Thursday, March 19, 2020

Crash the Economy or Let People Die? The Pinto Memo.

Every day, governments, corporations, and indeed, individuals, make an assessment as to the value of human life, in dollars and cents.  And every day, some dumb-ass acts all shocked by this.

Many years ago, Ford was sued for supposedly selling a dangerous car - the Ford Pinto.  It was alleged that the car was more inclined to catch fire in rear-end collisions.   The reality - years later, now that we have consolidated crash data - was that all cars of that era, which had gas tanks located behind the rear axle, were about as dangerous.  It was much cheaper to build a car that way, particularly a small car, where there was little room anywhere else to put the gas tank.  And people liked the "convenience" of a centrally-located gas filler pipe, behind the license plate.  The Pinto was not significantly more likely to catch fire than any other small car of its era - and some other cars were particularly more dangerous, including the VW Beetle and many Japanese imports.

Ford was singled out for abuse, however, for reasons that remain obscure.  Like the GM "sidesaddle" tank issue with its pickup trucks, some media outlets ran with the story, showing demonstrations of fiery test collisions that turned out later on to have been rigged.  But the damage was done, and people sued.  And during the discovery process, a memo appeared which seemed to be saying (to lay people) that Ford could have fixed the problem for a few dollars a car, but chose not to because human life was only worth a few dollars to them.

Well, that is what the raging true-believers said.  These are the same people who scream, "If it saves even one life then it's worth it, no matter what the cost!"  These are the same people sending you the forwarded "Wal-Mart Slasher" e-mails or Fecesbook posts.  "Pass this on, if it saves even one person, it's worth it!"   Problem is, it will never save even one person, because the Wal-Mart slasher doesn't exist, except in the mind of hysterical women (and sadly, it is mostly women).

The reality of the Pinto Memo was that it was not about the Pinto alone, but all rear-mounted gas tanks, and the memo dealt with the overall costs to society in making design changes, not just the cost to Ford.  Read the memo above - does the Pinto qualify as a "light truck"?   But that gets lost in the media hoopla, and let's face it, beating up on Ford (or any large, faceless corporation) makes for good copy, unless of course, they are one of your major advertisers (I guess Ford didn't pony up enough dough - pun not intended).  Bezos was smart to buy his own newspaper.

The reality of life is that every day we make value assessments about human life, on a personal, corporate, or governmental level.   You get into your car and you are making a personal judgement about the value of your life.   There is a finite risk you will be killed on your way to work, but on the other hand, if you don't go to work, you won't get paid.    You make a trade-off - a pact with the devil - that the risk of death is compensated by the convenience of being able to live ten miles from where you work, shop, or whatever.

You have a beer, or a hamburger, or smoke a cigarette, you are making a value judgement of your own life, whether you realize it or not - and I suspect that deep down, we all realize it.  Our lives are finite, and while life is precious, it doesn't have an infinite value.

In the public sector, calculations are made all the time about the trade-offs between human life and the cost of alternatives.  And yes, economics does drive this.   Over time, for example, cars have been made safer - and become more expensive. They last longer, too, which makes the cost more palatable.   The switch to front-wheel drive made it a lot less costly to put the gas tank under the rear seat, instead of under the trunk.   In a rear-wheel drive car, this gets trickier, as you have to make a hump for the drive-shaft.  My BMW E36's had a "dog-bone" shaped tank, with two fuel pickups, two fuel level senders and even a second fuel pump to pump fuel between the two halves of the tank.  You can see that it cost more than a few dollars to move the tank under the back seat.

Of course, cars back then didn't have airbags either - certainly not six or more of them (I believe our truck has eight - two in the front, four side-curtain, and two rear seatbelt airbags).   The cost of these things has come down with volume production, and other safety items, like traction control and anti-lock brakes are also a lot cheaper because of integrated semiconductor sensors and controllers.  Believe it or not, air bags and anti-lock brakes were available from GM in the early 1970's, but were prohibitively expensive options - and not very reliable at that.

There is an old saying about third world countries - "Life is cheap in [fill-in-the-blank]" and this is often literally true.  The value of human life - as used in making public safety calculations, varies from country to country.  In India, people ride outside of train cars which kills a number of people annually.   The trade-off of inexpensive transport versus the cost of human life is apparently acceptable to them.   In the United States and other Western Countries, no one would accept this.  "Would you like First Class, Coach, or Outside?"  I suspect, that over time, life in India will become more expensive and riding outside trains will become a thing of the past.

