Strict Liability

Shruti on Bhopal

If I were to write a post on Bhopal, I would write almost exactly what Shruti has written.

You can, if you wish, paint Bhopal as an example of rapacious profit-seeking corporations putting profits above human lives. You can argue that thatzwhy we need strong regulations. But your argument will run into the problem that Bhopal occurred in 1984, in the India of the license-permit-quota raj.  Not all the permissions that Union Carbide had to seek, not all the inspectors they were forced to bribe, could prevent the disaster from occurring. Once it did occur, the paternalistic State, instead of looking out for its children, sold them out.

So, if the failure of the free market makes the case for regulations, does the failure of regulation make the case for loosening them? Well, that’s not what usually happens.  We’re more likely to hear that Bhopal makes the case for strengthening the regulatory framework.  We don’t need deregulation. We need stronger, more effective regulations, the argument goes.  If we don’t have strong regulations, what is to prevent corporations from creating a Bhopal every other day in pursuit of profits?

Well, strict liability and the tort system, for one. If we could sue the pants off any company that dares to impose harm on third parties, we would see fewer industrial disasters.  If we junk half our regulations and use the resources freed up to modernize our courts so that they deliver verdicts in months rather than decades, we will be much, much better off than we are. Shruti notes in her piece that the Indian government actively worked to minimize the compensation victims could claim from Union Carbide. This phenomenon is familiar, and has a name – regulatory capture.

The Dangers of Labeling

I was going to write a post on this today, but coincidentally, Wired’s piece on 100 Things Your Kids May Never Know About has “Toys actually being suitable for the under-3s” as one of those things.   The United States of America faces a dystopian future where no child under 3 will have a toy he or she can play with.

I got a taste of this future back in November, at a Toys R Us outlet in New York. I was searching for something to buy for my then 2 month old son to show people what we got from phoren. Sadly, the only thing that was available was some cuddly soft toy that hummed tunes when its tummy was pressed. Indian children at that age have rattles and other toys to play with, but not their American counterparts.

I am back in India, and my son is now a few months older. I have managed to find some toys for him, but attempts to buy high-end ones usually fail. Companies like Fisher-Price attempt to follow the same standard for labeling toys as they do in the US, and sadly this means that any interesting toy is labeled “Not suitable for children under 3”, because apparently those toys invariably have small parts that cause a choking hazard.

We were planning to buy an inflatable rubber tub to pour water into and let him splash about. Just as I took out my credit card, we saw the choking hazard warning. It took some detective work, but we finally figured out that the small part in question was the lid covering the inlet for air.  The lid was attached to the tub, and it was exceedingly unlikely that a child would swallow it. In any case, responsible parents who will let 6 month old kids play in water will watch over them all the time. The warning label was obviously intended, not to protect children from choking, but manufacturers from lawsuits.

The danger from this defensive labeling is that either children will be left with no toys to play with, or parents, inundated with too many pointless warnings will start ignoring them, and some will also ignore real hazards.

Response: More on Strict Liability

No, I haven’t given up on responding to the strict liability comments.  Here, I respond to two comments by Ritwik:

There are some tradeoffs involved here. For example, if a ‘bribe the inspector’ system exists, it’s becaue it is economically attractive – that is the amount of the bribe will typically be lower than the amount required to install the fire safety systems. Thus, there is no automatic incentive for a theatre owner to improve the safety requirements if the inspectors are removed.

My dear Ritwik!  What makes you think that fire safety is just a matter of installing safety equipment? What makes you think that any government regulation is designed to be easy to follow? My mother used to work in a small scale company and had to fend off these inspectors, and believe me, complying with the rules is simply not an option. Unless you pay them off, they will always be able to find a violation and harass you, even if the the violation is just using ink of the wrong colour in the quarterly fire drill report.

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