When I saw the headline of an article “The Big Question: Who Wrecked the US Auto Industry”, at Bloomberg, I was obviously interested, although the subtitle: “A Q&A with author Kenneth Whyte on how Ralph Nader brought down General Motors — and poisoned the American public’s view of business forever” instantly gave me pause. Oh no; he can’t be serious. And of course there’s a Corvair on the cover.
What a load of rubbish. The Mustang killed the Corvair, dude! By the time Ralph Nader’s book “Unsafe At Any Speed” came out in late 1965, the Corvair was already toast. And even if Nader had killed the Corvair, GM was hardly the worse for it, given that the Corvair represented a tiny slice of the behemoth’s total sales. What about the Vega, X-Cars, and all of its other Deadly Sins? Have I been totally wrong? Apparently so, as the author claims what killed GM was Nader, tort lawyers, regulations, and a deep-seated anti-business climate that appeared in the sixties, with GM as their target. And of course the imports were all exempt from all that, right?
And yes, American enterprise ended with the decline of GM. Never mind Microsoft, Google, Netflix, Walmart, Amazon, Apple, Tesla, and so many other high-flying… American enterprises.
Here’s a few choice excerpts:
Joe Nocera (interviewer): Your book is about what happened to General Motors in the mid-1960s, and how that not just damaged the American automobile industry but set the U.S. on an anti-business path from which it has never completely recovered. I guess if I were to sum up your thesis in one sentence, it would be, “It’s all Ralph Nader’s fault.”
Kenneth Whyte: Something semi-disastrous happened to General Motors in the sixties and its repercussions are still with us today. Ralph Nader was at the fore of that phenomenon, but he wasn’t alone. He was part of an intellectual movement that was interested in reducing, if not denigrating, the role of business in American life. He was closely associated with people in the higher reaches of the American government, along with the tort industry and a lot of intellectuals sympathetic to an anti-business message. And the fact that they were all in this together created the momentum for what befell Detroit.
Me: Aha! It was a left-wing conspiracy to destroy GM and American business. The fact that GM and other car manufacturers (and many other businesses) felt free to build flagrantly unsafe and grossly polluting products of all sorts until the government regulated those aspects of their products is of course irrelevant. And why weren’t high-flying IBM and so many other companies targeted that weren’t creating negative impacts on health and the environment?
Nocera: … you focus on the Corvair, the GM-made car at the center of Ralph Nader’s book, “Unsafe at Any Speed.” How did this controversy swing public attitudes against business?
Whyte: Nader launched a safety crusade that blamed Detroit for making unsafe vehicles and killing 40,000 people a year on the highways. The crusaders argued that drivers weren’t responsible for highway fatalities; Detroit was, because Detroit was making unsafe cars and foisting them on an unsuspecting, unwary American public.
Me: He also targeted VW, as a matter of fact.
Nocera: I’ve always taken it for granted that some of these measures needed to happen — that these outsiders who said the cars weren’t safe enough were actually right. Are you saying that they were wrong?
Whyte: Yes. They were wrong in 1966 because in 1964 most of the major problems with car interiors had already been taken care of. The federal government had used its purchasing power to insist that all cars that it bought would have safety steering wheels and padded interiors and so forth, and all of the concerns of the American medical establishment about the interior of Detroit automobiles had been taken care of by this time.
Me: Wow! Turns out 1964 cars were as safe as cars ever needed to be! Who needed anything safer than than a set of lap belts, which never got used anyway? If this guy had his way, we’d all still be driving cars with just lap belts and nothing more.
Whyte: The rate of progress in improving auto safety declined after Nader’s intervention. Putting the focus on the car, rather than the driver, and blaming Detroit rather than the people behind the wheel was counterproductive to the cause of auto safety.
Me: Yes, it’s all the drivers’ fault. Now if we could just fix all the drivers, magically make them all attentive and sober and safe drivers, we’d solve all our problems with vehicle deaths and injuries. That should be easy enough… Oh, but then there’s also the fact that most crashes involve innocent passengers as well as innocent occupants of other cars involved. But that’s just their bad luck.
