Interesting. Would you mind elaborating? What are the relative environmental costs of these pollutants? How did you arrive at the abatement figure? (I skimmed your links but it didn't leap out at me.)
See below for the calculation. The relative environmental costs are debatable but NOx being 34 times worse is a stretch. Protectionism may be a factor -- domestic automakers have little incentive to push back on NOx.
The response is punitive because VW acted deliberately but otherwise far out of proportion to the harm. The article mentions that buybacks cannot be resold unless EPA approves a fix. I hope they do, because their embodied energy will dwarf by a significant margin everything else being considered here and scrapping them would be a disaster.
Fortunately internal combustion engines are nearly obsolete for light automobiles and this will all be moot in a decade.
VW light vehicle sales: 50M worldwide since 2009 [1]
Affected cars: 500,000 US, 11M worldwide [2]
VLKAY price: 70% pre-scandal level [1]
For the United States...
Annual average miles traveled per car: 11,000 [3]
NOx emissions allowed: 0.06 g/mi [1]
Actual TDI emissions: 1.6 g/mi [1]
11,000 mi * 500,000 * 1.5g/mi = 8,200 tonne NOx per year
CO2 from gasoline combustion: 8.9 kg/gal [4][5]
CO2 from diesel combustion: 10.2 kg/gal [4]
Jetta fuel efficiency: 27 mpg [6]
Jetta TDI fuel efficiency: 36 mpg [6]
Jetta carbon efficiency: 330 g/mi
Jetta TDI carbon efficiency: 280 g/mi
11,000 mi * 500,000 * -50 g/mi = -275,000 tonne CO2 per year
It seems odd to me that most of the financial windfall here goes to Volkswagen owners. (2/3 anyway). Wasn't the "damage" done almost exclusively environmental, which affects everyone?
Wouldn't it make more sense to use these large amounts of money to combat the actual damage that was done? (e.g. environmental cleanup initiatives?)
This settlement doesn't actually count all the fines, the EPA will get their cash for violations of the Clean Air Act at a later date. This is the initial fix to get the vehicles into compliance or off the street and refunding customers who purchased fraudulent vehicles.
VW owners paid a lot of money to purchase a product that was advertised to perform to certain specs. VW lied about this, and the cars didn't actually perform to these specs so the people who purchased the car assuming it would work as advertised definitely deserve something. This is important because in many places VW owners may not be able to legally drive their VW anymore (or at least in the future), because it doesn't meet emissions laws, so they suffer large damage there.
>The settlement, to be announced on Tuesday in Washington, includes $10.03 billion to offer buybacks to owners of about 475,000 polluting vehicles
They'll buy back my diesel so that I can get another one that pollutes less, thus getting my cheater car off the road, thus addressing the environmental damage going forward.
They're not just paying me money as a "we're sorry" factor.
Because the VW owners were the ones who paid their own money for a product that was falsely advertised.
Its not like these cars caused direct damage to the environment that can be cleaned up, they're still relatively low in emissions compared to a lot of other cars on the road.
Well the VW drivers got to drive a car, so they did get some benefit out of owning it even if it wasn't exactly as advertised. Meanwhile the rest of us got to breathe their pollution and die sooner. It's not "they're lower emissions than other vehicles", it's that they aren't as low emissions as they said they were. If people were in the market for a LEV and they bought a VW over a car that actually produced the emissions that the VW claimed to, that's an insane amount more pollution than the alternative car.
It's not just VW owners who were lied to. It's everyone who had to breathe the air around them.
I'm not sure about that. Pollution comes out of the back of the car, and the drivers sit well in front of the tail pipe. As long as they're not standing behind their running car for long periods of time, the person inhaling most of the exhaust will be the car behind them in traffic or more likely, the pedestrian standing beside them on the sidewalk at a red light.
The first hurdle is standing. Since most of the other cars on the road are more harmful to you than the VW LEVs, you'd have to show that 'but for that purchase', you'd have been in better shape, which is unlikely. That said, the parent makes a decent point - if they were looking specifically for LEVs, they might well have bought an electric or hybrid vs. a diesel. In that case, you might be able to show standing. Of course, then you have to prove that the amount of emissions involved in producing the electricity for a Tesla are less than the emissions produced by the VW. I have no idea what the math on that looks like, so it could be impossible, or very easy, but you've got to prove it to win the suit. Because civil cases have a lower bar, you might be able to get to this point without too much effort.
What really kills you though, is in establishing mens rea, because it's absolutely impossible. Since consumers could not have known that emissions were falsified, they could not have had the intent to harm you for profit. Again here you slightly benefit from the lower burden of intent on civil cases, as negligence or recklessness can count, but that's out the window on the facts, as the owner was specifically choosing a lower emissions vehicle in the first place, presumably so that they would be killing their brethren less, or less quickly.
Oh no, mind you, the tarmac didn't suffer, it's just another mil added to the cancer risk for every person in the cities these things are roaming wild.
(That must be reason #192845 why "capitalist healthcare" doesn't work: often, you only need it because other peoples actions require you to, and they're not paying for it.)
The VW owners get their money refunded as part of the settlement. So, they are no longer stuck with a lemon (And get to pocket depreciation.)
The extra $5,000/car could have been put towards planting trees, cleaning up an ex-industrial site, shingling San Francisco's city hall with solid gold...
Yes, there will be many more billions of fines levied at a later date (this is an admitted violation of the Clean Air Act which could be a fine up to $37,500 per vehicle or an additional $17.8B in fines). The EPA doesn't really care about getting their cash first, they would rather the vehicles fixed or off the road.
there is money set aside for environmental. so I don't see the problem as at least the people who still have the cars can get out from under them if they want. I actually traded mine off in May and after the scandal broke I don't even want to know what happened to the price if you could even trade them.
2.7 billion so far doesn't look all that bad to me, followed up with another 500 million or so to the states.
The real question you should be asking, will the states prove they put it towards the environment or merely general fund it or worse pass it off to cronies who suddenly have environmental solutions companies and investments.
I'm a "proud" owner of a 2014 Passat TDI (purchased May 2014). Here's the math breakdown for me personally:
- $26,000 for the car, before TTL
- First year, the car will depreciate 20%, so its September 2015 value would be $20,800.
- VW will give me $5,100 (maybe more) plus that Sept 2015 value = $25,900
- I don't have to make a decision until December 2018
Result: I get a car for 4.5 years for which I've paid $100
* Simplified math, doesn't factor time-value or the 0.9% interest rate.
I have a 2015 purchased in May 2015, 72 month loan at 1.9% interest so the math doesn't work out quite the same, if we both take the buyback + $5,100 on the same date I would probably still have paid more for mine than you for yours.
20% depreciation seems low, is there a source for that number? KBB value for my vehicle, private party sale, "very good" condition is $16k. Even "excellent" condition (3% of cars) only adds $500.
