Justinian Lane

Litigation because of lack of regulation

Perhaps you've heard the business community complain about "regulation through litigation," the alleged attempt to regulate businesses through courts instead of through the political process.  What the business community doesn't like to admit is that some litigation is necessary because of a lack of regulation.  Take for example this story about defective tire valves made in China:

Poisonous pet food. Lead paint on children's toys. The latest potentially defective Chinese import to hit American shores: tire-valve stems, the rubber shafts that allow motorists to fill their tires with air.

There are at least 36 million of the imported valve stems on tires on American roads. Any of them could cause dangerous tire failures this summer.

Already, a lawsuit has blamed a defective tire-valve stem for a crash that killed a Florida driver. One US importer issued a formal recall this month; another alerted the National Highway Traffic Safety Administration (NHTSA), which has begun an investigation. Earlier this month, the federal agency issued an advisory to motorists to check their tires for wear but said nothing about valve stems.


"The company [that imported most of the tires] has issued a technical bulletin, but nobody seems to know about it," says Sean Kane, an auto-safety consultant with Safety Research & Strategies in Rehoboth, Mass., which issued its own public warning Thursday. "We need to know because the public is entering the high-risk summer season, and this is a real problem that potentially affects millions of vehicles." (Emphasis added.)


Mr. Kane, the auto-safety consultant, says the valves could deteriorate and crack in as few as six months. Dill's suspect valves were manufactured more than 1-1/2 years ago, from July through November 2006, according to the company. (Emphasis added.)


In response to public outrage over contaminated pet food and lead paint on toys made in China, Congress moved last year to bolster the US Consumer Product Safety Commission. But a bill to boost commission funding and force it to notify consumers of unsafe products more quickly has not yet passed.

The agency does not oversee tires.

"Congress and whatever agency [involved in overseeing Chinese imports] don't do enough," says Peter Navarro, a business professor at the University of California at Irvine. "It's very hard because they're understaffed and underbudgeted." Source: A defect on tires has links to China |

Perhaps the oldest saying in economics is that there's no such thing as a free lunch.  That definitely seems to be true with cheap, outsourced goods.  Sure, we might save a few bucks (or pennies, in this case) by using a foreign-made good, but we may pay for it with our lives. 

At lunch today, I'm going to check my valve stems as I have tires from that time range.  I hope you check your valve stems, too.  And I also hope you remember that product liability litigation is too often the end result of unregulated industry.

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Posted at 11:45 AM, Jun 17, 2008 in Product Liability
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You raise a great point about costs. A popular argument for limiting the impact of these product liability cases (either through preemption or laws that make it difficult to file class actions, etc.) is that taxpayers pay for these lawsuits, and that only the trial lawyers benefit from them.

But either way, taxpayers pay. They pay to keep the legal system functioning, for a system that holds corporations accountable for public harms when the government won't/can't; or they pay for products that we can't guarantee are safe because under-regulated industries are free to pursue profits even at the expense of safety.

If the costs are going to be shifted to society either way, I'd rather pay for a legal system that provides redress for victims, holds corporations accountable, puts the government on notice of its inadequacy, and helps protect me from dangerous products.

Posted by: Kia | June 17, 2008 4:42 PM