Ethics the Ford Pinto Case Offers an Essay

Ethics

The Ford Pinto case offers an ideal opportunity to apply utilitarian ethics to a real world situation. First, it is important to list the actors and stakeholders in this case. Lee Iacocca was the leader of the Ford Motor Company. He is credited with creating the inflexible parameters for the Pinto automobile as weighing no more than 2000 pounds and costing no more than $2,000. Therefore, the utilitarian analysis can and should apply primarily to Iacocca and his corporate brethren at the helm of Ford. It was their decision that led to the consequences associated with the poor design of the automobile, causing deaths.

However, the Ford Pinto case also highlights the ethical responsibilities of all members of the Ford Motor Company. In particular, the case showcases the role that engineers play in carrying out their jobs. It can easily be said that any engineer who felt that Iacocca's decision was unsound or unethical could have left his or her post with Ford Motor Company, but also that another engineer would have seamlessly replaced the other. The engineers are therefore more like passive actors, versus the more active decision makers in corporate headquarters. It is important to determine which entities are responsible for the ethical decision-making, and in this case, those entities are Iacocca and his corporate comrades.

The stakeholders in the Ford Pinto case include all consumers of the automobile. Ancillary stakeholders include all members of the general public who might come into contact with the automobile in their community. Because of the tendency of the Pinto to explode on impact, bystanders who had not purchased the car might also be injured in its wake.

Before completing a utilitarian analysis of the Ford Pinto case, it is important to note the historical context in which the situation arose. Iacocca was reacting to specific market forces. In particular, foreign automobile manufacturers were creating and selling cheap cars that were cutting into Ford's market share. Iacocca had to act fast in order to retain the competitive advantage of his American company. His stakeholders are the shareholders of Ford, who depend on Iacocca to make decisions that maximize Ford's profitability. For Iacocca and the shareholders in the Ford Motor Company, profit is the primary (and even arguably ethical) objective. If Iacocca were to shirk his responsibility as president of Ford Motor Company, he would be ignoring the obligations he has to Ford shareholders. The shareholders place their trust in the corporate heads of the company to maximize their dividends.

John Stuart Mill's hedonistic calculus is the basis of a utilitarian analysis, involving five steps toward ethical decisions. The first step is determining the alternative courses of action in the case. In the Ford Pinto case, there are several course of action that Iacocca had at his disposal. Those course of action included (a) refraining from making any new automobile; (b) producing a low-cost automobile regardless of potential problems associated with cost-cutting measures; (c) producing an automobile at the lowest cost possible while maintaining strict safety standards.

When determining who will be affected by the actions, which is the second step in the utilitarian decision-making process, Iacocca would face his first significant challenge. That challenge is to recognize both his shareholders and the stakeholders in the general public as being impacted by his decision. Iacocca's failing here was to only consider shareholder value, and not stakeholder value. Iacocca made his decisions with the shareholder value in mind, but neglected to value the relevance of consumer safety. No matter which action Iacocca took, both Ford shareholders and the entire public of the United States would be affected.

Calculating the consequences of the decision to manufacture the Ford Pinto is a difficult step, as it might have been absolutely impossible to know for sure what the Pinto would do once it was released onto the market. For one, Iacocca could not be certain that the car would sell. His decision to manufacture the cheap car was based on an assumption that it would sell well enough to compete with low cost Japanese imports, but he had no way of knowing for sure that consumers in America would be interested in the car. Second, Iacocca and his engineers did know that the design specs for the Ford Pinto were problematic.Based on this fact, the consequences of the decision to manufacture the Ford Pinto were known to be negative. It was known that there would be some safety issues with the car, but the company went forward with their plans. Their decision was based on financial, rather than humanitarian consequences.

A utilitarian decision is made on the basis of creating the greatest good for the greatest number of people, or maximizing happiness for the greatest number of people. Iacocca's world was arguably disconnected from the world of the average American, which is why to Iacocca it seemed natural to assume that maximizing happiness meant maximizing profit. If shareholders are happy, then Iacocca was doing his job well. He could not have thought through the consequences of the Pinto failing as it did, or else he would have foreseen that his shareholders would lose in the end. Therefore, it is assumed that Lee Iacocca made the decision to maximize happiness for the greatest number of Ford shareholders -- the people who directly depend on his judgment. Iacocca did not receive, or did not listen, to advice given to him related to the greater group of people affected by the automobile manufacturer. The number of Ford shareholders is small in comparison to the number of residents in the United States; or even in comparison to the number of Pinto purchasers. Maximizing the greatest good for the greatest number of people means that one or two deaths is acceptable, if the rest of the American public is happy. The American public cannot, however, be happy when it knows that it was duped, lied to, and taken advantage of by a corporation. When people die as a result of a known manufacturing defect, the whole country suffers. Suddenly, maximizing happiness via providing a cheap car seems like a ridiculous decision. Iacocca was working under the assumption that the American consumer would generally prefer to save a few bucks than it would be to save the lives of a few strangers. He would be dreadfully wrong, as the Pinto literally backfired.

The action with the "best net effect on happiness is the right action to perform," according to the fundamental steps of utilitarian decision-making ("Utilitarianism"). From Iacocca's perspective, the best net effect on happiness was to maximize profitability for the company and ensure its market share. Iacocca was cut off from reality in a way that had a significant impact on his judgment. In reality, the best net effect on happiness would be to create the best possible budget car while also maintaining safety standards. Therefore, Iacocca's decision to manufacture and then market the Ford Pinto even after knowing that it had potentially fatal design flaws represents poor utilitarian decision-making. Iacocca did not go through the steps of utilitarian decisions, or use the hedonistic calculus, in an honest way that actually takes into account the fact that the American consumer public -- not just Ford shareholders -- are the primary stakeholders in his choice.

When analyzing the ways the engineers handled the Ford Pinto situation, the ethical equation changes somewhat. The engineers working on the Pinto do have moral obligation to maximize happiness. An engineer could operate under the same flawed assumptions as Iacocca to assume that maximizing happiness meant retaining the supremacy of American automobile manufacturers and staving off the threat of foreign competitors. After all, it could have been argued that American workers were at risk of losing their jobs if Japanese and other foreign interests pierced too….....