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Death and Number-Crunching in Corporate America

(Photo: Lone Primate / Flickr)

We now know that the death of 112 workers in the Tazreen garment factory in Bangladesh, just like the death of countless others around the world and right here in America, was the result of a cost-benefit analysis. This one was apparently largely done by Walmart, although the practice is common across the corporate world.

Before the fire, Walmart was well aware of the dangerous conditions at the Tazreen factory. In 2011, the retail giant audited the factory, giving it a high-risk rating. A second audit several months later found similar high-risk safety hazards, and the factory was then barred from producing clothes for Walmart in the future.

Yet, Tazreen, which saw its fire safety certification expire in June of this year and was currently building a ninth floor on a factory that was only authorized to have three floors, continued making garments for Walmart.

Walmart is the largest purchaser of merchandise in Bangladesh, using, through third parties, cheap labor there, just like their business model depends on cheap labor here in America.

According to documents obtained by Bloomberg News, Walmart and other retailers like Gap and Target were directly notified in April of 2011 of the numerous safety hazards at factories they were using in Bangladesh. During a meeting in Bangladesh’s capital, Dhaka, the retailers were specifically asked to pay slightly higher costs for garments, so that the factories could make some much-needed upgrades and safety improvements.

Representatives from Walmart and Gap responded to the request by saying, “Specifically to the issue of any corrections on electrical and fire safety, we are talking about 4,500 factories, and in most cases very extensive and costly modifications would need to be undertaken to some factories…It is not financially feasible for the brands to make such investments.”

Walmart collected more revenue than any other corporation in America in 2011, and ranked in the top five in total profits, bringing in a whopping $16.4 billion last year. But they weren’t willing to spend a penny of that massive profit to protect their wage-slaves in Bangladesh from dying in a fire that was so very, very likely to happen. These documents suggest that Walmart concluded that extra investments in safety in Bangladesh would not be as profitable for the company. As a result, the families of 112 workers in Bangladesh are in mourning.

But this isn’t surprising, since Corporate America has played this hand before. Between 1973 and 2009 as many as 2,000 people were killed here in the United States when their General Motors trucks crashed and their gas tanks exploded on impact. An investigation by the National Traffic Safety Administration concluded the problem had to do with side-saddle gas tanks that were newly-installed on GM trucks beginning in 1973 to increase fuel capacity. Those gas tanks, now located on the outside of the truck, were more likely to be damaged in an accident and could explode. But, GM didn’t initiate a recall.

Instead, GM asked one of its engineers, Edward Ivey, to run a cost-benefit analysis to determine what would be more profitable to the company: a recall, fixing the new gas tanks, or just paying out settlements to burn victims and their families.

At a cost of just $8.59 per vehicle, GM could have moved the dangerous gas tanks to a safer location on the car. But Ivey concluded that paying out settlements to the 500 or so people who died every year when their gas tank exploded would cost GM just $2.40 per vehicle. So, in 1973, GM abandoned plans to make the gas tanks safer, embraced profits over safety, and condemned thousands of Americans to an agonizing death.

Then there’s the foreign oil giant, BP. In 2005, a BP refinery in Texas City exploded, killing 15 workers who were in nearby trailers. As reported by The Daily Beast, the lead attorney representing the families of the workers killed discovered that BP had run a cost-benefit analysis in 2002 to determine what material they should use to most cheaply build the trailers surrounding the oil refinery.

Rather than using expensive blast-resistant material that would have likely saved the lives of those killed, BP opted for the more profitable and less-safe alternative, because, should an accident occur, BP would actually saving money paying out settlements to the dead rather than building blast-resistant trailers. According to BP’s own calculations, the life of a worker was valued at $10 million. And many assume the 2010 BP Gulf oil explosion and spill that killed 11 workers was also the result of a cost-benefit analysis performed somewhere in BP headquarters.

So how much longer are we going to let Corporate America get away with their deadly number-crunching?

When GM’s immoral cost-benefit analysis was exposed, a Los Angeles jury awarded victims of the exploding gas tanks an enormous $4.9 billion civil verdict in 1999.

More than a decade later, when BP’s corporate malfeasance behind the Gulf oil spill was exposed, the corporation was hit by the biggest criminal fine in the history of the country – $4.5 billion. Not only that, BP was barred by the EPA from receiving any new federal contracts, and barred by the Department of the Interior from receiving any new leases to drill for oil on public lands.

In response to this latest factory fire in Bangladesh, we should be demanding similar punishment for Walmart. If BP is banned from drilling any new holes in the ground to suck up oil for its role in killing 11 human beings, then Walmart should be banned from opening up any new stores in the United States for its role in the death of 112 Bangladeshis.

Since we claim to set a moral example for the rest of the world, then we shouldn’t discriminate between the deaths of white Americans and brown Bangladeshis. Only harsh consequences will force these corporations to put safety first and profits second.

If Walmart and the other retail giants in America know they’ll be hurt the next time they let a factory in the Third World go up in flames, then there will be an industry wide re-think of those precious cost-benefit analyses. And, just maybe, they’ll bring some of those jobs back to America.