Cost-Benefit Analysis and the Ford Pinto Essay

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According to the principles of modern corporate ethics, every private business bears direct responsibility for the well-being of the community and environment, in which this firm operates. The company must not pursue only its own commercial interests but the interests of society as well. Moreover, the profitability of this enterprise heavily depends on its ability to maintain good relationships with the public. Inability to meet these standards inevitably leads to a decrease in sales and the loss of profit. However, there are cases when the private business deliberately violates these norms because hoping that it would this unethical conduct would go unnoticed and the public will not be able to take any action.

Such firm as Ford Motor Company (FMC) has frequently been criticized for its failure to ensure the safety of American consumers. Its automobile the Ford Pinto lacked a safety kit and this made the car more prone to fire. Furthermore, the management was aware of this drawback, but nothing was done to rectify it. It should be borne in mind that the cost of this improvement was approximately eleven dollars per one car. The company made this decision on the basis of cost-benefit analysis. In other words, they estimated that the cost or redesign would be much greater than the costs of lawsuits (Friedman et al, 70). In fact, they tried to calculate the value of human life. Certainly, from a moral point of view, this behavior is impermissible as human life is invaluable and it cannot be measured in terms of numbers. But this decision had other important implications.

In his article Michael Friedman strives to analyze the criteria according to which this decision was made. First, the author sets facts on the idea that cost-benefit analysis is the most common technique used by the management of Ford (Friedman et al, 70). In fact, it is utilized nowadays by the firms officials. Thus, this fact should not be so astonishing. The only exception is that at that time people became aware of the firms policies.

Undoubtedly from an ethical perspective, such a decision may seem outrageous to many people. It even appears to be utterly unthinkable because average people cannot imagine that their safety may not be worth of $ 11 improvement (Friedman, p 66). But this example shows that a great number of firms are concerned only with their position in the market rather than the well-being of average citizens. At the present moment, the consequences of such a decision could have been more severe. The thing is that Ford could simply lose the competition to foreign automakers, for example from Japan or Germany and the competition was truly stiff at that time because new manufactures have already entered American markets (Friedman et al, p 63). In fact, Ford was saved by a mere chance because the number of car accidents was relatively small.

Overall, it is quite possible for us to say that the mere pursuit of profit is morally impermissible and dangerous to any enterprise. In the modern age, customers can profoundly impact the development of any company. Provided that this event occurs in the modern age: customer dissatisfaction can immensely decrease the income level even of such giant as Ford Motor Company. This case illustrates that those claims about corporate social responsibility are mere lip service or hollow promises because they are not supported by any actions. Furthermore, this situation demonstrates that the value is human life is sometimes estimated by means of cost-benefit analysis.

Works Cited

Almeder. Snoeyenbos, M., R., & Humber J. Business Ethics: Third Edition. Prometheus Books, 1992.

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