The Corporation

A corporation “is compelled to cause harm when the benefits of doing so outweigh the costs” (60). Harmful effects can strike people outside the corporation and are called “externalities—literally, other people’s problems” (61). Harm to the environment or to communities, and even negative consequences borne by the corporation’s workers, are considered externalities, to be paid for by others: “[T]he corporation’s built-in compulsion to externalize its costs is at the root of many of the world’s social and environmental ills” (61).

In the late 1960s, General Motors begins redesigning some of its cars’ fuel tanks to save money, placing the tanks dangerously close to the rear bumpers. GM performs a cost-benefit analysis and reckons the redesign will reduce costs by $8.59 per vehicle, minus the per-car cost of $2.40 from lawsuits due to car fires, for a net savings of $6.19 per auto “if it allowed people to die in fuel-fed fires rather than alter the design of vehicles to avoid such fires” (63).

By the early 1970s, dozens of lawsuits have been filed by victims of rear-end-collision car fires caused by the dangerously positioned tanks. One suit awards punitive damages of $1.2 billion; during appeal, the US Chamber of Commerce argues that a cost-benefit analysis is a “hallmark of corporate good behavior” and “the logic underlying it is unimpeachable” (64).