Granted I bought this because I was commuting long distance last year and it has 39k miles on it, but I put about 5 miles a day on it now so that will even out over time.
You shouldn't compare your KBB right now, after the scandal, to its September 2015 KBB value, before the scandal was started. The values took a huge hit. I don't know what the Sept 2015 value was, so I used 20% since that's what Google told me when I searched "how much does a car depreciate in the first year".
I think your math is pretty similar. A virtually free car for 1 year less ownership time.
I got a 2015 TDI Jetta in May of 2015. It gets wonderful mileage when I'm on the highway. 51-52mpg on long hauls on the interstate with cruise control set.
I'm honestly torn between taking the total amount of money or the $5,100 and letting them fix the car. I just hope it doesn't kill the fuel economy too much.
...and what downsides are there to holding on to the car if they have a fix?
2015 Passat TDI owner checking in: I would love a Porsche Cayman but can't justify the price. I've been looking at the S5 or TTS though. I don't have any particular affinity for the VW group but Audi has some nice looking cars.
Ha, it wasn't brand new. It was a 2007 that I sold in 2014. Repairs were EXPENSIVE! ($190/hr for labor at the dealer, $130 at the place I went to). Every part was 4x what it would be in a Camry. KBB was about $26k when I sold it.
"Owners will have two years to decide whether to sell back vehicles..."
So the rumor is I can drive my affected Golf TDI for ~2 more years, and then get compensated @9/2015 value plus up to $5k on top of that? Honestly, that's a terrible deal for VW.
Edit: thinking more, maybe this is better for VW than an alternative where they have to make good right away. They don't have to scramble to get 500k cars repaired or off the road as quickly, and they can spread whatever makes up the rest of their hit over a longer period as well.
To me, this does signal that we're a lot more upset about the dishonesty than we are about the emissions themselves.
Yeah, but I'd prefer the penalties did something useful, and weren't just a cash transfer to people who got lucky and bought cars from an unethical manufacturer.
This wasn't exactly a fuel economy issue, it was more of an emissions cheat. I get great economy out of my Golf - higher than advertised. I agree that if they'd done the right thing w/ emissions that economy might have been worse and the car not as attractive.
The reason the cars got better fuel economy than competitors is because VW cheated on emissions. IOW, the deception wasn't in the economy numbers, but in how VW managed to pull that off.
I agree that it's a little weird to say that they got lucky, but a pretty big hint that they actually did is that I wish I were a part of the settlement. It's not like anybody was actually harmed. These owners are getting a great deal.
Did they have extra fuel expenses? My understanding is that VW bypassed emissions controls in order to maintain a high level of efficiency and performance. The environmental cost of that was externalized onto all of us.
Yeah, but I'd prefer the penalties did something useful
I think that sticking VW's head on a pike as a warning to others that may follow would qualify as "useful". The fact that owners are compensated for not getting what they thought they were buying can be viewed as a bonus.
Furthermore, if the owners weren't compensated, many of them would continue to drive these cars rather than sell them at a loss. The outcome would be worse for everyone who breathes air, not just the VW owners.
It's it also supposed to get the too-high-emissions vehicles off the road? It seems like letting people drive them around for two more years is counter productive to that goal.
It's not counter productive, its just not super productive.
But I think the concerns are less about getting these specific cars off the road immediately, and more so ensuring that other manufacturers are scared away from trying to pull this shit again.
They have some incentives to be speedy and individual states may move things along even quicker (denying registration for unfixed vehicles):
> The settlement includes $2.7 billion in funds to offset excess diesel emissions and $2 billion for green energy and zero emission vehicle efforts, the source said. The diesel offset fund could rise if VW has not fixed or bought back 85 percent of the vehicles by mid-2019, the first source said.
But they are still facing stiff penalties under the Clean Air Act which could more than double the damage. There are also 80,000 larger engine vehicles they still need to deal with (which I am quite curious about since I have one!).
The way I interpreted that verbiage, what they really mean is that they'll buy your vehicle back for the price that it would fetch in September 2015 _in the condition that it currently is_ - i.e. any extra mileage and wear and tear would still drive the price down, it's just that you don't have to worry about the value lost due to the scandal.
As an individual, you make one wrong statement to the FBI, and you are hauled off to jail. The company lied over 500,000 times to the government, and gets off by paying a paltry fine. No wonder companies continue to do this: there is no consequence to the employees who do this shit.
You may wish to search for "Dieselgate" on the web, to better familiarize yourself with this case.
The German government is actually investigating the ex-VW Germany CEO, although I don't know if that means potential jail time.
Further, there have been serious consequences at VW. Top management has effectively changed in both Germany and the US. The future product roadmap has changed radically in both the US and Europe. Also, this direct monetary outlay is not exactly a slap on the wrist, even for one of the world's largest automakers.
Losing your job << going to jail for your actions. From the Wikipedia article: "... estimated that approximately 59 premature deaths will be caused by the excess pollution produced between 2008 and 2015 by vehicles equipped with the defeat device in the U.S."
https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal#D...
Installing the defeat devices in hundreds of thousands of vehicles was not an accident that happened one day. It was a calculated corporate decision involving many people, over a long period of time. The result, according to many sources, was dozens to hundreds of deaths in the United States, Europe and elsewhere.
There's no way they can reliably calculate that. Any increase in deaths could just as easily be attributed to the increase in popularity of country music and therefore diesel truck sales. All we can reliably say is that the environment is worse off.
Also, 59 seems like a statistically insignificant number when compared to the overall population. Or maybe I'm interpreting it incorrectly?
I sit in stunned amazement at the foaming-at-the-mouth outrage being expressed on this thread.
There is no way you can pin the death of anybody on VW diesel emissions. It's a statistics game that that's it. You might as well blame Tesla for the extra deaths caused by the increase coal plant emissions created by owners charging their cars. Or make up any other example of any activity that increases some polutant. The only difference is that VW violated an arbitrary number in a government regulation.
There are millions of vehicles on the road today with worse emissions than the violating VW diesels. They are all killing people (statistically) and the government and therefore you and I are complicit in this murder by allowing it to continue. I am sure everone on this thread will endorse punitive tax increases to punish us all for our negligence, and to buy out the owners of these polluting cars so that they can all buy clean-and-green new ones (conveniently ignoring the rather massive environmental impact and attendant premature deaths caused by junking and replacing perfectly serviceable vehicles).
Exactly. It's understandable to be angry about this, but I think many people overestimate the magnitude of the issue here (or perhaps have misplaced their anger).
Consider the fact that in some states, heavy duty diesel trucks (8,500 lbs or more) and trucks older than 1997 are completely exempt from all emissions testing.
I bet a single one of those trucks produces more emissions than the "actual vs claimed" emissions delta of dozens of VWs combined.
Not to mention the car transporter ships which pump out bunker oil soot and Nox while idling at port while the VWs get unloaded. An extra 30 minutes of that is probably worse than all the extra emissions combined.
