We understand why Toyota is recalling millions of cars and trucks built since 2004. The value of the Toyota brand, linked closely to the company’s reputation for reliability, is at stake. We are less certain why the Secretary of Transportation is exhorting consumers to stop driving models that have been recalled and bring them back to the dealers for repair.
For as odd as it may seem on first reflection, some recalls may do more harm than good. In an article in last summer’s Regulation magazine, Kevin McDonald pointed out that asking owners to make an extra trip to their car dealers imposes a variety of costs on society. Those trips, after all, expose both the owners and other drivers on the road to a bit more risk of accidents, add to traffic congestion and pollution, and, of course, increase total consumption of gasoline. The trips also cost time to the driver and hours of labor to the dealer – no small thing for time-pressed Americans.
In some cases, these costs may be outweighed by the benefits in terms of safety. McDonald notes, however, that the National Highway Traffic Safety Administration (the agency that oversees recalls) has never bothered to do the math.
Sticky accelerator pedals and floor mats that degrade driver control are potentially serious matters. Toyota should be free to implement a recall, and consumers should be free to decide whether they want to bring their cars back for retrofits. But government should exercise self-restraint in getting between owners and manufacturers. It makes sense for NHTSA to gather information about vehicle defects and to make it available to the public. However, before the agency uses its legal authority to force recalls or even advises owners to heed manufacturers’ requests, it ought to compare the likely societal benefits of the fix to the costs.
Maybe it makes sense from society’s perspective to fix the millions of Toyotas involved in the recall, and maybe it doesn’t. It would be nice to see the numbers.
I don’t understand what you’re saying in the second paragraph. Is it only me that completely missed the purpose? Maybe Im just being cynical, either way it was a solid post. Regards,
cindar
Thanks for pointing this out. We’ve changed the link. Our main point is that the government should not advise on recalls, or instigate recalls, before it has data that suggest the benefits would likely justify the costs.
“The Secretary of Transportation is exhorting consumers to stop driving models that have been recalled”.
I don’t think you read that link. It very clearly does not say what you say it says.
The Secretary gave an informal answer to someone asking about his “advice” for consumers, which he immediately walked back. The link you posted is pretty clearly NOT telling people to stop driving, but how to minimize their risks. Should they do a cost-benefit analysis of that, too? Should we run a cost-benefit analysis of every statement the Secretary makes?
Mulp: I’m not sure if you’re making an explicit analogy, but is the terrorist-victim analogy really an accurate description of the Toyota-customer relationship?
The main problem, which I’m sure the author is aware of, is that even if the costs of the recall are very expensive, the Secretary of Transportation will bear none of them. But he will be aware of the costs of the alternative — someone will die driving a Toyota they could have returned for the recall. This is a pretty common governmental issue, as most voters recoil from the idea of comparing the costs of a human death vs. purely monetary concerns, or anything else for that matter. Even though anyone evaluating risk has a very explicit cost analysis for the marginal accidental death. Wasn’t 5 million the number being thrown around recently?
Paraphrasing “But government should exercise self-restraint in getting between owners and manufacturers,” government should exercise self-restraint in getting between terrorist passengers and non-terrorist airlines and passengers. In both cases, courts can determine wrong doing, liability, and legal remedy and punishment after the fact.
And Martin’s statement applies aptly, paraphrasing, over the past decade especially, the national security and economic regulatory apparatus evolved toward placing relatively more emphasis on the less effective (and to some extent largely symbolic) approach of ex post rejection of the concepts of inalienable rights and rule of law.
After all, those who oppose regulation, arguing harms should be dealt with torts, also rather uniformly call for limiting the use of torts to address past harms, arguing the legal costs will be borne by, and harm, future consumers.
There is an interesting take on this in a book from, I believe, the 1990s, The Struggle for Auto Safety, by a Yale law professor Jerry Mashaw and another guy. If I recall correctly, the book says NHTSA started out trying to promote safety by means of standard setting regulations, but US administrative law principles and legal culture made rulemaking involving complex engineering issues and lots of private money at stake difficult to carry out in practice. As a result, the agency evolved toward placing relatively more emphasis on the less effective (and to some extent largely symbolic) approach of ex post recalls.