Satan, the Ghost of Hitler, and a VW Executive Walk into a Bar…
OK, I have to sound off on the Volkswagen emissions debacle and its implications. If you perused the headlines last week, you are probably aware that the company cheated on its emission tests. Calling VW a “cheat” doesn’t do justice to the shockingly devious lengths that they went to in order to deceive customers and regulators. Unfortunately, the number of people whose health and finances are negatively impacted by this extreme act of greed could end up being unprecedented.
In summary, Volkswagen has sold 482,000 vehicles in the U.S. since 2009 (and over 11 million globally!), with the claim that they were highly efficient “clean diesel” vehicles. In reality, they were not, as VW intentionally gamed emissions testing. And the deceived consumers of their vehicles, shareholders, employees, dealers, anyone who works in the diesel industry, and anyone who breathes air are paying a significant price.
The EPA found that Volkswagen used a “defeat device” and sophisticated software algorithms to:
“detect when the car is undergoing official emissions testing, and turn full emissions controls on only during the test. The effectiveness of these vehicles’ pollution emissions control devices is greatly reduced during all normal driving situations. This results in cars that meet emissions standards in the laboratory or testing station, but during normal operation, emit nitrogen oxides, or NOx, at up to 40 times the standard.”
NOx is some really bad stuff, by the way. It leads to acid rain, severe lung/respiratory damage, asthma, ozone toxins, and even death if exposed to enough of it.
Can you get more evil than that? Like, seriously? I imagine Satan, the ghost of Hitler, and a VW executive walking into a bar, finding a dark corner and plotting this all out…
VW executive: “OK guys – we gotta sell some vehicles – what do we do?”
Satan: “Well, how about we focus on fuel-efficient diesel engines, since gas prices are so high?”
Ghost of Hitler: “And how about we make those diesel engines “clean” by limiting NOx emissions?”
VW executive: “Interesting, interesting… how about we do both, but ONLY during emission tests through the use of a defeat device and software, and then crank out the NOx fumes in the face of unsuspecting children at all other times, while simultaneously claiming the vehicles are “advanced technology” and increasing their price?”
Ghost of Hitler: “Woah, Dude! That’s some F$CKED UP SH$T right there!!! I think I’ll pass…”
Satan: “Count me out on this one, bro…”
VW executive: “mwa hah hah hah. Mwaah haah haah haah. MWAAAH HAAAH HAAAH HAAAH!!!” <strangles puppy on the way out the door>
The Immediate Implications of the VW Scandal
The true impact of this deviousness is no laughing matter.
First, there is everyone who bought a bill of false goods. These are the 482,000 U.S. and 11 million global customers who paid a premium of thousands of dollars for “clean diesel” TDI Jettas, Beetles, Golfs, and Audi A3s from 2009-15 and Passats from 2014-15. Not only did these customers pay a premium, but they did so thinking that they were being environmentally responsible. In reality, the opposite was true. And to make matters worse, the resale value of their vehicles will likely fall through the floor. The cars can’t even be resold in the state of California due to their non-compliance.
Next, are the company shareholders. Volkswagen could face a maximum fine of $37,500 per vehicle ($18 billion total) in the U.S. alone. That figure doesn’t include fixing the recalled cars. And it doesn’t include the litigation costs and settlements for the dozens of lawsuits from regulators, shareholders, customers, dealers, and even employees that are already coming together.
As a result, VW’s share price has already lost 36% since this travesty was made public last Monday – and it will almost surely be losing much more. Shareholders will ultimately take a huge hit. Employees will as well. With the financial hit the company will take, it seems inevitable that job losses will ensue. And many VW employees are large holders of the stock, so it will be a double financial whammy for them. I’m sure all but a few VW employees had no knowledge of this scheme. And I’m sure those who are found to have known will get lovely golden parachutes to add insult to injury.
Then there are the dealers and all of their employees. About 23% of VW vehicles sold were diesel, and any on the lots can no longer be sold. Even if all of the vehicles are fixed, will the brand ever recover to the point that vehicle sales will match what they were prior to this?
And last but not least, there’s the environment and everyone who breathes what these vehicles have been spewing. Can you even put a dollar amount on all of the damage done here for VW to “make good” on? That’s 6 years of 11 million vehicles spewing out 40X the “acceptable” amount of pollution.
Our Faith in Unchecked Capitalism
Acts of this kind of corporate greed and evil are not isolated to VW, of course. Madoff, Enron, BP, Countrywide Financial, Healthsouth, Goldman Sachs, Toyota, GM, Bear Sterns, Lehman Brothers, Tyco, Arthur Andersen, Worldcom, Qwest, Martha Stewart, and Lance Armstrong are just a few of the well-known examples among the thousands of lesser known and tens of thousands of uncaught evils in corporate America.
Just last week, the former Peanut Corporation of America President was sentenced to a shamefully light 28 years in jail for knowingly authorizing salmonella tainted product to be shipped and sold to consumers, killing 9 and making 700 others ill. And let’s not forget about the Starkist class action I just wrote about – skimping on filling tuna cans? A travesty!
When money is the driving factor, those in power can do some really evil things – while pushing aside all moral and ethical standards. It can not only ruin lives, but ruin the very place we call home. Everyone is on a Pope Francis kick lately, and here’s a timely and relevant quote from il Papa himself,
“Time, my brothers and sisters, seems to be running out; we are not yet tearing one another apart, but we are tearing apart our common home. Today, the scientific community realizes what the poor have long told us: harm, perhaps irreversible harm, is being done to the ecosystem. The earth, entire peoples and individual persons are being brutally punished. And behind all this pain, death and destruction there is the stench of what Basil of Caesarea called “the dung of the devil”. An unfettered pursuit of money rules. The service of the common good is left behind. Once capital becomes an idol and guides people’s decisions, once greed for money presides over the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another and, as we clearly see, it even puts at risk our common home.”
Capitalism can result in great things when those in power exercise strong values. The large majority of businesspeople make sound ethical and moral decisions. Yet, many don’t. Left to their own greedy devices, many are happy to cut corners at the expense of others and the environment. This is why we created and need a legitimate EPA. This is why we created and need strong insurance company, payday loan, broadband monopoly, and for-profit education industry oversight. This is why we created and need the Consumer Financial Protection Bureau, the FDA, and the Clean Water and Clean Air Acts. It’s to catch the few bad among the many good and protect those who otherwise have no recourse.
Please keep this in mind the next time you are sold “getting rid of job killing regulations” (aka “self regulation”) as an economic cure-all. What is the economic cure when consumers spend nothing because they don’t trust any companies to do them no harm? If we can’t at least take that away from this VW hoax, that would be the biggest tragedy of all.