The Ford Pinto was a subcompact car manufactured by Ford beginning in 1971. The car proved to be very popular, with over 3 million units produced between 1971 and 1980. It was produced partly in response to the increasing popularity of small, subcompact Japanese cars. The Pinto was known inside the company as ‘Lee’s car’, after the name of the president of Ford, Lee Iacocca. It was one of the smallest and lightest cars ever manufactured by Ford or any other American car manufacturer. When first produced, the Pinto weighed less than 2,000 pounds. It was also one of the least expensive cars the United States had every produced, being sold for around $2,000.
Then in 1977 suspicions were raised that the car was unsafe. More specifically, the fuel system of the Pinto was thought to be overly susceptible to damage from relatively minor collisions. The National Highway Traffic Safety Administration in effect demanded a recall of the Pinto, after many fatalities and injuries were reported. Ford also faced a number of very expensive lawsuits.
This paper will examine the case of the Ford Pinto. It will investigate why the car is thought to have been manufactured without due regard to safety issues. It will discuss the laws that were involved in the corporate decisions associated with the case. It will consider Ford’s and Lee Iacocca’s moral responsibilities, both to shareholders and stakeholders, and to customers. Finally, it will use the ethical framework of utilitarianism to discuss how the actions of the executives of the company may have been swayed in the actions that it took.
One reason why the Pinto was unsafe is that it was rushed from research and development into production. In their eagerness to produce a car that could compete with the Japanese subcompact offerings, Ford compressed the normal time it takes to go from drafting-board to showroom from three and one-half years into two. This meant that any design changes that needed to be made would have to be made during production, rather than prior to it. A consequence of this is that changes would be more expensive to make than they would normally be, and Ford would of course be less willing to make changes—especially changes that did not seem, at the time, to be absolutely necessary (Shaw and Barry 1995).
As it did with all of its vehicles, Ford crash tested the Pinto. The standard in 1972 required that cars be able to withstand a rear-end impact at 20 miles per hour without fuel loss. By 1973 that speed would be increased to 30 miles per hour. In 1970 Ford found that the Pinto failed even the 20 miles per hour test. Relevant impacts led to gas tank ruptures and dangerous leaks. So Ford faced a difficult choice: (A) go ahead with production, to meet the timetable demands; or (B) delay production to make the car safer. Not only did Ford go ahead, but they kept making the car the same way—a way they knew to be extremely unsafe—for the next six years.
Ford reasoned as most companies do within a capitalist system. They simply weighed the likely costs of moving forward with the costs of waiting and improving safety standards. They found that it would be cheaper, in the long run, to move forward and deal with the inevitable problems that injuries and deaths resulting from the Pinto’s unsafe nature would bring. We know this because of an internal report that concerned related forms of non-safety in cars generally. This became known as the ‘Fatalities’ report. For example, the report showed that the costs associated with improving safety standards in one case of estimation to be over $130 million, while the cost of simply moving forward—and knowing that hundreds of deaths and injuries would occur—was only about $50 million. They factored in potential lawsuits, of course. The bottom line is that Ford decided it was in their best economic interests to do something that they knew would cause hundreds of deaths.
So what happened as a result of Ford’s decision not to improve the safety standards of the Pinto? Between 1971 and 1978 it is estimated that close to 500 people were killed as a result of collisions with the Pinto. Ford engineers themselves later testified that 95% of these fatalities would have been prevented if the company had only moved the Pinto’s fuel tank, as it did with some of its other models. In 1976 the 30 mile per hour impact standard was finally adopted, and Ford had to recall all of the Pinto’s manufactured in the period 1971-1976. In that same rough time period, Ford faced around 50 lawsuits related to the Pinto. Ford was forced to pay nearly $140 million in damages in these lawsuits.
In one high-publicity case an even greater penalty was sought against Ford. In 1978, a crash involving a Pinto resulted in three teenagers being burned to death, in an incident that took place in Elkhart, Indiana. Ford was charged with criminal homicide. But Ford was acquitted. Ford has somehow managed consistently to deny that the Pinto was unsafe. It points out that the Pinto complied with federal regulations. What the company does not mention is that it actively lobbied politically for a delay in an increase in safety standards (Shaw and Barry 1995).
