2009 Archive

Stephen Sugarman Unveils New Tactic to Improve Industry Accountability

By Andrew Cohen

Professor Stephen Sugarman is proposing a radical new way to regulate consumer products that contribute to high levels of death, injury, and disease.

Through writing articles, speaking at conferences, and conferring with public health officials, Sugarman is working furiously to hold five industries more accountable: cigarettes, alcohol, guns, junk food, and motor vehicles. His proposed regulatory tool, called “performance-based regulation,” would obligate the product-makers to reduce their negative social costs.
“Business leaders try to frame these negative outcomes as collateral damage that’s someone else’s problem,” says Sugarman. He calls that “morally objectionable” reasoning that overlooks the possibility these industries—which account for more than 25 percent of American deaths each year—could substantially minimize public health problems.

Sugarman’s approach veers away from recent tactics that have had limited success: tort suits and “command and control” regulations that specifically dictate how companies manage a part of their business operations. Instead, performance-based regulation would let companies decide how best to decrease their products’ negative public health effects.

“The concept is similar to what we’re starting to see with climate change regulations,” says Sugarman, who joined Berkeley Law’s faculty in 1972. “The ‘cap’ part of those cap-and-trade measures is analogous to what I’m proposing. Just as power plants must now develop ways to reach reduced emission targets, an automaker would have to develop ways to help cap and reduce the number of highway deaths each year.”

Autonomy with Accountability

Sugarman acknowledges that Americans could mitigate these public health problems themselves if more of them ate and drank in moderation, drove carefully, did not smoke, and did not use guns irresponsibly. But he contends that, absent that self-control, our society will continue to endure an alarming amount of death, injury, and disease linked to these products.

Some existing laws have helped, such as indoor smoking bans, lower speed limits, alcohol taxes, and restrictions on how many fast-food outlets can operate in a single neighborhood. But Sugarman says society needs to “harness private initiative in pursuit of the public welfare” to achieve meaningful progress.

He envisions lawmakers or agencies setting safety- and other health-related benchmarks that companies must help satisfy. This system would monitor whether companies are meeting the prescribed goals—and impose financial penalties on those that do not.

Sugarman doesn’t wholly discredit the effects of prior measures such as health-risk warnings on cigarette packs, calorie counts on fast-food menus, and air bags in cars. “They’re not bad ideas,” he says. “But they’re not the most effective ways to achieve significant improvement in lowering negative social outcomes.”

A High-Performance Regulation?

Performance-based regulation would focus directly on outcomes. Sugarman’s examples include junk-food sellers ensuring that fewer schoolchildren become obese, car manufacturers reducing the number of fatal road crashes, and tobacco companies lowering society’s smoking prevalence.

Sugarman has found that a “large share of public health people don’t trust business” and that it’s “hard to get them to appreciate that this way of making business responsible could actually be productive.”

While he hopes policymakers will embrace his idea, Sugarman understands the need to be patient. In 1970—when he vigorously promoted educational policies that favored charter schools—his ideas were widely branded as radical, unworkable, and even heretical. Today, the charter school movement is flourishing.

In this current battle, Sugarman’s goal is to convince policymakers and public health officials that a new legal regime is needed—and feasible. By way of example, he cites a recent American Medical Association report that a 50-percent reduction in salt consumption could prevent roughly 100,000 deaths per year.

“If retailers like McDonald’s and Wal-Mart have to reduce the salt that passes through their cash register by 7 percent each year, in seven years that’s a 50-percent reduction,” says Sugarman. “I’m fully aware that this type of performance-based regulation is ambitious, but these are big public health problems that aren’t going away.”