Punish Ford-Firestone, But Don’t Reward NHTSA: Kazman WSJ Op-Ed

Published in the Wall Street Journal

September 12, 2000

This year’s worst tire disaster claimed more than 100 lives. It came after scores of documented mishaps, and it involved an internationally known company that rejected an available safety measure. The tires were manufactured not by Firestone, but by Goodyear.

The disaster in question was Air France’s July Concorde crash, in which 113 people perished. It now appears that one of the plane’s Goodyear tires burst after being punctured by runway debris, sending shrapnel into a fuel tank. Since 1976, there have been about 70 Concorde tire blowouts; on seven occasions fuel-tank damage resulted, though without deadly consequences. Several years ago British Airways strengthened landing-gear deflectors on its Concordes to guard against such ruptures; Air France did not.

‘Bureaucratic Mumbo-Jumbo’

None of this is to suggest that the current Firestone-Ford tire fiasco isn’t newsworthy. The tires’ susceptibility to tread separation is implicated in nearly 90 deaths, and Firestone has recalled over six million of them. If, as reports indicate, earlier foreign recalls of these tires were kept hidden from the American public, then we may have not only a defective product but a corporate coverup. But if you’re wondering whether tire safety is something that can’t be entrusted to the private sector, just remember this: Air France is majority owned by the government; British Airways is not.

The problem is that political attention in Washington has gone beyond whether Firestone and Ford deserve punishment. The companies have certainly been flogged by the markets (Firestone’s parent company, Bridgestone, has lost half its value) and face even more losses from the coming wave of lawsuits. Congress, however, has brushed the issue of fault aside in its hurry to start rewarding the regulatory agency involved, the National Highway Traffic Safety Administration.

In view of the Ford-Firestone fiasco, NHTSA’s new administrator, Sue Bailey, is asking for expanded powers and budget; Congress seems eager to oblige. Though she has been in office for less than a month, Dr. Bailey is already troubled by her agency’s lack of omniscience. “What else are we not knowing about,” she asked, “and when don’t we know it?”

In the Firestone case, NHTSA knew quite a bit. It had been alerted to the possibility of a tire problem by a State Farm auto-insurance analyst on several occasions beginning in July 1998. Even though State Farm found its Firestone claims experience noteworthy, Dr. Bailey testified last week that NHTSA didn’t think the insurance data indicated a potential defect. That discrepancy deserves some intensive scrutiny.

Indeed, while NHTSA’s inaction in no way lets Firestone or Ford off the hook, it raises a troubling question. Why should the agency’s inertia in this matter lead to an increase in its budget and powers? In the private sphere of competition and liability, corporate incompetence usually costs companies dearly. The prospect of having to pay for one’s mistakes, in some cases many times over, is a major incentive for keeping those mistakes to a minimum. But in the political sphere, regulatory ineptness seems to have the opposite result — the agency responsible has its funding increased and its powers expanded. This is a recipe for regulatory disaster.

And when it comes to regulatory disasters, NHTSA already has several notable ones under its belt. In 1978, a federal court overturned a NHTSA truck brake standard because, in the court’s words, it had made trucking even “more hazardous” than it was before. Worse, not only had NHTSA’s new standard proved dangerous, but the agency persisted in going forward with it despite mounting evidence of widespread malfunctions. This attitude was caused not by a scarcity of agency funds, but by an excess of agency arrogance. A larger budget would hardly have diminished that arrogance.

More recently, there is NHTSA’s air-bag mandate which, despite its lifesaving benefits for adults, has thus far resulted in the deaths of 99 children. The agency issued the mandate without waiting for supporting real-world experience, relying instead on engineering simulations. As the General Accounting Office documented, NHTSA ignored evidence of hazard to children. Once NHTSA learned of actual air-bag deaths, it decided not to immediately warn the public because it was worried, in the words of a 1991 agency memo, about “the potential for bad press.” When the agency finally required air-bag warnings in 1993, it chose a watered-down label rather than the stronger warning proposed by the auto industry.

A private company engaged in such a coverup would be facing bankruptcy or jail time. But NHTSA’s coverup of air-bag risks has only led to more regulation. In May it mandated even more complex air bags to supposedly fix the problems of its first rule. Once again, NHTSA has no supporting real-world data for these advanced air bags; it just assumes they’ll work.

Finally, there is NHTSA’s Corporate Average Fuel Economy program, popularly known as CAFE. The lethal impact of this program dwarfs that of Firestone tires by orders of magnitude. CAFE has resulted in downsized cars with higher mile-per-gallon capabilities. But these smaller, lighter cars are less crashworthy than comparably equipped heavier cars in practically every type of accident. This means that CAFE increases traffic fatalities, a view held by experts ranging from auto-insurance officials to engineering and safety researchers. According to one peer-reviewed study, CAFE increases accident deaths by 2,000 to 4,000 annually.

NHTSA’s response, however, has been a decades-long dodge. In 25 years of running the program, NHTSA has yet to admit that CAFE kills anyone. In a 1992 lawsuit brought by my organization and Consumer Alert, a federal appeals court ruled that the agency’s position was based on “fudged analysis,” “statistical legerdemain,” and “bureaucratic mumbo-jumbo.”

‘Too Much Control’

If a private company had taken this approach to a safety problem, it would no longer be in existence. Yet the current administration favors even more stringent, and consequently deadlier, CAFE standards. Only a congressional freeze on the standard has prevented that from occurring.

Dr. Bailey claims that “when it comes to safety, you can’t have too much control.” NHTSA’s history suggests exactly the opposite. Given her medical training, Dr. Bailey should recognize that one of the fundamental precepts of medicine applies just as well to regulation – “First, do no harm.”

Sam Kazman is general counsel of the Competitive Enterprise Institute in Washington.

©2000 The Wall Street Journal