Mesothelioma, Asbestos and Corporate Cover Ups: A Case Study in Market Failure
Asbestos and American corporations
Mesothelioma, asbestosis and other asbestos-related diseases have been at the center of the largest tort and personal injury cases in American history. The reason for this is four-fold:
- Asbestos was used widely in a variety of industries
- Asbestos was used by or played a role in the jobs of millions workers
- The ill effects of asbestos on human health are long term in nature, continuing to affect a person long after their exposure to the material has ended
- Many businesses covered up research proving the detrimental effects of asbestos for decades, and kept their workers exposed to the material rather than try to protect them or limit their exposure.
Asbestos was recognized as a health hazard as early as the 1920s. Yet major companies involved in asbestos production, as well as in various fields that made use of asbestos, intentionally downplayed the hazards of the material. Corporate decision-makers, with access to research on the nature of asbestos and its medical effects, often chose to keep their employees working in unsafe conditions. It was cheaper and more profitable that way.
Asbestos, mesothelioma and economics
Aside from the obvious moral failings caused by this narrow-minded quest for profit, this all amounts to a textbook case in market failure. Many conservative and libertarian thinkers argue that the market is the best tool for efficiently allocating goods and services, and should therefore receive minimal interference from government.
To be sure, there are some cases where the market allocates a good or service less efficiently than another system. But more importantly, this position causes a narrow emphasis on monetary gain and material wealth at the expense of other things that we value, such as human life itself.
In the case of asbestos, the short-term, self-interested decision making of the management of these companies led to horrendous outcomes and significant human suffering that is ongoing. Libertarians argue that in time, all information will ultimately come out to all market participants–consumers, businesses, workers, investors, etc. Thus, with all pertinent information available, everyone will make reasonable, rational decisions that benefit themselves. The problem is that this information may take a very long time, and by the time the market reacts, many problems may have arisen. As John Maynard Keynes said, “in the long run, we’re all dead.”
In this case, the theory would predict that construction workers, shipbuilders, miners and others would be fully aware of the dangers of asbestos before applying for a job. All information would be available, and they would factor it into their employment decisions. (As a result, a worker may choose to take the risk and work in an asbestos-related job for a period of time, fully aware of the dangers, or pursue a completely different job altogether.) However, the reality was that the information itself was often controlled by market participants (managers of these companies) that had a vested interest in a certain outcome.
In addition, it took time for the medical community to realize the extent of the danger. For years, nobody knew just how bad asbestos was for human health. This was a period in American history (late 19th and early 20th century) when safe working conditions and public health were barely addressed by the government, if at all. Without the government taking an interest in the health and well being of workers, massive health problems resulted. And they are still resulting.
The notion that the market can adequately police itself through the independent, rationally self-interested behaviors of its actors has been proven wrong many times over. It is currently politically popular to complain about “government overreach.” But the lessons of asbestos in the 20th century are quite clear that the state plays an important role in the economy.
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