Golden Rule Disregarded

If you knew your neighbors were operating or using a defective consumer product, wouldn’t you alert them? Of course you would. But most corpora­tions hush themselves; the simple Golden Rule is not for them.

This attitude was illustrated once again a few weeks ago when confidential internal memoranda dated September 1978 by General Motors and Chrysler on a Ford transmission defect became available to the media. The technical memos went right to the point: their transmission could not induce a park-to-­reverse slippage, but the Ford transmis­sion design could.

More than 20 million Ford automo­biles and trucks now on the highway with automatic transmissions could have this problem (Ford Motor Company, as expected, disagrees). Reports of at least 100 fatalities, hundreds of injuries and many thousands of complaints have been sent to the Department of Trans­portation regarding the sudden reverse movement of these Ford vehicles.

It took an extraordinary effort by the government to obtain the Chrysler and GM memos. The two companies have maintained a “mum’s the word” posture to this day.

Other examples of similar corporate behavior come to mind. For years insurance companies have settled cases with manufacturers of dangerous pro­ducts that injured their policyholders, yet these insurance companies make no effort to notify the public where there are other policyholders who may have purchased the same product.

In one case, an insurance company settled with GM regarding a Pontiac built some 20 years ago which, due to low-to-the-ground design, had a propensity to snag while going over railroad tracks. No public warning was issued by the insurance company to the large number of owners of similar Pontiac.

In the early 1970s, Herbert Denenberg, then the Pennsylvania insurance commissioner, tried with little success to have insurance companies report find­ings of such hazards to his office.

Every day insurance company experts document these defects in household, vehicular and other marketplace pro­ducts. But when was the last me you read or heard of an insurance company putting out a general alert or even notifying the appropriate government agency?

The one luminous except n is the Insurance Institute for Highway Safety, which publicly reports automobile de­fects that come to its attention.

I have asked business exec Ives about this reluctance to be, in of ct, a good neighbor. Some have said tat they do not want to get involved in a public controversy which drains and diverts their energies. A few have been candid enough to say that such corporate whistle-blowing would invite retaliation against their products and that all businessmen live in glass houses.

There are two possible solutions to this problem. One is to require such warnings by law. A version of this approach is contained in pending legislation by Congressman George Miller (D-Calif.). His bill would penalize corporate executives who do not inform the government and do not warn the people about known dangers, such as toxic chemical waste dumps in a community.

The second approach would be to support or work with a buffer organization that companies can rely on to provide this public vigilance. The Insurance Institute, funded by the insurance industry, performs this func­tion by direct research or with occasional information referrals from member companies.

This mechanism is limited since it works only across industry lines, such as the insurance industry alerting motorists to automobile industry defects. But companies. in particular industries can work through professional engineering or standards organizations, which they largely control already, and thus perform their neighborly duties by proxy.

This will take considerable statesman­ship—a commodity in short supply—on the part of top corporate leaders.