Risk Keeps Markets Free

It is a basic principle of capitalism that in the marketplace everyone seeking gain also incurs some risk of loss. Gains should go to those who provide a superior product or service, and losses to those who provide an inferior product.

Lawsuits have an important role to play in this system. They force corporations to pay the human cost of dangerous products. This prevents our marketplace from being flooded with dangerous products and actually improves competition in the marketplace, making the environment friendlier to businesses that operate on a human scale.

Corporations Have No Conscience

In 1906, Ambrose Bierce defined the corporation as “An ingenious device for obtaining individual profit without individual responsibility.” Recent Supreme Court decisions notwithstanding, corporations are not human and do not have a conscience. They feel no hesitation about introducing and even aggressively promoting a dangerous product if they feel they can profit by it.

If you need examples of this, look at the case of the Ford Pinto gas tank or the Dalkon Shield. Consider, for example, that it is the large-chain for-profit nursing homes that do not hesitate at providing fewer nurses to care for residents.

Small businesses, on the other hand, often take personal responsibility for their products. They stand by the quality of their work in a real, personal way, and when they become aware of a dangerous defect are more likely to restrict, repair, or withdraw the product.

In a marketplace where dangerous products are not penalized for the human costs they cause, small businesses are at a competitive disadvantage against their heartless adversaries.

Larger Businesses Are More Efficient at Making Dangerous Products

As with any production on a large scale, the production of a dangerous product benefits a larger corporation more than a smaller business. For a large corporation, an $11 savings on the production of a $1850 automobile can be aggregated over a large production run.

For a smaller business, it is harder to utilize the savings on the same scale, putting them at a competitive disadvantage as long as larger corporations are allowed to sell its dangerous product without paying the human costs.

Corporations Have More Influence over Government Officials

With their larger revenues, larger businesses that are already in the marketplace have more influence over government officials than smaller ones. This puts them in a better position to negotiate tax breaks, labor concessions, and even negotiate with regulatory officials for friendlier resolution when a product is shown to violate safety standards. Consider, for example, how Chevy was able to avoid ever issuing a recall on trucks with the side saddle fuel tank.

Lawsuits can target all wrongdoers equally and penalize them in proportion the level of their wrongdoing, not on the level of their influence with a government agency.

Lawsuits over defective products and dangerous services give a powerful market incentive to offer quality products and services. Join the fight to keep our markets free.