Additionally, I find it quite extraordinary how such huge settlements over a bit more car exhaust in a country with lots of emissions-testing-exempt trucks and massive hydraulic fracturing programs can exist at the same time, but who said that government policy needs to be consistent?
That's a bullshit attitude. How about cancer from smoking? Is that also a statistics game? The effect of NOx on human health was studied the same way that smoking was.
1. I am not an expert here, but unless you are too I wouldn't refute claims made by peer-reviewed publications without at least offering an argument against the analysis made.
http://iopscience.iop.org/article/10.1088/1748-9326/10/11/11...
If you agree that the environment is worse off and that the environment being worse off causes more deaths, then you agree that they caused deaths. Then it becomes a question of magnitude, which they tried as best as possible to estimate.
2. There is a confidence interval around 59 in the study which doesn't include 0, so it is statistically significant according to the analysis they did. Not sure what sort of analysis would say that 59 deaths is statistically insignificant unless it was a difference between two groups, but that's not the case here.
3. There's a problem here with news articles boiling down an estimate with a wide confidence interval to a single number. There needs to be a way for the public to start understanding statistical conclusions and confidence intervals.
> [If you agree that the environment is worse off and that the environment being worse off causes more deaths, then you agree that they caused deaths.]
...I should have said “worse off than if VW had not cheated and all other variables remained the same”.
I don't question that more emissions results in more deaths. I question their ability to reliably calculate the number of deaths caused when dealing with numbers that small (~0.0003%) and leaving out some very important variables (which they do reference but don't incorporate). Of course, the publication was meant to compare the claimed vs actual emissions, but I'm talking in the more general case of overall emissions.
The publication claims that:
>> [Finally, we note that there may have been environmental benefits of the defeat device that we have not computed. For example, the reduced use of diesel exhaust fluid in selective catalytic reduction may potentially have also reduced ammonia slip, and therefore associated PM2.5 exposure and health impacts. In particular, Dedoussi and Barrett (2014) find that total PM2.5 exposure attributable to road transportation is caused approximately equally by NOx and NH3 emissions.]
I can think of a few more inadvertent environmental/health benefits of the defeat device:
For example, suppose that VW hadn't cheated and instead spent more time and money on R&D to come up with a legitimate solution. They would then have to pass this cost on to the consumers in the form of a more expensive car.
Would all of the people who purchased diesel VW's still have purchased them if they were more money?
If not, would they have purchased a car that produces worse emissions instead?
The VW Jetta has a 5 star crash rating. Would all of the people who purchased other cars purchased cars with the same crash rating, or perhaps a car with a worse crash rating?
There are a bunch of things that you could list that could all have an impact that rivals the 59 cited in the publication.
We're talking about 59 out of 17,500,000 (number of annual deaths integrated over 2008-2015). It wouldn't take much to actually find out that the VW emissions scandal actually resulted in more lives saved.
EDIT: That said, the publication isn't really trying to measure the amount of deaths caused by the scandal itself, but rather the increased emissions portion of it. Perhaps my original comment was out of line now that I think about it.
Yes, it's very tricky to take an action as complex as the decision to cheat on emissions test and boil down numbers describing the damage done to society. Having numbers like "they killed 59 people" certainly makes it easier to stir enough outrage, but it is an oversimplification.
Would you agree with something like "the emissions they caused by cheating killed people, and our current best estimate of that is 59 (+- the confidence interval in the paper)".
It's true that the decision to cheat may have had the benefit of getting safer cars to more people, but that is even harder to measure than deaths caused by emissions. To me, the decision to cheat wouldn't be justifiable and I would still be outraged because they knowingly did harm to the environment and society with the hopes that there would be a nearly un-measurable side benefit: increasing the average safety of cars relative to a world that doesn't exist. To me, it seems despicably irresponsible to gamble the well being of many human lives against something so hard to measure.
This argument will seem a bit more empathetic if you don't consider it as killing 59 people outright, but increasing risk factors so that on average 59 additional deaths occurred(unclear over what timeframe and what the methodology is). Spread out over the world population (we share the same air) that is a relatively short amount of lifetime.
On the other hand, consuming more fuel, making car ownership more expensive etc also carries real costs. People can't get work done, spend more of that lifetime tAking less efficient means of transportation, doing less enjoyable things like waiting on a greyhound bus, etc.
The sensationalist 'caused x deaths' headlights are very hard to reason With and usually one sided. That being said, car emissions are still a problem and there is a reason for these(and other public health) rules -- the response should perhaps be a little bit less emotional though. ( there are plenty of scandals that are probably more worthy of this emotional response, e.g. Illegal dumping or contamination, unhealthy foods, antibiotic overuse, etc.)
The method for the paper that is quoted in the Wikipedia article can be found starting on page 2 (the full text is available for free): http://iopscience.iop.org/article/10.1088/1748-9326/10/11/11.... It's three and a half pages long and includes many citations to other published articles.
When you say "serious consequences", do you have any idea whether the people responsible have moved on to other similar jobs or are still working in the industry or living a similar lifestyle?
Because if they are, then I think we may have to disagree on what constitutes a "serious consequence", as per the original posters point.
And if we don't know that, then we're not really in a position to know if there have been sufficiently serious consequences for those involved.
Hell, I'll pay the 15 billion dollar fine if I can do it with Volkswagen money and you don't touch my assets, the money I took out of the company as salary while doing the crime, or jail me.
Serious consequences laid on a corporation don't do anything, because there's no conscious being there to react to, perceive, or experience those negative consequences. They especially don't do anything if you're managing other people's money and the executive class receives relatively little personal punishment.
Shareholders are not innocent. It's their responsibility to bear, albeit limited, financial risk. It's therefore prudent for them to demand companies uphold legal and moral obligations, or move capital into ventures that will. Failure to do so means they are more likely to lose their investments.
Then they should have invested in companies that have stricter controls, or put their money somewhere safer w/ more transparency. That some investors are unsophisticated doesn't absolve them of liability.
All bets are off when we're talking about blatant violations of the law. Who's to say that "transparency" is even really transparent? What good are stricter controls when the people who are in charge of creating and enforcing them are the same people who are violating them?
My point is that this could happen with any company and is part of the risk of investing, but to imply that the shareholders should have just "demanded companies to uphold legal and moral obligations" is assigning more stupidity on the shareholders than deserved.
It usually goes without saying that shareholders expect the companies they're investing in to obey the law and not lie to them.
Like I said, this is part of the risk of investing. There's always a chance the company you are investing in is cooking their books, lying, etc..., but the risk exists with any company and there's not much you can really do to mitigate it.
> German prosecutors said on Monday that the former Volkswagen chief, Martin Winterkorn, is suspected of market manipulation for having waited too long to disclose that the company faced an inquiry. They are looking into another member of the management board as well for potential violations of securities laws.
