is very common to make decisions that will bring negative effects on other people or entities. However, there is a limit that anyone, natural or juridical, cannot cross: the line of legality. The law establishes minimum guidelines to enable life in society, but they have been created by humans so it is imperfect and we should try to make ethically sound decisions. (In this case, law is modified after a few years because it is revealed that these standards are not enough)

Regarding the legality, many people would put radical examples like:

"The woman, who was feeding her newborn son without a dime, so was forced to steal."

Such cases, although involving a violation of the law, are valid under the ethical point of view since it is human beings in situations of imminent danger. It is not the case of a company that decides whether to market a car model whose users might die. For Ford, if the company did not remove the Pinto model from the market, the company would not go bankrupt; it would just lose their investment and recover soon. But that's all.

A company is the result of the union of

...