Executives at General Motors have answered the age-old question of how much is a life worth. A life is worth 57 cents. Earlier this week, newly installed General Motors CEO Mary Barra was on Capitol Hill, testifying before Congress about GM’s recall of nearly 2.6 million vehicles because of a faulty ignition switch, a problem that has caused the deaths of at least 13 people. But more importantly, Barra was answering questions about why GM knew about the ignition switch problem a full decade ago, but chose not to make fixes that would have saved American lives.
At a news conference after her testimony before a House subcommittee, Barra told reporters that, “I think we in the past had more of a cost culture.” In other words, GM cared more about profit margins than peoples’ lives. And at least with the ignition switch debacle, that appears to be the case.
When General Motors first learned about the ignition switch problem, executives and engineers got together to discuss how the company would respond. According to GM, company engineers got together in 2005, and proposed solutions to the ignition switch problem, which included installing a small new piece of metal called a “switch indent plunger”.
But, statements in 2005 GM internal documents show that the company’s executives decided not to fix the ignition switch problem because that small new piece of metal was too expensive and an unacceptable cost. So, how much did the ignition switch piece that GM executives chose not to fix cost? 57 cents.
That’s right, according to testimony from House Democrat Diana DeGette of Colorado, the piece that needed to be installed in the faulty cars, the “switch indent plunger,” cost only 57 cents. When asked about that number, GM spokesman Jim Cain said that, “Presumably it is based on documents in evidence, so I won't dispute it either.”
So, rather than go out and spend 57 cents per car, or a little over $1.48 million to fix all of its cars with the ignition switch problem, GM essentially performed a cost-benefit analysis, and found that fixing the vehicles, and saving American lives, wasn’t worth losing that $1.48 million. To put that in perspective, GM’s net income in 2013 was $3.8 billion. So, the ignition switch fix would have only cost .0003 percent of the company’s 2013 net income.
As Michael Moore put it, “GM has a legal and fiduciary responsibility to its shareholders to make the biggest profits that it can. And if their top people crunch the numbers and can show that they will save more money by NOT fixing or replacing the part, then that is what they are going to damn well do.”
Even Daily Show host Jon Stewart was outraged by GM’s actions, saying that, “For God's sake, even if you're strapped for cash, GM, you could have found at least that much in the seats of the cars you're fixing. The thing would have paid for itself.”
The GM debacle represents a huge problem with corporate America today - a lack of any real accountability. As Donna Smith, executive director of Health Care for All Colorado, and an owner of a recalled GM vehicle put it, “The GM recall represents once again how dishonest and greedy many, if not most, US corporations have become.” The whole notion of “corporate responsibility” has been thrown out the window, and been replaced with the mentality that profits are king.
Many corporations are willing to do just about anything to protect their profits and bottom-line, even if that means “accepting” that a few people might die as a result, whether in a car crash, an oil-rig explosion, or a suicide after a home is foreclosed on. And even worse, they know that nothing will happen in the way of punishment.
Sure, they might face a fine or two, and have to settle a couple lawsuits, but at the end of the day, those are just the costs of doing business and piling on the profits. In many cases, they're even all or partly tax-deductible, so you and I end up paying for it. Those fines and lawsuit settlements are built into the risks that American corporations are willing to take. But it’s time for that to change, and to put accountability back into the game. It’s time to bring back the corporate death penalty.
As I chronicle in my book "Unequal Protection," throughout most of the 19th century an average of 2000 corporations a year got the corporate death penalty. They were dissolved, their assets sold off at auction, and their stockholders and managers left out in the cold. We've done this before, and we should do it again. Corporations shouldn’t be able to commit massive crimes - from environmental crimes to banking crimes to defective product crimes - and get away with just a slap on the wrist. And they certainly shouldn’t be able to choose making a profit over protecting human lives.
Until there’s the real threat of substantial punishment, like losing the right to do business in America, corporations will continue to play fast-and-loose with the lives and livelihoods of the American people, and Americans will continue to suffer. Let’s make sure that no one else ever has to lose a loved one because a car company thought that installing a 57 cent piece of metal was less important than being a good corporate member of the community.