Like other commentators, I would suggest that the criminal investigations are ongoing, but I also suggest that VW management is getting off very easy. They are not currently under arrest. Individuals by this point, with this sort of evidence, would have been arrested and bailed. There is more than probably cause to start arresting dozens of VW employees. They can then fight amongst themselves as to who is going to turn state's evidence.
They should treat it as they would any other conspiracy. You focus on an individual, arrest them, then get them to give evidence. Eventually you work your way up the chain. Waiting until you've got all the ducks in a row is special treatment in comparison to standard criminal investigations.
Compare Toyota's fine for it's failure to report safety defects to GM's in the GM ignition scandal. I think reasonable minds can conclude that they are both serious, but it is possible to make an argument GM's was more serious, and they paid a lesser fine. Also compare timelines, and the fact that US regulators were pressured by public discourse in the GM case. It's not crazy to come to the conclusion regulators show bias towards US automakers.
It's actually no conspiracy at all that the US government has bias and favors US auto makers in public policy. Afterall, it was not long ago we gave GM a huge welfare check / bail out package. Ford to a lesser extent.
Here's the arguments I can make in 5 minutes of Google searching. My point is just that there's room for debate here (in other words, I'm not saying I am right and you are wrong, what I am saying is that reasonable people can agree there is reasonable debate on this issue).
Argument 1:
Toyota paid 1.2 billion dollars for failure to disclose safety defects linked to 5 deaths. Floor mats in Toyota cars may be linked to up to 34 more deaths. GM had to pay only 900 million for safety defects leading to at minimum 124 deaths, but the real death toll may be much, much higher than that, because as many as 90% of claims are not included in that figure as they are part of an ongoing civil dispute.
Argument 2 (an argument similar to yours that oversimplifies):
Complete loss of control of your car (not even airbags functioning) is less serious than having floor mats in your car?
Argument 3:
Toyota paid 1.2 billion dollars for "having floor mats in their cars" and an extremely rare accelerator sticking issue that was linked to only 5 deaths. GM got off easy on an issue that caused complete loss of control of the car as ignition cut off, and not even the airbags would be deployed in this scenario. GM also internally was aware and discussed this defect for about a decade and did not disclose it.
Argument 4:
Most of the deaths in Toyota's case were linked to floor mats, but how much blame can we reasonable put on floor mats for causing accidents? Is it more or less than putting items on your key chain? Maybe it's not reasonable to assume items on your keychain a safety risk, but manipulating and kicking the floor mats out of their socket holders obviously could interfere with the accelerator pedal.
Edit: I think no matter how you spin it, GM paid probably an order of magnitude less $$/human life than Toyota in these two cases.
My comment was unrelated to how much did each have to pay though.
And it's not "complete loss of control", not to mention airbags are not part of "control of a car". It's "less control" and unlike in Toyota's case, the car doesn't actively do something.
I mean, sure, it's debatable and GM were despicable for not fixing it when they knew about it, but every time I hear about "IgnitionGate", it feels like most people are making out of it a bigger problem than it was.
>My comment was unrelated to how much did each have to pay though.
The topic of my post is about unequal punishment b/w GM/Toyota. If your comment isn't about that then I don't see what the point is in changing the topic and going into a microscopic debate about which safety fault was worse?
If you want to go into these tangential arguments about safety defects, car control, etc. ...my arguments were for illustrative purposes in the first place, but second... you know when the ignition is cut off in modern cars, that would usually mean you can not steer the car, right? That is pretty dangerous.
We don't like to talk about it, but if you want to commit crimes, the best way to do it is to collective responsibility over a corporate entity, and hold your employees and economic sector hostage.
VWs actions left around 60 estimated dead. Around 120,000 days of people not being able to function normally. At a direct cost to the economy of around $450 million. And a cost to our quality of life that most would consider even higher.
All of which is bad. But no matter how you do the math, most of this fine is punitive dissuasion for others who might be tempted to also cheat.
(Note that most of the fine moves money from the left hand to the right without destroying it, so we are theoretically collectively left better off as a result. Plus we prevent about as much more damage as we had already.)
I think you're right. Fines have to be higher than the direct cost to society and they have to be higher by the chance they're caught.
In this case, it was very hard to detect, it was fully intentional on the part of the company, and they fought for years to keep it hidden.
This sort of deception is maybe 1 in 20 or 1 in 50 to be caught? So it isn't like a parking ticket - it's hard to catch and was hard to prove.
Furthermore, this is a "deal with the mess you made" solution - or a "natural consequences" consequence if you are a parent. There are certainly much more efficient ways of spending the money to improve public health, but those are abstract, hard to explain to the public, and hard to explain to the car owners. So they are less efficient from the government, public and company's perspective. Make America hyper-rational and the owners would continue driving these cars and we'd spend the money on truck emissions or something.
Was it? The researches who detected it didn't seem like they were doing anything that special. My impression is that nobody had bothered to check before.
On September 22, 2015, VW stock had the trading highest volume / price decline. The stock closed $106 per share that day.
There is a trading strategy that assumes markets over estimate liability of lawsuits. While I am probably cherry picking data, it is notable that the stock closed at exactly $106 per share today. So much for that trading strategy in this case. The market pretty much nailed it.
In my opinion it is going to grow from now on, until it gets back to normal. A large part of the world is driving cars made by VW Group. Too big to fail.
Nature would benefit if gasoline prices were 10 US per liter and people would stop to drive around senselessly. (I know the geographic circumstances make this impossible, but nevertheless...).
How is defrauding consumers a "US vs Germany issue" and nothing else?
Also VW got off with a slap on the wrist here.
The US did nothing wrong here. People don't drive around needlessly, they drive because they live in places that often have no viable alternative. Why on earth should they be punished?
Your comments are bizarre and naive. Is you point just anti-Americanism?
1- GM, Ford, Chrysler lobby congress to enact the strictest NOX limits in the world. While at the same time having lenient limits on other exhaust fumes killing thousands of people every year, so that we can continue our gas guzzling SUV and Pickup truck craze.
2- VW faced wtih dilemma. Stop selling diesels altogether, or go rogue and yolo your way through emission tests.
3- Get caught and fined.
Well played, GM, Ford, and Chrysler. GM, Ford, and Chrysler were behind in Diesel tech, so this as a great defensive move to thwart Japanase and European automotive competition.
Moral of the story is: You need good lobbyists if you wanna be successful here.
In the meantime, some smart scientist notice that the exhaust from fracking is pretty poisonous and sometimes even radioactive... (lots of fracking wells release more radioactivity than highly regulated nuclear power plants).
Thank god the big oil lobby massages congress to enact legislation that naturally bound pollution released through fracking/digging/drilling does not count.
That is pure conspiracy theory. Please provide evidence of such lobbying and refute me. Until then its conspiracy theory.
