Legacy Exclusive Member
- Oct 8, 2002
- Reaction score
WRONG IS WRONG!
A circumstance which exposes one to civil liability is a circumstance which exposes one to civil liability.
Whether it is a business decision or a moral one is, I suppose, up to you.
Take this example:
I manufacture widgets, and I know that the widget has a 1 in 100,000 chance of failure resulting in the loss of the user's little finger.
I know that the average liability payout for the loss of a little finger is $50,000.
I expect to sell 100,000 units per year, and make $5 profit on each one.
I know that I can improve the widget to lower the failure rate to 1 in 200,000.
The improvement will cost me $100,000 in increased manufacturing costs.
Do I make the safety improvement or not?
Explain the moral aspect of that decision.
And for those who aren't good at math.
If I don't make the improvement, I make $500,000 and pay out $50,000 in liability.
If I make the improvement, I make $400,000 and pay out $25,000 in liability (as I know have half the expectation cost of someone losing a finger).
So, do I opt to net $450,000 and expect someone is going to lose a finger, or do I opt to make $375,000 and there is a 50% chance that someone loses a finger?
Economically rational behavior is a remarkable thing. Anything else is just peeing against the tide.