Page 258 - Toyota Under Fire

LESSONS

The answer to the first question is fairly obvious. It’s likely
that the crisis would have cost a significant number of people their
jobs. Certainly some people’s careers would have been destroyed.
It’s also likely that the overall investment climate for foreign com-
panies would have been undermined, perhaps further damaging
a weakened U.S. economy. A recent book by Micheline Maynard
documents the value of foreign investment for the U.S. economy.
These companies haven’t just brought money; they’ve brought
innovative ideas and created many of the good jobs that pundits
lament are disappearing.* Given this threat, was anything gained?
Several experts that we talked to pointed to one benefit from
the recall crisis: greater focus on safety issues and human fac-
tors in vehicle design. We’ve noted that the industry has lowered
the bar for recalls, initiating them more often and for issues that
probably wouldn’t have been dealt with via a recall in the past. At
the same time, it’s not by any means clear how many of the in-
creased recalls actually benefited drivers in a material way. Kevin
McDonald of the George Washington University School of Law
suggested in a paper published in 2009 that for many recalls, the
costs to drivers and society as a whole far outweigh the benefits.
Those costs, according to McDonald, include “the risks of crash
and injury, not to mention fuel consumption and pollutant emis-
sions, posed by otherwise unnecessary trips to car dealerships to
repair ‘safety defects.’”†
Perhaps a clearer benefit of the drama of the Saylor incident
is the needed attention to the fact that vehicle technology has

* Micheline Maynard, The Selling of the American Economy: How Foreign Com-
panies Are Remaking the American Dream (New York: Crown Business, 2009).
† Kevin M. McDonald, “Do Auto Recalls Benefit the Public?” Regulation, vol.
32, no. 2 (June 21, 2009), pp. 12-18. Available at SSRN: http://ssrn.com
/abstract=1432448, p. 1.

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