The "value of life" worldwide is pretty low - on the order of $100,000 per person in many countries.   In many middle-eastern countries, there is an explicit dollar amount assigned.  If you killed someone by accident, you can get out of trouble literally by paying the family of the decedent the requisite amount of money.  In America, you would be sued for "wrongful death" in addition to facing criminal charges - although the very wealthy have ways of avoiding prosecution, in some instances.

In the United States, as well as most Western countries, the value of life is a lot higher than the worldwide average.  Depending on what source you use, it can be calculated as $50,000 a year, or $7M to $9M per person.  And yes, courts - and juries - are expected to put dollar amounts on human life in "wrongful death" cases - and lawyers have handy calculations to offer juries - based on life expectancy, lifetime income, value to spouse, and conjugal relief.  Sounds rather crass, but there you have it.

Some have asked the question whether the current virus is worth tanking the economy over.  And again, the clueless dweebs use shaming and damning techniques to cry "How dare you!  If it saves even one life it is worth it!"  But as we see, one human life in the US is valued at under $10M and we are going to spend trillions in the next few months - collectively - over this virus.

Of course, there are a lot of unknowns.  At the present time, there are about 10,000 reported cases and less than 200 deaths from this virus.   However, this is only reported data - widespread testing hasn't really been enacted, so there may be tens or hundreds of thousands of cases out there.  And the death toll will certainly increase, before, like every other epidemic before it, it peters out, over time, and fades away.

If we assume the death toll is about 3% for this virus (some are saying as low as 2%, others as high as 4%) in a nation of 330 million people, we could expect as many as 9.9 Million people to die, if this virus infected everyone in the United States.   If we assume $9M per person in "value" of human life, this comes to a grand total of 89.1 Trillion dollars.  I had to check my math on that twice.  Bear in mind I am using the "correct" system in America, where a billion is a thousand million, and a trillion is a thousand billion.  The British have it all fucked up, thinking a billion is a million-million.  But they drive on the wrong side of the road, have Brexit, a Queen, and don't even speak the language proper-like.

Now bear in mind the annual GDP of the United States is only 19.39 Trillion dollars and even tanking the economy for several years seems like a relative bargain.

But of course, death is only part of the deal.  Many more will be hospitalized, including those who die.   Assume 10% of the population becomes ill enough to require hospitalization, and the average hospital stay costs $1M in intensive care, and you're talking about another 33 Trillion dollars in health care costs.  Ouch.

When put into those terms, suddenly the GDP of America seems kind of paltry compared to the cost of an epidemic.   If we could avoid having everyone in America infected, it would save us all a lot of money.   So, I suppose the argument is, if we "spend" a couple of trillion in damaging the economy, it pays back in terms of savings, in health care costs and in human life.

If this quarantine thing lasts only a few weeks (the incubation period of the virus) that it may have a positive cost-benefit to society,

Say, for example, this quarantine thing does a month's damage to our economy, which at 19.39 Trillion dollars, would come to $1.6 Trillion.   How many people would that equate to, in terms of sick and dying?   Ok, let's get really crass, now.

If we make the same cost assumptions above, and assume that for every person dying there are roughly three people in the hospital, that means we can "afford" 13,000 sick and dying, or roughly 3,333 dead and 10,000 seriously ill, for each month of GDP the economy is tanked.  Pretty scary numbers.

What is interesting about this "cold, crass calculation" is not that it trivializes life, but illustrates how costly it is.   Put in purely numerical terms, it illustrates how the current response to the Corona Virus is, if anything, understated.   If a nationwide quarantine for two or three weeks would eliminate the virus from the public, it would be a cost-effective measure.

The problem is, of course, that re-infection is always an issue.  The Chinese have opened Pandora's box - and no, it is not "racist" to blame the Chinese government and "traditional Chinese medicine" (read: primitive superstitions) for unleashing this nonsense.  Wild animals should stay wild - they do not make you healthier, they make you sicker.  And leave the fucking Rhino's alone, while you're at it, for chrissakes.  Sheesh!   You want to join the first-world club, the first thing you have to do is chuck third-world habits.  But I digress.

It will be interesting to see, in the next few weeks, if there is an issue with re-infection.  And China, having overcome the initial epidemic, would be the logical place to see this happening - it if is to happen at all.