> To counteract the financial incentives of shareholders (which result in bridges collapsing or data breaches) with the financial and legal incentives of a special class of employees - licensed engineers.
But now you have a special class of employees whose incentives are wrong in the opposite direction. They make decisions that are overly conservative, because they lose their license if the bridge collapses but by design no one can overrule them if they unnecessarily make the bridge cost four times as much.
This not only makes the bridge cost many times more, it thwarts the original intention because now building new things is so expensive that we avoid doing it and instead continue to use the old things that are grandfathered in or maintained well past the end of their design life, which is even less safe in addition to being less efficient. This is why so much of our infrastructure is crumbling -- we made it prohibitively expensive to build new.
> This type of licensing model has worked wonders in civil engineering, electronics engineering, law, medicine etc in improving safety standards for the public.
And these things are now unaffordable as a result. Ordinary people have been priced out of legal representation and are being bankrupted by medical bills. It's not a solution, it's just a new problem.
> Think letting the victims of the bridge collapse suing as the only method of preventing bridge collapses. This is not how things operate.
The reason this doesn't work in that specific case is that the damage from a bridge collapse can easily exceed the entire value of the bridge-building company, so then if you go to sue them they just file bankruptcy. Which they know ahead of time and then don't have the right incentives to prevent the damage. That hardly applies to the likes of AT&T, which is not going to be bankrupted by a large damages award, but is going to want to avoid paying it out.
> In sue-after model the responsibility before an accident has happened to make the product safe is quite diffuse across the whole organization, and the decision makers (C-suite) do not in fact have the expertise to determine if the product is unsafe.
Neither are they expected to. They're expected to hire someone who does, but then they have the incentive to balance the cost against the harm, so they neither end up with the incentive to abandon quality nor the incentive to make everything prohibitively expensive.
A real issue here is limited liability. The CEO comes in, hires low quality workers or puts them under unreasonable time constraints, gets a bonus for cutting costs and is then at another company by the time the lawsuit comes. Forget about licensing, make them personally liable for what happened under their watch (regardless of whether they still work there) and you'll get a different result.
Limited liability should be for shareholders, not decisionmakers.
That way the same party suffers both in the case of unreasonably high costs and in the case of unreasonably low quality and doesn't have a perverse incentive to excessively sacrifice one for the other.