Nocera: So how does this effort in 1966 lead to the decline of Detroit?
Whyte: The Corvair was Nader’s exhibit number one in his prosecution of Detroit. He said it was a one-car accident, unsafe at any speed, prone to going out of control and flipping over and killing people for no reason. By leveling these accusations, he managed to kill the Corvair business for Chevrolet and General Motors. I found a lot of internal General Motors documents that show that the safety crisis also did deep damage to the General Motors brand and to the company’s finances. Basically, Nader and his friends in the Senate and in Lyndon B. Johnson’s White House did manage to convince Americans that Detroit’s cars and General Motors’ cars in particular — GM at the time sold half the cars in America — were unsafe at any speed. And as a result people rationally stopped buying them and began turning to import cars. Detroit had been doing an excellent job of beating back imports up until the mid-sixties. Then the safety crisis hits, and within five years import automobiles went from an afterthought in the American market to almost 25% of vehicle sales.
Me: Yes, the Corvair just liked to flip over randomly, at any speed. Even sitting still, presumably. And I see now! It was GM’s reputation for selling unsafe cars that killed it. Wow; and here I had it all wrong for all these years. And it was actually the safety crisis, not the energy crises and the mediocre small cars that the Big Three built that propelled imports sales! How could I have been so wrong all these years?
Nocera: The third part of your thesis is that what happened in the mid-sixties, where General Motors became vilified and Nader became a hero, was a seminal moment in American business history. It created a template for activists, tort lawyers, members of Congress and so on to take on other industries. And this, in effect, reshaped the way the country thought and dealt with business.
Whyte: …And then you had a whole bunch of public interest advocates and public law firms, following Nader’s example, who descend on Washington in the late sixties and seventies and take up business in regulating corporate conduct. The Nader incident was the spark that lit this conflagration of greater legislation and regulatory protection of Americans from business.
Nocera: …there have also been any number of business scandals that were real. You don’t really talk much in the book about how American society would fix those problems if we didn’t have this culture of tort lawyers and public interest people and so on. How do you stop the bad stuff from happening?
Whyte: …What I’m talking about are repeated incidents where the social harm that’s identified, as with automobile safety — and later with opioids and tobacco — becomes an opportunity for crusaders to attack corporations and blame them for what are essentially social failures. That to my mind is counterproductive and harmful for business and industry in America. In terms of reducing the social harms, these initiatives are useless.
Me: Yes, big pharmaceuticals and complicit doctors pushing opioids had nothing to do with that crisis; it was a “social failure”, a code word for “moral failing”. And yes, the anti-smoking initiatives and higher taxes have been utterly useless, which explains why the majority of Americans are still smoking like it was 1955.
Nocera: … I do think that in the opioid situation companies behaved badly.
Whyte: Companies behave badly in every industry. It’s a fact of life and it’s something that, again, we need to be concerned about. But these attacks on companies, the way we go about trying to solve the problem by suing them and punitively regulating them, does not work. A more nimble and sensible approach could be taken to solve problems without doing harm to the private sector.
Me: Good luck with that! So just what is that magic alternative to solving the problem of badly-behaving corporations other than regulation and holding them legally accountable? Fairy dust?
Whyte: Virtually every other country in the world has a less combative and belligerent process than U.S.-style torts. There are all kinds of administrative options, apart from having the parties go at each other hammer and tong in political and legal venues.
Me: So that’s what this book is really all about: an anti-tort reform screed. And who funded this screed? The American Enterprise Institute?
The American tort system has its pros and cons, but that’s a bit outside of our scope here. There’s a reason tort reform hasn’t happened, as the American public on balance feels it’s a valuable check on unscrupulous, negligent and just plain bad actors. To suggest that tort or safety regulations are what killed GM, or the “American Enterprise” is utterly absurd.
So how can I sue this author for wasting my time reading his inane blather? My time is valuable. Care to join me in a class-action suit?