Regulation saves lives.
Take auto safety regulation.
The 1966 auto safety law has saved 600,000 lives.
The highway death toll has dropped from roughly 50,000 deaths per year in the 1960s to roughly 30,000 deaths per year today.
The death rate has dropped from 5.5 deaths per hundred million vehicle miles travelled in the 1960s to 1.1 deaths per hundred million vehicle miles travelled today.
The death rate has been cut by over 70 percent.
How did this happen?
Michael Lemov has written a remarkable new history of the auto safety wars.
It’s called — Car Safety Wars: One Hundred Years of Technology, Politics and Death (Fairleigh Dickinson University Press, 2015).
“From the turn of the century until the 1960s, the public basically accepted a rising toll of death and injury in motor vehicles and on the highways,” Lemov told Corporate Crime Reporter in an interview last week. “It seemed to be the price we had to pay for this expanding economy and the tremendous convenience of the motor vehicle. The death toll hit 55,000 or so deaths a year in the early 1960s. There were early efforts to get regulation and some kind of control on the highways first, and to qualify drivers, second, and finally the motor vehicles themselves. But nothing succeeded. The auto companies fought regulation, until 1966, when Congress unanimously passed the National Traffic and Motor Vehicle Safety Act.”
“At the time of passage, there was an active press, an incident involving General Motors and Ralph Nader, and the rising death toll.”
“General Motors had the bad judgment to think that there was something wrong with Ralph Nader, this young crusader,” Lemov said. “They trailed him with private detectives. Ultimately, GM was caught by a Capitol Hill policeman, who told Nader. And Nader told the Washington Post. It went worldwide — the story of this giant corporation GM bullying this young kid. Nader was just out of law school. He had been practicing law in his own law office in Hartford, Connecticut. He got a call to come to Washington. And he became a thorn in the company’s side. So GM hired a private detective to trail him. GM apologized publicly and the apology went worldwide also. The story created enormous public pressure that led to the unanimous passage of the law.”
“The legislation was originally created by the Johnson Administration,” Lemov said. “Johnson put highway safety into his State of the Union message in 1965 and promptly sent up a message. The Johnson bill delegated to the industry the authority to set standards. The government could review the standards and if they thought they weren’t adequate, the government had five or ten years to improve them. The consumer advocates were at the time a group of public health doctors and Ralph Nader. There weren’t many others.”
“But Magnuson was an amazing Senator and he had one hell of an entrepreneurial staff. They toughened the Johnson administration bill in every area except one. Nader and the consumer advocates got everything they wanted except criminal penalties. The manufacturers hired a fine lawyer by the name of Lloyd Cutler — the founder of Wilmer Cutler & Pickering. He and other lobbyists and the power of the auto industry defeated criminal penalties, knocked them out of the bill, even while at the same time standard setting authority was switched to the federal government, recall authority was given to the federal government, research and investigative authority was given to the newly created National Highway Traffic Safety Administration (NHTSA).”
“But the consumer advocates could not get criminal penalties. And presumably Senator Magnuson and Congressman Harley Staggers surrendered on criminal penalties.”
“The law went through with only civil fines. And they were pretty light civil fines at the time –they were capped at $5,000 per violation with a cap of a few million. The fines are now up to $25,000 per violation with a cap of $35 million per series of violations.”
“The most a company risks in civil fines is what General Motors paid — $35 million for a series of violations and now criminal penalties.”
Cutler is rarely mentioned in Lemov’s book, yet he played a key role in knocking out criminal penalties.
“Lloyd Cutler was an honorable attorney,” Lemov says. “He was hired by people who wanted to kill criminal sanctions. I guess singling him out was unfair. But Cutler was the lead person on this issue. He and Nader negotiated the bill in separate conference rooms in the Hart Senate Office Building.”
“Nader did not agree to knocking out criminal penalties,” Lemov said. “He went down fighting. He never has agreed. He’s still pushing for them now.”
“The industry lobbied the committee really hard. Criminal sanctions were removed from the bill and it passed the Senate and House unanimously. The public was fired up about it.”
Given the public pressure that had built at the time, had criminal penalties been in the bill, the law would have passed with the criminal penalties, right?
“Yes,” Lemov says. “They could have gotten them through. They wanted to prevent accidents with safety standards in advance. But they didn’t realize that there would be so many defective cars on the road. They didn’t realize that recalls would be so expensive that there would be pressure not to fix the defective automobiles. And that’s what has happened since the law was passed. The lack of criminal penalties was seen as a leak in the dyke. It wasn’t major, they would get it later. But the door slammed and they never got it.”
Who had the final say that there would be no criminal penalties in the bill?
“It has to be the proponents of the bill — Senator Warren Magnuson, backed up by Senator Abraham Ribicoff. They just decided they could get by with a civil penalty and that the companies would voluntarily tell the public when the cars were defective. It hasn’t worked out that way. Times change. And so we have a change that has to be made now to keep the law up to date.”
[For the complete q/a format Interview with Michael Lemov, 29 Corporate Crime Reporter 17( 12), April 27, 2015, print edition only.]