by tzs | 2025-08-04 22:17:35+00:00
There's an interesting philosophical debate about the nature of product liability laws. Suppose I'm selling some gadget which when used correctly is safe, and I've taken all reasonable steps possible to try to make it hard for people to use it incorrectly.

Nevertheless people sometimes still manage to use it in an incorrect way that injures their hands such that it will take a year of treatment and physical therapy before they can use their hands again.

Some people view the point of product liability laws is to make those who are to blame for the injury pay. Under that view I'd not be on the hook.

Another point of view is that it should be about who can most efficiently handle dealing with these injuries. Either someone is going to have to pay for the treatment and therapy to enable these people to use their hands again or they are going to probably end up on disability for the rest of their lives which will be paid for by government (and so indirectly by most of the rest of us).

Who should that someone be?

One candidate is the user's health insurance company.

One problem with that is that in the US there are plenty of people without health insurance. They would be able to get free treatment right after the injury at any emergency room if they can't afford to pay for that treatment, but that would only get them to the point they aren't in any more danger. It would not include the follow ups needed to actually restore function, so there is still a good chance they will end up on disability. Also that "free" emergency room treatment will actually be paid for by higher costs for the rest of us.

Even if the user does have insurance that pays for their treatment and therapy, ultimately that money is coming from premiums of the people that use that insurance company.

This health insurance approach then ultimately comes down to socializing the cost among some combination of two broad groups: (1) those who have health insurance, and (2) taxpayers in general.

Another candidate is me, the gadget maker. Make it so I am liable for these injuries regardless of who was at fault. I know exactly how many of these gadgets are out there. If all injury claims from people using them go through me I'll have full data on injury rates and severity.

That puts me in a good position to figure out how much to raise the price of my gadgets to establish and maintain a fund to pay out for the injuries.

This still socializes the costs, but now instead of socializing it across those two broad groups (everyone with health insurance and taxpayers) it is getting socialized across all purchasers of my gadgets.

The people who favor this strict liability approach also argue that I'm the best candidate for this because I'm in the best position to try to reduce injuries. If health insurance companies were the ones dealing with it and they noticed injury rates are going up there isn't really anything they can do about that other than raise premiums to cover it.

If I'm the one dealing with it and notice injury rates are going up I can deal with it the same way--raise prices so my injury fund can cope with the rising injuries. But I also have the option to make changes to the gadgets such as adding extra safety features to reduce injuries. I might come out ahead going that route and then everybody wins.