Do you know that Volkswagen has a plant in Chatanooga, TN that employs many American and that Ford Motor Company has a plant in Cologne, Germany that employs many Germans right? It's not the 1970s any more. Nobody is trying shut anyone out of the American market.
I'm critical b/c I think 'defrauding consumers' in this case doesn't deserve a 15 billion 'slap on the wrist' (which will hinder innovation and affect jobs here - VW could have spent this money on the development of electric cars).
When hearing such numbers, yes maybe I am 'America-critical'. But it's not only in this case. E.g. recently I cannot understand how someone can sucessfully sue for $10,000 upon being forced to upgrade to Windows 10? Or, more fundamentally, how 'a country' can e.g. put Chelsea Manning behind bars for 35 (!) years? (She is an American hero for me).
If you discount all the hypothetical environmental costs that at best guess are just that, guesses. And, if you were to consider this penalty in a somewhat satirical manner, it would have been cheaper for VW if they would have been killing the consumers of their cars.
I understand the punitive nature of the penalty and its amount, but the amount seems somewhat egregious given the fact that all VW did was violate regulations of a government body. Uber is constantly praised for skirting or directly violating state or local government laws and regulations, yet is seen in an overall positive light for the supposed benefit they are providing society. This is the government's heavy hand making an example of VW and it's violation of regulation.
> If you discount all the hypothetical environmental costs that at best guess are just that, guesses
That VW's behavior caused some environmental impact is not a guess. The guess is only to the extent of the damage.
> it would have been cheaper for VW if they would have been killing the consumers of their cars.
That is ridiculous. The death toll would be many times 9/11.
USG would've seized by force every asset inside its borders and a lot (or all) outside of its borders. Not only of VW but of any contractor that might've may had something to do with it. For starters.
> Uber is constantly praised for skirting or directly violating state or local government laws
And also constantly criticized, and sometimes shut down.
But more to the point, violating different government regulations (by extension, different laws) has different outcomes. Why is that surprising/concerning, again? Federal environmental regulations SHOULD be treated more seriously than local taxi rules.
> This is the government's heavy hand making an example of VW and it's violation of regulation.
On only his can we agree. The message is clear: fines for willfully ignoring environmental regulation are not a cost of business.
VW did something in the US that's explicitly illegal under US federal law (employ a "defeat device" to disable emissions equipment outside of testing). For the most part the other auto manufacturers seem to be tuning/optimizing their emissions equipment specifically to pass the test cycles but are not going so far as to outright disable it outside of them like VW did.
There's a difference between a car that's tuned to passively give good values at emission tests and making a device that detects emission testing, activates a procedure that involves changing the dynamics of the engine.
I'm of the opinion that there should be a corporate death penalty (though I oppose the death penalty in criminal cases). There's some situations that are so ethically indefensible, wherein a corporation can cause incredible harm over a long period of time, that the only just outcome is for the company to be destroyed. The people responsible are shielded from any real consequence (how many people at VW knew about this, and how many are going to jail over it?). This is not a minor squabble over regulations; this is a conscious decision, involving many executives within the company, to willfully cause environmental destruction that directly costs human lives and health.
This is one of those cases where the corporate death penalty is the only just outcome I can think of.
$15 billion looks like a large sum; and maybe it's even enough to deter car companies from doing something similar in the future. Maybe. VW is worth $73 billion, and they generated a lot of money on the strength of their diesel campaigns. Amortized over the many years that they were shipping out these cars, it begins to look like a cost of doing business, rather than a massively punitive expense.
Such a "Coorporate death penalty" is likely counterproductive in several ways. On one hand you could just open a new company under a similar name and continue buisiness as usual, on the the other hand, what happens to the workers employed by VW? It would kill entire cities in many places of the world. For example, Wolfsburg, the VW headquarter city has a population of ~100 000, the factory alone employs 57,000 people, ignoring administration and managment for VW in Wolfsburg. The shareholders would still be richer and don't have to fear punishment, the managers are still well networked enough to quickly get a new job at Siemens or wherever and the only people suffering at the end are the guys putting the seats into the chassis who had nothing to do with the whole situation.
Also, what you are ignoring is that the US can't just come along and close a transnational or foreign company. Also, what about subsidaries? Does condé nast get closed if reddit violates the law? Does GM get closed if Opel cheats?
All of those things have direct comparisons to the individual death penalty or other pre-existing laws.
A human could be put to death even if they have a family to support, so the workers argument is settled. The only issue is the matter of scale, but the death penalty is pretty rare to begin with, and I would expect a corporate death penalty have even stricter requirements.
They don't have to close a transnational, they can just force them to stop doing business in the country. They can close their US operations and ban their imports. We already have import bans on companies, countries, and products.
For subsidiaries, it would depends on how far up the chain the crime went. If Opel committed the crime but GM didn't know, Opel dies. If GM knew, GM dies. You could likely even spin off the "innocent" subsidiaries. If a husband commits a crime and the wife was not involved, the wife doesn't go to jail. If they both did it but their children were not involved, the children don't go to jail, they go to live with another set of parents.
You're not wrong, but this is also the same argument your parent post was making, namely that it will have a large scale negative effect on many regions.
I feel it's a bit strange to argue for corporate death penalty by comparing it to individual death penalty, given how controversial the individual death penalty is.
It should be, they both should be very controversial. But it easier to argue for a corporate death penalty than it is for a corporate "life in prison" because both of those things look exactly the same.
In this case, VW claims they didn't know either, it was those pesky employees that put it in there "for some reason", and any evidence to the contrary probably does not exist anymore if there was any. So VW would be innocent in your case?
>>The shareholders would still be richer and don't have to fear punishment
This is actually an interesting thought. What if they did have to fear punishment? Perhaps in the form of having a percentage of the settlement/regulatory fees passed to them via their brokerage accounts. A mechanism like this would mean that potentially shady/unethical corporate behavior would be reflected much more strongly in the stock price, since holding onto those stocks would carry risks beyond just the stock price temporarily going down during lawsuits.
It would also put immense pressure on corporations to not do shady shit.
Do you mean in amounts that could exceed the value of their shares? If so, then you're talking about changing a fundamental of corporations: limited liability. If you're not, then I don't see any difference in impact whether the corporation pays or the stockholders pay.
Limited liability doesn't protect you from the value of a stock being wiped out. Lehman Brothers was a limited liability corporation but anyone holding their stock during the bankruptcy was still stuck with worthless stock or debt that they couldn't recover in the proceedings. The current fine mechanisms are inadequate and can't properly realign incentives against breaking laws that carry civil penalties, especially in a case as blatant as VW's cheating.
Perhaps increase fees/taxes on "toxic" shares in companies that have broken significant laws with intent or maybe force these companies to settle by issuing diluting stock that goes to agencies responsible for cleaning up the mess. Or even tax revenue instead of profit on these toxic shares which would create a huge incentive, especially for executives and large stock holders.
