In contemporary business settings, ethics is often perceived primarily along the lines of workplace ethics, negotiations, ethics of management, and cultural diversity. However, this subject has many important areas, and one of them is focused on the relationship between the business and society. These relationships often result in clashes because they normally involve a large variety of very different issues.
Naturally, in a non-perfect world, where unanimity is rarely the case, fulfilling the need of one side always leads to the dissatisfaction of another side. That way, confrontations are never-ending and so are the ethical challenges faced by the contemporary businesses. This paper will focus on the exploration of a well-known business ethics case study known as the Ford Pinto case—a scandalous event that resulted in a multitude of fatalities caused by a major product liability. Namely, the business and legal issues that resulted from the case will be discussed.
To be more precise, the Ford Pinto case will be evaluated from the legal point of view to establish which laws were violated in the process of corporate decision-making that led to the production of the Pinto. Further, the decisions of the Ford staff will be explored from the perspective of Milton Friedman’s philosophy. In addition, the company’s moral responsibilities to the stakeholders (the customers in particular) will be discussed. Finally, an ethical framework that impacted Ford’s executives will be applied to the case.
Ford Pinto Case Overview
Competing against the Japanese car manufacturers, which used to be considered as superior to the American ones in terms of product quality, the leaders of Ford decided to create a new vehicle known as the Ford Pinto. The vehicle was also regarded as “Lee’s car,” which is a reference to the president of Ford at the time, Lee Iacocca (Shaw & Barry, 2014).
The new car was designed to be rather light (no heavier than 2,000 pounds), and its price was assigned as no higher than $2,000 (Shaw & Barry, 2014). Apart from these standards, the manufacturers had to fit into one more frame—that of time. To be more precise, the time they were given to design and produce the Pinto was abnormally short—two and a half years instead of the usual three; that schedule meant that the stages of design adjusting and production line tooling were to overlap (Shaw & Barry, 2014).
Many of the car prototypes were tested for the purpose of meeting the state standards of NHTSA that required the cars to endure rear-end collisions of 20 mph. All of the prototypes (including the Ford Pinto) failed to withstand this level of impact; the results were the loss of fuel and broken gas tanks (Shaw & Barry, 2014).
Facing this problem, Ford’s leaders had to decide whether to release the existing vehicles with a dangerous flaw and put the consumers at risk or to spend more time redesigning the cars. After cost-benefit reasoning, the choice was made to stick with the flawed Pinto. As a result, the vehicles caused a number of deaths related to rear-end collisions and the ensuing fires; to be more precise, the critics estimated the number of victims of the flawed car design to be around 500 (Shaw & Barry, 2014). About fifty lawsuits were filed against Ford for the accidents involving Pinto cars and collisions, including a charge with the homicide of three teenagers, where Ford was found not guilty (Shaw & Barry, 2014).
The company never agreed with the statement that Pinto cars were unsafe in comparison with the other models; however, the critics maintained that Ford officials’ decision to release the cars was an error due to their easy to rupture gas tanks with an unsafe location in a very soft rear end (Shaw & Barry, 2014). Practically, the cause of the disagreement was the criticism of Ford leaders as responsible for unethical decision-making that put the consumers in danger for the sake of financial benefits.
Three Laws Violated by Ford
The case of the Ford Pinto violated many types of laws; three of them are criminal law, consumer protection law, and tort law. Further, each of these laws is explored in detail in reference to the case of the Ford Pinto.
Criminal Law
As specified by Brickley and Gottesman (2016), a breach of the criminal law is punishable when it involves a combination of two elements: mens rea (guilty mind) and actus reus (guilty action). The guilty mind can be defined as having criminal ideas, and guilty actions are divided into four categories: the acts committed intentionally, negligibly, knowingly, and recklessly (Brickley & Gottesman, 2016).
In the case of the Ford Pinto, the guilty act definitely involved the knowledge of the perpetuators of the danger their decisions represented. Namely, the officials were aware of the flawed design of the cars as well as their inability to match the safety standard established by NHTSA. Besides this, the manufacturers even conducted a cost-benefit analysis and evaluated the potential danger the cars presented to the consumers. This knowledge did not stop them from selling the vehicles. One may conclude that the guilty act was committed knowingly with the presence of guilty mind interested in financial benefits.
Consumer Protection Law
Sometimes the practices of some businesses may result in negative consequences for the consumers; this phenomenon is recognized as an abusive business practice and is addressed by consumer protection law (Consumer Rights – Consumer Protection Law, 2016). To be more precise, consumer protection laws are designed specifically to hold the manufacturers and sellers responsible for actions that victimize the consumers via the unethical pursuit of profit.
