The Results Were Foreseeable

Economists Alex Tabarrok and Eric Helland looked at whether generous liability laws encouraged dangerous behavior by general aviation (small airplane) operators. This classic test of moral hazard examined the effect of the General Aviation Revitalization Act of 1994 which "said that small airplane manufacturers could not be held liable for accidents involving aircraft more than 18 years old." Prior to GARA's enactment, small airplane manufacturers "found that they could be sued for any aircraft that they had ever produced" (production had begun in the 1920's and 1930's) and the spate of lawsuits halted production in the entire industry.

The study's findings:

Our estimates show that the end of manufacturers’ liability for aircraft was associated with a significant (on the order of 13.6 percent) reduction in the probability of an accident....After GARA, for example, aircraft owners and pilots retired older aircraft, took fewer night flights, and invested more in a variety of safety procedures and precautions, such as wearing seat belts and filing flight plans. Minor and major accidents not involving mechanical failure—those more likely to be under the control of the pilot—declined notably.

GARA thus appears to be a win-win because it revitalized the industry and increased safety.

There's a broad societal consensus that manufacturers bear primary responsibility for product safety. However, if that responsibility extends much longer than the original parties had a reasonable right to expect, then the result may be unsafe behavior and even the demise of an industry.

Successful businesses control their costs. When they're prevented from doing so by force of law, the results are predictable. When the laws are relaxed in business' favor, the results, as Tabarrok and Helland showed, are also foreseeable.