The point is to tweak and realign incentives, it doesn't have to be passing on extreme financial liability to shareholders. Most investors can't take a huge hit on their portfolio like a company with tens or hundreds of billions of dollars of revenue can.
This is precisely what the fine is doing. Fifteen billion dollars of the market capitalization was wiped out, directly impacting shareholders. The stock has lost about 40% of its value since news of scandal broke.
You can argue it should be worse, but we don't need some special new mechanism. The fine can be anywhere from $1 to the the market capitalization+1 and the effects would then range from a slap on the wrist to bankruptcy and the loss of all equity in the company for shareholders.
>>>>The shareholders would still be richer and don't have to fear punishment
>>This is actually an interesting thought. What if they did have to fear punishment?
What about people who may have invested in a fund that bought shares? Should the fund managers fear punishment? Should the people that bought into the fund be punished?
This is where the "punishment for those who benefit" gets complicated. It's hard to work out the people that should NOT be punished.
> It would kill entire cities in many places of the world. For example, Wolfsburg, the VW headquarter city has a population of ~100 000, the factory alone employs 57,000 people, ignoring administration and managment for VW in Wolfsburg.
Shutting down a company doesn't mean you destroy all of its assets. Factories or entire divisions could continue to run under new ownership. Just treat it as a Chapter 7 bankruptcy where the company owes the government more than the total of its assets.
> The shareholders would still be richer and don't have to fear punishment
Shareholders would lose out to the maximum extent allowed without piercing the corporate veil since their ownership stake in VW would become worthless.
> Also, what you are ignoring is that the US can't just come along and close a transnational or foreign company.
No, but they could close down the US subsidiary (Volkswagen Group of America) and take all assets that are in the US.
> Also, what about subsidaries? Does condé nast get closed if reddit violates the law? Does GM get closed if Opel cheats?
Easy, just sell them for whatever you can get for them.
So, corporations can just open (shell) subsidiaries to do their shady stuff for them and then the subsidiaries get declared bankrupt, which means the actual company survives and profits?
Just a thought on this - presumably some workers knew what the device did and others must have suspected. "Just following orders" is not widely seen as OK.
It was not even a device, it was a modified program. I highly doubt more than a dozen actual workers knew of it. How much management knew of it is hard to say.
I'm of the opinion we'd see far less corporate shenanigans if we were more willing to pierce the corporate veil and hold individuals accountable for their actions and orders.
Involuntary manslaughter and criminal negligence already have plenty of case law around them. Yes, you can be prosecuted for being a menace to society whether you meant to or not.
In addition, everyone who got screwed by buying a VW is now doubly screwed when they're trying to find a shop to perform routine maintenance, as the factory repair shops have apparently been put out of business.
While we're on the topic, can we sentence BP to death?
They destroyed the livelihoods of thousands, if not millions of innocent people, and thoroughly polluted huge swaths of the Gulf of Mexico coastline (and a bit of the Atlantic coast, as well). They caused the biggest single environmental disaster in United States history, and it was due to negligence.
If this wasn't an accident, but rather a deliberate attack "in the name of Islam", we would have gone back into Iraq. It would have been 9/11 all over again, but with far more actual damage caused. But since they're a company, they get a slap on the wrist and keep on going. (I'm exaggerating, I know they paid a lot, but they're still more than alive and kicking. I just wish their stock tanked more after the Brexit vote.)
If you want to make an example of a company with a clear-cut case, you can't really do better than this. They committed mass destruction of the Southern coastline. Seriously, if this was intentional it would be a war crime.
Nonono, don't compare anything to terrorism please: We have a far to belligerous action on terrorism, while we don't do much against other causes of death. Smoking still causes an order or magnitude more deaths of innocents than terrorism (non-smokers) and the people still defend it's ok to smoke on the sidewalk (and defend it's ok to kill Muslims without trial as long as it's a military action). Responses to terrorism are disproportionate.
That's kind of like Godwin's law. It's worth comparing things to the Nazis to reveal how little we despise other bad actions. But we have unreasonably strong negative feelings about both Nazis and terrorism, so it's not really helpful.
I couldn't agree more. I tend not to be a conscientious shopper but will very happily go out of my way to avoid spending a single penny with BP.
Utter scumbags - they should never have been let off the hook the way they were after that disaster. I fully expected the company to be on its knees at the very least but nope - they're trading happily ever after.
I know people who work for BP too. Sorry you took my comment to heart but obviously I'm not beating up all of those 80,000 individuals.
However, BP as a legal entity and a subset of its employees fucked up, causing untold damage to the world we live in. There are people who work for BP who I would hold accountable, and those people do not deserve to have my hard earned cash spent on their company.
The argument could also be made that a random person on the internet passing judgement on other people without knowing anything about them isn't a particularly right thing to do.
That's a sadly America-centric view of the world. Shell's spills in the Niger Delta are just as bad or worse and nobody cares because it's some weird foreign country that doesn't appear in their news:
The total volume of oil spilt was on the same order of magnitude - about half that at Deep Water Horizon. But the environmental and health problems are perhaps worse. It's close to shore and there's hardly any cleanup work, compensation or health protection.
I agree that not listing every oil spill isn't required to make a view American centric. That's not the issue though, it's a straw man. What's American centric is to focus on America even when similar things exist elsewhere.
You misunderstand what Americentrism is. It is about the presumption of US morals and standards when judging other countries and cultures. Some would say that your use of the word "America" to describe the United States is itself Americentrism.
>> "...and maybe it's even enough to deter car companies from doing something similar in the future..."
As anyone who's ever been near a major automaker's test engineering lab knows, ~all [0] of VW's competition is doing something similar, to varying degrees of sophistication. I remain perplexed by the pitchforks, outrage, and witch-hunt mentality displayed towards VW alone.
I am assuming you meant this as a figure of speech, but it is a very unfortunate one.
As for your edit:
I am assuming that the downvotes are because you express yourself in a way that doesn't help at all. The statistic being what they are you are either unware of the statistical insignificance of that number or you are but you are inflating it to make it seem more important than it really is.
Yes, statistically speaking there may be 59 'premature deaths', but that does not quantify just how premature those deaths were, nor does it acknowledge that transportation carries an enormous cost in lives over and beyond that tiny little bit extra because of these emissions.
Yes, VW did a really bad thing, yes, they should be punished. But the cost of transportation already being what it is the punishment seems to be roughly in line with the extent of the crime.
If you're really concerned about this you should campaign for us all to stop driving, that will really move the needle.
"If you're really concerned about this you should campaign for us all to stop driving, that will really move the needle."
I do that, too, to the best of my ability. And, whenever given the chance I argue for self-driving cars, too. Yes, the entire auto industry (and our addiction to it as a society) is terrible.
