[richlevy]

Yes, but at the opposite end of this are corporations who measure behavior against ridiculously low fines and lapse enforcement and who are held in check only by the possibility of lawsuits.

The famous Ford Pinto example.

*Expected Costs of producing the Pinto /with/ fuel tank modifications:*

* Expected unit sales: 11 million vehicles (includes utility
vehicles built on same chassis)
* Modification costs per unit: $11.00
* *Total Cost: $121 million
*[= 11,000,000 vehicles x $11.00 per unit]



*Expected Costs of producing the Pinto /without/ fuel tank
modifications:*

* Expected accident results (assuming 2100 accidents):
180 burn deaths
180 serious burn injuries
2100 burned out vehicles
* Unit costs of accident results (assuming out of court settlements):
$200,000 per burn death*
$67,000 per serious injury
$700 per burned out vehicle
* *Total Costs: $49.53 million
*[= (180 deaths x $200k) + (180 injuries x $67k) + (2100 vehicles
x $700 per vehicle)]

Thus, the costs for fixing the Pinto was $121 million, while settling
cases where injuries occur was only $50 million. With such a difference
in costs, Ford decided to manufacture and market the Pinto without fuel
tank modifications.

Now the customer was never given the choice whether to buy the modification or not. I would certainly have paid the $11. Ford had all of the information and the opportunity to correct an issue. They had already assigned a value to each human life (this is not necessarily an 'evil act'. Actuaries regularly do the same thing).

Still, decisions like this demonstrate the need for the tort system. Bad corporate behavior is constrained by the threat of bad publicity, government oversight, and threat of legal action. Not every incident will end up as a national story. Government oversight depends on the mood of the administration and the diligence and competence of government employees, who are paid the same whether they actively pursue and win cases or not. Trial lawyers are paid to represent their clients and win. They fulfill the same function for their clients as the private contractors do in Iraq do who substitute for government agents who it seems have been deemed understaffed and/or under equipped to fulfill the role.

This has been effective to the point that the business community has been arguing for tort reform, attempting to cap (and therefore weaken) this system of private remediation. If this were to occur, companies (like Ford in this example) could safely set a per-victim cap, no matter how egregious the violation. For examples we only need to look at the adulterated products coming from China. If a child had died because of poisoned toothpaste, would anyone have been happy if the award were limited by law to $200,000?