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cross-posted from Talking Point Memo

“What GM did was break the law,” Anthony Foxx, the secretary of transportation, announced as a news conference on Friday. The National Highway Safety and Transportation Agency imposed a $35 million penalty on General Motors, the largest ever imposed on an automaker, for its failure to correct and its cover up of known defects in the ignition switch of the Cobalt, a problem that contributed to at least 13 deaths.

 

While the fine and the multiple continuing federal investigations of GM may deter future wrong doing, they risk closing the garage door after car has crashed. GM is not alone. Toyota and Ford both recently paid hefty fines for misleading the public and regulators or failing to recall defective vehicles.

 

Something is wrong — and the problem goes beyond cars. In January, Freedom Industries tanks spilled thousands of gallons of chemicals into West Virginia’s Elk River, an industrial chemical spill in the Elk River, contaminating the drinking water for 300,000 people and sickening hundreds. The spill came after Freedom had failed to carry out regulators’ recommendations made after previous spills. Last month, federal investigators concluded that the explosion at the West Fertilizer Company in Texas that last year killed 14 people and injured more than 200 was due to a lack of oversight and regulations at the local, state and federal levels.

 

Americans rely on health and safety regulations to ensure that the products we use – and the processes that make them – won’t kill us. But today America’s health and safety enforcers are weaker than they have been in decades.

 

Once, the United States led the world in protecting public health from corporate excess. Between 1960 and 1980, spurred by the environmental and consumer movements, 49 federal laws were passed that set rules for the health and environmental practices of nearly every industry. Majorities of the public and both parties supported these regulations. And these regulations saved lives. After NHTSA was created, the United States motor vehicle death rate per 100,000 fell from 25.9 in 1966 to 10.8 in 2012, although countries with stronger regulations saved even more lives.

 

Beginning in the late 1970s, however, corporate America launched a counter-offensive. Using President Ronald Reagan’s 1981 inaugural claim that “government is not the solution to our problem, government is the problem,” corporate leaders began a systematic effort to roll back, underfund, and delay regulations. Corporations bankrolled advocacy campaigns that won support of lawmakers from both parties – advocacy campaigns that continue in 2014. It is this legacy that sowed the seeds for today’s regulatory failures in the auto, food, pharmaceutical and other industries.

 

What are the health consequences? Today chronic diseases and injuries are the nation’s leading causes of premature death and preventable illnesses and injuries. Three of every four health care dollars is spent treating chronic diseases. Injuries, especially those related to automobiles, firearms, and alcohol, are the leading causes of death for young people. The practices and products of the tobacco, food, alcohol, firearms and automobile industries are major contributors to the most common chronic conditions and injuries. The decisions the United States makes about regulation of these industries will determine whether we can reverse the growing burden of chronic diseases and injuries.

 

Three changes could help. First, all companies should have a duty to disclose what they know about the harmful effects of their products and executives who withhold such evidence should be subject to criminal penalties. Second, making false health claims (for example, claiming that sugary cereals with a few added vitamins are healthy) should be subject to sanctions that are tough enough to deter violations. Third, regulatory agencies should use the full scope of their existing powers to protect public health. This could include more forceful regulation of tobacco, more aggressive and timely analysis and investigation of consumer complaints about the safety of cars and trucks, and bigger penalties for drug or device makers who fail to report adverse events promptly.

 

Reform will not be easy. For four decades, corporate America has campaigned effectively to roll back health and safety rules. But unless citizens and health and consumer organizations push back, Americans will increasingly be guinea pigs for risky products.

 

Nicholas Freudenberg is Distinguished Professor of Public Health at City University of New York and author of Lethal But Legal: Corporations, Consumption and Protecting Public Health (Oxford University Press, 2014). He has written about corporations and health for Slate, Salon, the Guardian, the Daily Beast, the American Interest and numerous scientific journals and is a member of the Scholars Strategy Network.

 

 

Nearly fifty years ago, shortly after Ralph Nader’s 1965 book Unsafe at Any Speed charged that General Motors knowingly distributed Chevrolet Corvairs despite design defects, GM  CEO James Roche  hired former FBI agent  Vincent Gillen to investigate Nader  to, in Gillen’s words “ determine what makes him tick,” examining  “his real interest in safety, his supporters if any, his politics, his marital status, his friends, his women, boys, etc., drinking, dope, jobs, in fact all facets of his life.”

