In other words, this apparent reassignation of the liability for occupational illness from employees to employers and the government will act as an economic incentive to the latter: employers will eliminate exposures to toxic substances up to the point at which the cost of doing so exceeds the benefits to be gained (in the form of lower expected court and out-of-court damages). In addition, if employers are more informed about occupational risks than employees, or can obtain this information at a lower cost, this shift in liability may be economically efficient as well as effective in eliminating occupational exposures. The use of such suits in the courts in no way guarantees that the right amount of exposure reduction will take place, however. Excessive damage awards may lead firms to expend more than the socially optimal amount on protective equipment, for example.
Designing policies to respond to the threat posed by toxic substances is not easy. In fact, it may be the single most difficult environmental problem we have yet faced. This is so not only because of the considerable uncertainty about the identity of toxic substances and the ways in which they do their great damage or because of the long latency periods often associated with exposures to them. These problems are also difficult because their solution may require alterations--occasionally drastic--in the conditions in which people work, the products they consume, and the technologies they employ in their daily lives. Changes like these are not easily made.
We have seen that economic forces sometimes have the potential to alleviate the need for corrective policy when occupations or products are risky. However, the conditions necessary for a market solution to the toxic substance problem cannot be presumed to describe the world as we know it. The governmental role which is thus necessitated has taken a familiar form--the establishment of standards that in some cases limit and in other cases prohibit exposures to toxic substances. These standards and the other regulatory options available appear in a number of pieces of legislation that together form an umbrella of protection against toxic substances.
One problem with this umbrella is its irregular construction. That which it is to protect us against is defined differently in different legislation. Moreover, the protection that the umbrella is designed to offer--what legislators have chosen to call the margin of safety--varies from act to act. Finally, as we have seen, certain sections of the umbrella are to be designed with costs in mind while other sections are to protect us regardless