The VW scandal is pretty bad

As you’ve probably heard, Volkswagen,the world’s biggest car maker, was caught cheating on emissions tests. Specifically, its diesel engines had software that turned on anti-pollution features only when it detected signs that an emission test was going on. In normal mode, the vehicles had better performance but emitted something like 40 times as much pollution.

This wasn’t a simple thing to rig. Serious work went into the deception. And it isn’t just a clever amusing hack; the additional pollution almost certainly cost lives. (Update 2015 Sep 25: For one back-of-the-envelope estimate of the number of deaths attributable to Volkswagen’s actions, see this piece from Kevin Drum. He comes up with a conservative estimate of 4000 lives lost.)

The problem was first discovered a year ago, but Volkswagen stonewalled and denied they were doing anything wrong. It was only when they were backed into a corner by irrefutable evidence that they started acting all contrite and apologetic, the same pattern of behavior embraced by street thugs, except that street thugs don’t kill quite as many people.

Corporations caught in criminal wrongdoing are usually hit with fines, often so small that they’re treated as just another cost of doing business. This time the fines will reportedly be much larger, on the order of $18 billion, and VW’s stock has taken a huge hit, falling about $20 billion in market value. Massive lawsuits are almost certain.

But those things hurt shareholders, including institutional investors such as pension funds, who had nothing to do with the deception. (Just over half of VW shares are controlled by the Porsche family and more than a third by the governments of Lower Saxony and Qatar, but that doesn’t mean the drop in value doesn’t hurt some regular people as well.)

The bad guys are software developers, engineers, and managers, very likely high up in the organization. People ought to go to prison, just as people should have gone to prison (and didn’t) for the corruption that caused the financial crisis and the Great Recession we’re still crawling out of.

Just about everybody across the political spectrum from the far right to the extreme left seems to agree with throwing the book at these jerks, and yet it rarely happens except to low-level scapegoats. Partly it’s because people in a giant corporation have a lot of ways to cover their tracks, and corporate regulations needs to be tightened to make that harder to do. Of course, the U.S. Chamber of Commerce and the corporate wing of the GOP fight like cornered weasels whenever this is proposed.

(To be fair, it does happen sometimes, outside giant corporations and the financial sector, that corporate leaders do get punished. Several executives at Peanut Corporation of America have recently been given lengthy sentences for their role in a salmonella outbreak, for example; see this link.)

For more on the Volkswagen story, see this short piece by Kevin Drum and this article from The New York Times. Or just do a search for “Volkswagen.”

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