The consumers may become easy targets for such unlawful practices due to their lack of information or the power to bargain (Consumer Rights – Consumer Protection Law, 2016). In the case of Ford Pinto, the manufacturers failed to inform the consumers about the weaknesses of the vehicle and its potential implications for the people’s safety. As a result, many individuals were harmed and killed.
Tort Law
Tort law is specifically designed to provide protection to the parties that become injured as a result of a harmful act of another party; that way, the loss of the harmed party becomes the liability of the responsible party (Tort, n. d.). In other words, the damages suffered by the injured party can be paid back by the initiators of harm in monetary form. In the case of the Ford Pinto, the losses of the consumers affected by the fires and explosions of the flawed vehicles were covered by Ford; such losses involve the loss of income due to sick leave or disability and the cost of medical treatment.
Friedman’s Philosophy and Ford’s Staff
The character of the Ford Pinto case in relation to the free market issues was discussed by Milton Friedman in one of his lectures given in the 1970s. Friedman’s take on the case was rather controversial as he pointed out that the problem was not of moral but of economic character (Milton Friedman on the price of human life, 2011). This is the principle that became the basis of Ford’s analysis of the issue when they realized that the Pinto vehicles had a flaw.
Practically, the Ford’s leaders and analysts rejected the principles of morality and the intuitive feeling of wrong and right and instead treated the financial side of the problem as isolated from all the other components, assuming that is was the rational approach. Friedman’s approach was misused by Ford during their cost-benefit analysis. Friedman disagrees with the calculations they made; however, the basics of the solution and decision-making process practiced by Ford in reference to the Pinto align with Friedman’s philosophy.
For the executives of the company, Friedman’s philosophy may have served as a strong justification of their flawed models and the decision to go through with their release. Dry and emotionless calculation of monetary costs and benefits of selling cars and the loss of human lives taken objectively to find the right solution led to multiple lawsuits and risks for the organization.
Ford’s Moral Responsibilities
Continuing to connect the Friedman’s philosophy with Ford’s decision concerning the release of the Pinto cars, it is crucial to mention that the philosophy emphasizes one important aspect: the need to follow the rules of the game (Returning to the Pinto Case, 2016). In other words, sticking to the rules of the games referred to Ford’s obligation to avoid the breach of criminal laws and put their customers at risk by means of selling flawed cars.
At the same time, at the moment when the cars were sold, the consumers were not in danger. Basically, the law of time was not breached by Ford as the effects of their decisions were not the reality at the time, and neither were the laws violated in the collisions (Returning to the Pinto Case, 2016). Also, it is possible to say that the consumers should have learned about the advantages and disadvantages of the cars before purchasing them, making the buyers partially responsible; however, this approach does not remove the fault from the manufacturers (Returning to the Pinto Case, 2016).
Ethical Framework That Applies to the Situation
The utilitarianism is the framework that Ford’s analysts relied on while conducting a cost-benefit analysis of the release of the Pinto cars (Poel & Royakkers, 2011). Practically, the calculated social costs of the potential car accidents were not outweighed by the costs of waiting for the release and making improvements. The utilitarian perspective was based on the evaluation of the costs from the point of view of the consumers and not Ford (Poel & Royakkers, 2011).
At the same time, the costs calculated by Ford can be recognized as arbitrary (for instance, how can one calculate the value of pain?). Also, by making that calculation, the researchers dismissed the fact that the release of the cars would lead to the deaths of people, thus committing an ultimate act of immorality. Ford’s utilitarian-act argument does not work, because it treats utilitarianism as merely a practical approach, rejecting its ethical component that does not allow sacrificing lives and the wellbeing of people for financial rewards.
Conclusion
To sum up, the Ford Pinto case is one of the clearest examples of consumer rights abuse by a manufacturer. The most disturbing aspect of the case is that numbers and calculations were used as the basis for a decision that was supposed to rely on legal and ethical rules. In addition, some of the variables and numbers presented in Ford’s report are arbitrary. Because of this, the release of the defective cars resulted in the deaths of many people and multiple lawsuits for the company.
References
Brickley, S. D. & Gottesman, B. M. (2016). Business Law Basics.
Consumer Rights – Consumer Protection Law. (2016).
Milton Friedman on the price of human life. (2011).
Poel, I. & Royakkers, L. (2011). Ethics, Technology, and Engineering: An Introduction. New York, NY: John Wiley & Sons
Returning to the Pinto Case. (2016).
Shaw W. H. & Barry, D. (2014). Moral Issues in Business (8th ed.). New York, NY: Cengage Learning. Tort. (n. d.).