Automakers & Socrates

While Toyota‘s woes are the big news, there are numerous other cases of companies inflicting defective or dangerous products onto the public. In the case of Toyota, there also seems to be some evidence that the government was aware of the problems for quite some time, yet acted in ways that seem contrary to the public interest. Toyota has also been accused of covering up problems.

Of course, Toyota has paid for these actions. Millions of vehicles have been recalled for repairs and consumer confidence has been shaken. In my own case, I bought a Toyota in 2001 based largely on Toyota’s reputation. While the truck has worked out well for me, I cannot say that I would buy a new Toyota today.  I suspect many other people are also wary of the company now.

Given the damage caused by such problems, one wonders why companies do such things.

In regards to problems with cars, the answer can be both simple and honest: cars are complex machines and can have various problems that do not become evident until they are exposed to a wide variety of conditions. Such potential problems are simply part of the nature of an imperfect world.

Of course, this cannot be used as an excuse across the board-eventually a somewhat vague line is crossed and a corporation can be justly regarded as producing a defective product. For example, I do accept that my PC might have problems if I attach certain peripherals or load certain software. However, if my video card catches on fire due to shoddy manufacturing, then the company is at fault.  In the case of cars, I accept that certain unusual conditions might create unanticipated problems. But, the brakes and accelerator in cars need to work properly and failures in this area are not acceptable.

Not surprisingly, companies do not intentionally make products to cause them trouble. Rather, they produced such products through negligence or in an attempt to make money by cutting corners. When a problem is found, the natural tendency is to cover it up rather than face up to it.

One reason to do this is to avoid having to pay for the consequences of the problem. For example, if a company accepts responsibility for a defect, this makes it much easier for laws suits to succeed in this area. Also, if a company can cover it up, it can avoid having to pay for the repairs. So, money is an important factor.

Another reason to do this is to avoid the harm to the brand reputation. After all, if the problem stays hidden, the company retains its reputation. This also motivates individuals. For example, Spitzer, Clinton and Stanford did their best to hide their affairs.

A third reason to do this is that people are naturally inclined to hide their failures and resent those who would correct them.

However, the tactic of the cover up is generally a poor strategy. In addition to the obvious ethical issues, the strategy often creates more damage in the long run than being honest.

In his Apology, Socrates noted this. He pointed out that people who do misdeeds prefer to remain hidden and uncorrected, but that they should be grateful for a gadfly who keeps them on track. After all, by being corrected, they will be more likely to do what is correct. But, if they are free to hide their misdeeds, then they will be even more inclined to act poorly and thus end up in a worse situation than if they had been open to criticism.

Toyota seems to be in this situation: they were aware serious problems and seem to have acted to try to conceal them by using their relation with the regulatory folks and by other means.  It seems that getting away with such things might be habit forming. In any case, it does seem to be natural for people to slack when they know they can get away with it. As such, Toyota can be faulted for doing wrong, but the folks who were supposed to be their gadfly also deserve blame.

When Socrates was on trial, he told his accusers that they were doing themselves harm. He seems to have been right. While companies would no doubt prefer to get away with whatever they wish to do, this actually turns out to harm them. While Toyota did enjoy a delay in the consequences of its failures, it is now paying the price. If the company had been properly regulated and brought to task for past problems, it might not bee going trough the disaster it is facing today. Hiding misdeeds just allows them to grow, as Socrates well knew.  As such, proper regulation can actually be very good for companies by helping keep them from hurting themselves.