The fines on the corporations were negligible for ge

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The fines on the corporations were negligible For GE, about the same as a man who makes $175k getting a $3 parking ticket The civil suits were more damaging to the corporations The antitrust legislation allows for treble damages in civil cases By mid-1964, GE alone had settled 90% of the 1,800 claims against it for an estimated $160 million
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Techniques of the Conspiracy They went to great lengths to not be caught Attendance roster for the meetings was called the “Christmas card list” Meetings were called “choir practice” Usually met at trade association conventions Those who did claim travel expenses lied about the destination but never the distance
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Techniques of the Conspiracy They chose who made lowest bid in several ways A company could submit lowest bid the same portion of time as their portion of market share Drawing straws Scheme based on the phases of the moon The contract wasn’t always awarded to the lowest bid creating strife
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Why It Happened Some saw the crime as doing a service to the market by “stabilizing prices” Illegal? Yes; Criminal? No Weren’t charging excessive prices; weren’t harming the consumer “Imbued Fraud” Many came to a new job, and entered into the scheme just as any other part of their job
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Why It Happened Culture of compliance in the organization Those who didn’t take part lost their jobs Others knew if they didn’t others would Market structure Personal performance bonuses were at- stake Dog-eat-dog business conditions
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The Ford Pinto
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Designing the Pinto In 1971, the president of Ford, Lee Iacocca, ordered a car to built that weighed less than 2,000 lbs. and cost less than $2,000 to compete with foreign cars In rear-end collisions, the gas tank would come unmounted and get punctured on a bolt from the differential, with a spark the car ignited If hit hard enough the doors would become stuck trapping the occupants inside
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The Traditional Narrative The traditional narrative Ford acted with an amoral pursuit of profit Knowingly marketed a car that was unsafe Measured the loss associated with potential law-suits against costs of a recall or redesign, and determined the latter options were not cost effective Valued human lives $200,000 dollars
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The Analysis 180 burn deaths 180 serious burn injuries 2,100 burned vehicles Costing the company $49.5 million in settlements The company would fix the problem at an approximate cost of $11 per vehicle for the ~1.5 million sold at the time, or a total of $137 million
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Counter Points The Pinto had a safety profile similar to other cars at the time The designers did not believe they were taking calculated risks with consumers’ lives Auto-safety regulation did not begin until 1966 a year before the Pinto’s design began There was no belief that the car was “unsafe” Designers were not thinking about potential lawsuits Therefore, costs saved through settling law-suits did not factor into their decision making
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  • Spring '14
  • AidaY.Hass
  • The Jungle, Occupational safety and health, Sherman Antitrust Act, Food and Drug Administration, Corporate crime

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