> Since the likelihood that a corporation will obey the law
> depends on the likelihood of potential sanctions, only huge
> judgments can deter business from cutting corners, even where
> public safety is put at risk. Reducing the costs that
> corporations face obviously increases their incentive to
> ignore legal requirements. For example, Ford never faced
> criminal charges in the Pinto case. Instead, those who
> suffered injury or their loved ones could only sue the
> company for damages in civil court.
This is only one aspect of tort litigation, one that is least objectionable. I see nothing wrong with making corporations pay for "cutting corners." However, the above does not address my main objections to the current system. These are:
1. Litigations against government entities effectively "privatize" public resources i.e. transfer tax revenue that can be used for public purposes (e.g. schools, roads, etc.) into a private windfall. Compensation for actual losses is one thing but everything above it is windfall to the plaintiff, i.e. privatization of public resources.
2. Imposing added "transaction cost" for cutting corners on corporations - while justified - does not have to translate into private windfalls - it can be a sum paid to a public interest organization, as it is routinely practiced in Europe. Thus, if a plaintiff wins, he/she can win back actual losses (including time, lost earnings, actual legal cost etc.), but the "punitive damages" should go in their entirety to a public interest organization identified by the court; instead of ending up in the pockets of the defense attorneys and their clients.
3. Private litigation does not address the systemic problem of standard enforcement. In fact, corporations can afford the risk of individual litigation if they know that otherwise standards are not enforced. This is a casino style public policy enforcement is really a gamble on someone willing to file a suit, a gamble on legal manipulations, etc.
4. Using private litigation instead of public policy and taxation is a very ineffective way of recovering the cost of corporate malfeasance. In fact, the chances are that most of the cost of that malfeasance will never be recovered (cf. tobacco litigation). Passing an excise tax on products that are likely to produce public harm, and vigorous government enforcement of safety standards with hefty fees for violations are a much more effective way.
Wojtek