But, my point is that even the mild environmental and health regulations we have were defeated for years for VW profits, all while they advertised "clean diesel" and went head to head in the market with technologies that are actually superior and safer (unless those companies are cheating, too), claiming to be better than them by using falsified data.
My point is really that when a company in an industry that already kills on an unprecedented scale decides to willfully harm even more because they'll profit, there should be truly dire consequences. BP is another great example of a company that consistently made decisions that knowingly endangered entire communities over a long period of time. Their only regret seems to be getting caught.
Transportation is a fact of life, no amount of wishing is going to make it go away and you'd not be able to make a world without it work at the level that we're at currently. Of course we can do better, but that's likely going to be marginal rather than some kind of revolutionary change.
VW messed up, sure. I've been pretty explicit about my criticism of what they've done, and I would happily see Winterkorn serve jailtime (fat chance of that ever happening).
But I think you are magnifying the damage done way out of proportion.
FWIW, 15B for 59 premature deaths is a very large premium compared to what we, the western nations typically think a life in some Oil rich country is worth, and those people too are indirect victims of our transportation.
Proportionality is what it is all about and I really miss that element in your comments here.
The extent to which it cost human lives is a function of the arbitrary emission standards that governments have set. Those standards are obviously chosen as a trade-off between too many harmful consequences of pollution and being too expensive for car makers to comply with. So it's not as clear as "VW killed people" but more like "VW killed more people than we expected them to." The standards themselves still allow some harmful emissions to be released. If had more relaxed standards then all the extra harm caused by the VW cheating would simply evaporate.
But, we have the standards we have (which are already weaker than they need to be to avert a climate and air quality disaster going forward). If one company is permitted to fake results, it means all companies will have to fake results to compete.
My argument is that cheating our already lax air quality and environmental standards should be a tremendous deal. It shouldn't be something that can be swept under the rug or written off as a cost of doing business.
Under your theory of the crime it was some form of negligent homicide? And you want to hold all the receptionists accountable (lose of job) because they negligently did/failed to do what exactly?
Of course I don't want a receptionist who knew nothing of the crime to lose their job; but, the same scenario can be created for any person who goes to jail. No one wants a baby to grow up without their mother or father, but sometimes people commit crimes, and are punished with jail time, leading to suffering of their whole family. It's not good (and, I think there's a lot to be said for ending our carceral focused criminal justice system), but we as a society do seem to agree that sometimes the good of society as a whole trumps that of an individual or group.
I'm not suggesting that imposing a "death penalty" on a corporation would be a nice thing, or that it would make employees of the corporation happy. I'm not even saying it wouldn't have negative consequences for more than just those directly employed by the company. But, I am saying that when someone commits a truly heinous crime, our society removes them from society by force. Volkswagen has committed a truly heinous crime. If I had my druthers, the CEO and a wide variety of other executives who knew what was going on would be spending their days in a lonely grey room contemplating what they've done. That'd be a good start toward justice.
But, we also have to address the company as a whole. It was not one person who made this decision, and it's probably literally impossible to know who knew and who did what with any precision. Pretty much the entire company is suspect. We can't expect internal processes to correct this kind of malfeasance...they had years to do so, and chose profit over human lives.
Finally: Many corporations have died, through all manner of faults over the years...often, they've failed due to inefficiencies, the Innovator's Dilemma, etc. Very few companies have failed because they killed people. But, it is not the end of the world when a company, even a very large one, dies. It makes room in the market for new competitors. And, in this case, a shake up in the auto industry is a great thing. We need new auto companies that don't willingly trade human and environmental health for greater profits. While VW exists, and wields political power, those new companies (or old companies that want to do right by the world) are competing with a company shown to have no scruples. Ever tried to compete in a business that has high health and safety costs with a competitor that ignores health and safety regulations? That's a part of why Chinese manufacturing destroyed American manufacturing industries.
Someone else mentioned Enron in another comment. I think it's a useful example. The fallout from Enron was hard for a lot of people; and, it was painful across several industries for a little while. But, I believe we're better for killing Enron (and Arthur Andersen). And, I believe the world would be better off, in the long run, by killing VW.
I'm curious, are you a native English speaker? When you read my comment, do you genuinely believe I'm suggesting killing people (despite my explicitly saying in the previous comment that I oppose the death penalty for people)?
I don't think you're alone in interpreting my comment that way, but I'm not sure I understand why it's been so misinterpreted. I'd like to do better in the future (without giving up entirely on humor, though perhaps I shouldn't quit my day job).
Your rationale is appreciated but it is about the tone of the discourse. The sentence just makes one think about readers comments on some newspaper sites I guess every country has.
You're getting down-voted because you're asking for company executives, who are human beings, to be killed for something that hasn't quite proven out to be a "crime" yet.
Most reasonable people find that repulsive.
While we're at it, why don't we kill everyone who every bought a VW? Surely they are partly culpable.
"You're getting down-voted because you're asking for company executives, who are human beings, to be killed for something that hasn't quite proven out to be a "crime" yet."
Did you really interpret it that way? I'm speaking of companies, not people. Apologies for not being clear. I am speaking of a "corporate death penalty"; one for companies. The person I was replying to said other car companies are doing the same thing, and I would hope they would face consequences as well, if so.
I explicitly stated in my first comment that I oppose the death penalty for humans in criminal cases.
Can you make a public policy case for a "death penalty" for multi-billion-dollar companies in mainstream industries? Who does that help? Who does it harm? Is it the most effective way to achieve the goal of the policy?
Since we have neither a corporate death penalty nor adequate criminal statutes for malfeasance, how is the "corporate death penalty" superior than laws that make it more straightforward to hold managers and directors accountable criminally? People who are willing to commit crimes to enrich themselves using companies are unlikely to be especially motivated by the well-being of the company, its employees, or shareholders.
The investors lose. The companies are liquidated and the assets bought by new investors. This actually happened to GM, to a degree. The workers don't have to lose out.
Realistically speaking, it's far more likely that in an established industry like autos the cheating company will simply beat their competitors at market because they can sell cheaper, spend less on research, etc.
It's nice to imagine that maybe it would breed "super companies" that are tougher, smarter, and more efficient because they thought they had to be to compete. But, there aren't any order-of-magnitude wins to be had in automobile technology. There are no lone geniuses who figure out how to eke out 10% more efficiency with this one weird (but patentable) trick. It takes research over a long period time to make even modest gains, and a cheater in the market bleeds the honest companies of resources.
And, to go further: Because Volkswagen made these claims about diesel tech, other honest companies may have been wasting resources trying to match the dishonest VW claims...when there are actual better techs they could have been pursuing. This may have led to even less gains over the time VW were faking data.
Often shareholders have a degree of culpability. Arms companies and tobacco are examples where in my view shareholders are using their money to promote harm. Automakers fall somewhere on the harm - good spectrum and I'd mostly not put them down as a net good. Fossil fuel emissions would be be the key reason. Shareholders have a choice where to put their money and many (most?) choose high returns over anything else. I'd say punishing this behaviour might be worth considering.