On most accounts, Ford did not actually break any laws. But it is, of course, a fallacy to infer from this that its actions were not morally wrong. It is possible, however, to mention some legislation that is related to some of the court cases Ford was involved in. One has already been mentioned. In the Indiana case Ford was charged with criminal homicide. The law here requires knowledge that deaths will occur, or will very probably occur, as a result of something either done or not done by the person or company involved. In the 1800s, courts began to move away from assigning importance to the fact that an incident (a death, for example) was the result of an action ‘on trespass’, or rather of an action ‘on the case’. These terms seem to relate to the amount of foreknowledge that must be possessed in a case for legal liability to be assigned. A landmark decision here was Brown v. Kendall in 1850. This decision effectively replaced the previous all-or-nothing standard with a fluctuating scale of foreknowledge and responsibility ratios. Over time the courts began to accept fewer excuses on the ground that some accidents are ‘unavoidable’. In Huntress v. Boston & Main R.R., for example, the court found the defendant negligent even though it took all the precautions thought to be ‘necessary’. The court stated that the railroad company ‘should have foreseen the probability’ of the death involved (Leggett 1999). [For an argument that the orthodox understanding of the Pinto case is incorrect, see Schwartz (1990).]
Milton Friedman’s philosophy of business ethics undoubtedly seems to have influenced Ford’s behavior in this case, and in hundreds of similar cases involving other companies. Friedman upheld what is called ‘shareholder theory’—basically the idea that the only moral obligation a CEO like Lee Iacocca has is to increase profits for his or her shareholders. Judged by this standard, Ford’s behavior was morally acceptable. It did what it though was in its own economic best interests.
However, Friedman’s view is widely rejected these days, as it seems obvious that a company can be guilty of moral wrongdoing despite trying to increase stock value. Indeed, since few companies every do anything that is not in their best economic interests, Friedman’s view has the absurd result that few if any companies every do anything morally wrong (Fontrodona and Sison 2006).
Both Ford and Lee Iacocca undoubtedly violated their moral responsibilities to both stakeholders and to customers (on some views customers are part of the set of stakeholders). It has been argued that there is no way Iacocca was aware of the danger posed by the Pinto, since anyone who told him about it would have been fired immediately. But even if this is true it does not absolve him of moral blame. Creating an atmosphere in which people are afraid to tell you that your product is dangerous is itself morally wrong. As for Ford itself, it is obvious that it knew the Pinto was unsafe; it is obvious that it knew that its inaction (in moving the fuel tank, for example, or in taking other steps to make the Pinto safer) would cause hundreds of people to be burned to death; and it is obvious that it lied about all of these things (Lee 1998).
Part of the problem is with companies like Ford using the wrong ethical framework. What is called ‘Free Market Ethics’ (seems to be an oxymoron) is basically just a codification of some sort of Friedman’s shareholder theory. But even a slightly more reasonable ethical view, such as hedonistic utilitarianism can be thought to deliver the same results. Ford could have reasoned—and probably did reason—that human lives have a certain dollar value, and they made calculations that maximized happiness (or pleasure) for everyone, where the value of a human life is monetized (De George 1981).
So we may conclude that part of the problem with the Ford Pinto case is that Ford was using—to the extent that they were thinking ethically at all—a bankrupt moral theory. More reasonable moral theories (such as virtue ethics, or deontologism) would not be nearly as easily manipulated to deliver the result that Ford wanted on purely economic grounds (Birsch and Fielder 1994).
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- Fontrodona, J., & Sison, A. J. G. (2006). The nature of the firm, agency theory and shareholder theory: A critique from philosophical anthropology. Journal of Business Ethics, 66(1), 33-42.
- Lee, M. T. (1998). The Ford Pinto Case and the Development of Auto Safety Regulations, 1893—1978. Business and Economic History, 27(2), 390-401.
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- Shaw, W., & Barry, V. (2015). Moral issues in business. Cengage Learning.
- Schwartz, G. T. (1990). Myth of the Ford Pinto Case, The. Rutgers L. Rev., 43, 1013.