 

The recent media and Congressional investigations of General Motors decision not to replace a defective ignition switch on Chevrolet Cobalts –a part that cost less than one dollar—despite evidence that the defect had contributed to more than a dozen deaths again put the spotlight on GM.  And once again, GM senior management seemed to be consulting the same playbook that Roche had apparently followed in responding to Nader’s charges.  According to the New York Times, although the company learned in 2009 that a potentially fatal defect existed in hundreds of thousands of cars, for the next five years, “GM told the families of accident victims and other customers that it did not have enough evidence of any defect in their cars… In one case, GM threatened to come after the family of an accident victim for reimbursement of legal fees if the family did not withdraw its lawsuit. In another instance, it dismissed a family with a terse, formulaic letter, saying there was no basis for claims.”

 

From a review of this record of five decades, we’re pleased to offer General Motors Quick Guide to Crisis Management.  We hope this will help GM managers and other corporate leaders to respond rapidly when the next round of design defects is revealed. 

 

1.  Ignore the problem in the hope it will go away.

The first step in corporate crisis management is to hope for the best.  Creating a communications system that keeps engineering, safety, legal and public relations departments units separate also helps.  After all, you can’t be liable for what you don’t know, can you?

 

2.  Withhold relevant information from regulators.

Regulators can’t take action in problems they don’t know about.  GM failed to report the defect to the National Highway Transportation and Safety Administration (NHSTA) for years. Last week NHTSA Administrator David Friedman testified before Congress that his agency would have acted differently had GM not withheld information.   

 

3.  Attack and threaten your critics.

In the unlikely event that a problem does come to light, warn your critics that further action could result in lawsuits, staggering legal fees and smear campaigns.  GM emphasized that several of those killed in the Cobalt crashes had been drinking prior to the event.   It also threatened families contemplating lawsuits that GM would aggressively seek to require these families to pay the company’s legal fees. 

 

4.  Apologize, apologize and apologize.

In the unlikely event the company is caught misrepresenting the record of what it knew when, company executives are urged to apologize profusely and repeatedly.

 

At the 1966 Senate hearing to examine GM safety record and its investigation of Ralph Nader, CEO Roche explained to the committee that GM had begun its investigation of Nader to determine if Nader was involved in the Corvair damage claims. He testified, “I am not here to excuse, condone or justify in any way our investigation” of Nader.  He deplored “the kind of harassment to which Mr. Nader has apparently been subjected” and was   “just as shocked and outraged” as the senators were.

 

And last month, Mary Barra, the current CEO of GM said, “Something went very wrong in our processes in this instance, and terrible things happened.” At subsequent Congressional hearings, media interviews and meetings with families of Cobalt victims, she has apologized more than a dozen times.

 

5. Hire experts to give some time and deflect legal or regulatory action.

GM has hired a raft of experts to conduct internal investigations of the Cobalt affair. It has also hired Ken Feinberg, the master craftsman of plans to manage corporate risk after disasters to come up with a possible compensation plan for victims and their families. 

 

6.  Lobby aggressively to protect industry against undue regulatory influence.

Media attention on auto defects waxes and wanes but it is Congress who writes the laws that regulate the auto industry.  To ensure a welcome reception on Capitol Hill, GM lobbies aggressively in good times and bad.  In 2013, GM reported spending $8.8 million on lobbying.  According to Open Secrets, between 2002 (when the parts maker Delphi first told GM there was a problem in the ignition switch that was later installed in Cobalts) through 20013, GM spent more than $114 million on federal lobbying. 

 

7. Support auto friendly politicians.

Since 1989, according to the Sunlight Foundation, GM has contributed more than $12.3 million dollars to candidates in federal campaigns.  Its top 10 recipients include 5 Democrats and 5 Republicans, showing the company’s commitment to bipartisan appeals to currying favor. 

 

Unfortunately, even these steps can’t guarantee that all problems will go away.  But in the long run, they help GM to keep its focus on profitability and to manage the inevitable distractions from that goal. 

Weak regulations and enforcement let General Motors and other carmakers kill people again and again.

cross-posted from Slate.com