Business Ethics
Ford Pinto Case
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VW Beetle became very popular
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Ford countered with a new car model “Pinto”
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extremely cost-efficient manufacturing
- cheaper gas tank (just 1$ cheaper)
- cheaper tank was unsafe
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car with cheaper tank exploded, killing a family
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decision between
- reconstruction of all cars → expensive
- compensating the families after accidents
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decision was to compensate families after fatal crashes
- decision against human lives for extra profit
- consumer rent (lives) vs producer rent (money)
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whistle blower leaked this decision making
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who is responsible for the damages?
- the engineers who made the tank
- the managers that did nothing
- the CEO that made the decision
VW emissions scandal
- cheating when measuring carbon emissions
- again… who is to blame?
- the engineers that made the cheating machinism
- the middle manager that pressurized the engineers
- the managers that set unrealistic expectations
- the CEOs that did not care enough
Systems
- if there are incentives to cheat people will cheat
- behaving in a morally right way is expensive
- how can one enforce morally right behavior
- innovation is a solution
- creativity of founders are key
- not just technical tradeoffs
- also moral tradeoffs
- politicians, government and wealth are not going to solve the problems of the future
- entrepreneurs will solve the problems with innovation
- consuming socially responsibly
- selecting a responsible employer