The first rule of Book Club is…

Dave Killion — August 13, 2011

Be honest, now. Wouldn't YOU like to blow this car up?

From the movie “Fight Club” –

Narrator: A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don’t do one.
Business woman on plane: Are there a lot of these kinds of accidents?
Narrator: You wouldn’t believe.
Business woman on plane: Which car company do you work for?
Narrator: A major one.

Sounds horrible. But let’s hear Professor Friedman on the matter –

That’s not actually Michael Moore, by the way. But here’s where I find the young man’s logic failing him –

… I don’t see Ford spending $13 less on each car at the cost of 200 lives a year as being a principled position to take…

Well, that’s because you’re not considering the total cost of saving those lives, which may amount to tens of millions. So talking about $13 per car is really misleading. In fact, I imagine there are lots of things that could be done to improve the safety of cars that cost very little per car, but I think if they were added to Fords, or Toyotas, or whatever, consumers would look to other slightly less expensive cars. Friedman is right. The balance between safety and cost is one that can and should be worked out between the consumer and the manufacturer through the market.


David C says

LOL, awesome

— August 13, 2011

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