Every time we assess a multi-billion-dollar penalty against a public company, we acknowledge that its shareholders share some culpability.
Do you think shareholders of a company like VW, which includes pretty much everyone with a retirement plan, shoulder _all_ the responsibility? Because that's pretty much what a "corporate death penalty" means.
Sure. I agree! I don't think it's fair for shareholders to reap returns that were derived in part from malfeasance.
The question isn't whether companies (and thus their shareholders) should be penalized for wrongdoing. It's whether shareholders should be zeroed out by a "corporate death penalty". I think it's an interesting question, why we don't have one of those.
I appear to be arguing with someone who has the same viewpoint as me. Perhaps a better summary of my view is that the existing penalty system would be OK if the fines were larger (and this hit shareholders hard enough to incentivise others not to break the law).
I'm more surprised that there are not more corporate "death penalties" meted out. Usually the beneficiaries of bailouts or bankruptcies are the entrenched managers who brought the corporation to where it might be subject to a death penalty.
Whereas if the corporation were liquidated, the assets would be bought up by different corporations and run by different management.
Banks, most of all, are just bags of assets that can be run by other managers who run the same types of assets (otherwise these assets would be illiquid and not need active management) at other banks.
The same goes for airlines: If an airline is a brand + planes (probably leased) and routes, why EVER bail out an airline? Especially a legacy airline when it's assets could be bought by an economically viable new airline?
We don't have corporate death penalties because to a first approximation there are no laws that enable us to do that. To put companies to death, we'd need to pass enabling laws. But those aren't the only new sanctions we can enable in new laws.
It seems to me that we can break down those impacted by sanctions against corporations as follows:
* Officers and directors of the company
* Employees of the company
* Shareholders in the company
* Customers of the company
When we think about how to structure sanctions against a company, we should think about where (a) deterrence will have the most effect and (b) where retribution is most warranted.
How does a "corporate death penalty" apply those effects? It seems to me:
* Officers and directors of the company have a demonstrated track record of harming their employers for personal short-term gain; see, for instance, every stock buyback scandal. Moreover, officers and directors tend to be wealthy and thus more likely to have a professionally or at least competently managed portfolio: they're diversified out of a lot of impact.
* Employees of the company have extremely limited ability to alter strategic decisions made by management, and so aren't useful for deterrence. They also tend not to profit from strategic high-level malfeasance, and so aren't deserving of much retribution. Meanwhile: mergers, spinoffs, and acquisitions are almost invariable dreadful for employees, huge numbers of whom are made redundant, pension obligations scrapped, benefits reduced, and so on.
* Shareholders have virtually no insight into the operation of their holdings. Moreover, vast numbers of shareholders don't even know they hold companies, because they do so through pension plans and mutual funds.
* Customers who, for instance, bought VW cars during this scandal did so in an effort to minimize their impact on the environment; the scandal is that VW lied to them. Not only are they demonstrably incapable of being deterred from future scandals, but it's hard to argue that they've in any way earned warranty confusion, loss of service stations and personnel, and slashed resale values.
Compare that to a new law making this kind of malfeasance a strict-liability felony for officers of the company. Doesn't that make much more sense than a death penalty?
While there are not criminal laws that could compel a liquidation directly, the equivalent could happen by making a restructuring unfeasible through fines, thereby forcing liquidation.
Sure, but the reason that doesn't happen is that you can't fine arbitrarily; companies can dispute them legally, and those cases are murderously expensive to try.
So I'm acknowledging that you could pass laws that make an effective death penalty (through fines or through literally forcing liquidation) a reality, but then asking: why would you want to do that? Aren't there better laws we could pass instead?
"Better laws" that directly target the management responsible for malfeasance could do the job instead of dismantling the corporation out from under that management. But the same lawyers fighting to keep creditors from forcing liquidation are also fighting for the management that hired them, no matter the shades of ethics involved in that. It's a difficult problem. In the case of VW you have suppliers and engineers being told to produce results that are not possible without cheating. And then that eventually becomes part of corporate culture and the cleverness of the cheat gets institutionalized and probably even spreads through the industry as employees move around at various levels and as suppliers sell, on the down-low, the means to cheat.
Group punishment for the actions of a few? Pretty indefensible.
If you think it is defensible perhaps you could explain why it's just that an assembly line worker should lose his livelihood because a few folks implemented this scheme? The worker had no actual or theoretical knowledge of the "crime". Further, the worker had no way of even spotting that a "crime" was taking place.
Companies die every day; almost never because of criminal behavior on the part of the company. People lose their jobs over it. Why not defend those companies from failing?
Would you suggest that Enron should have continued to exist because employees losing their jobs is a bad thing? Do you think we, as a society, would be better or worse off if bad companies, like Enron (and Volkswagen), are allowed to continue to exist? There is a certain necessary destruction in the free market. There's all sorts of things that the market corrects for (by killing off weak companies); why shouldn't society also impose some corrections based on some basic ethical factors?
Further, society does impose corrections on small companies; if my small company killed 59 people by hiding facts about my products, I'd pretty much certainly go to jail (as it should be). It is only very large corporations, and their executives, that are effectively immune to these kinds of corrections; even this, heralded as a huge penalty, is unlikely to impede VW significantly going forward.
What's so bad about opening up a place in the market for new auto makers, who don't cheat the system for profit? We are talking about criminal activity here over a period of years, not mere "irregularities".
Perhaps re-read my comment. I was not advocating a
"free market" solution to this particular problem, I was pointing out that were this a market failure instead of an ethical failure, no one would be arguing VW needs to continue to exist because "jobs".
We do not have a perfectly "free market" (and that's OK), though markets are nice things, and in some cases I am in agreement with wanting more free markets. But, do you sincerely believe the right answer to a company killing people is a boycott?
Enron was probably the last large example of a "corporate death penalty". Since then, in the US there has been a doctrine of minimizing "collateral consequences". Consequently there has been less criminal prosecution and more reliance on financial penalties.
Fun fact: I bought my first Aeron chair from the Arthur Andersen bankruptcy auction. I would have bought a shredder, too, but my dad recommended against it, saying, "Those shredders are worn out, son."
So, my question is: Would we be better off with Enron still existing, including the same executive team (VW executive team is still largely unchanged)? Would we be better off with a more aggressive response to the banking crisis a few years ago?
I believe ending criminal companies probably makes room for better companies, and in the long run makes our economy and our society healthier. I may be wrong; there are certainly negative impacts. But, I feel like the cost of looking the other way, or a slap on the wrist, is too high.
So, my question is: Would we be better off with Enron still existing
There are thousands -- millions? -- of innocent people who
would definitely have been better off had Enron survived. You could be right about the long term, but you're playing pretty fast and loose with other people's money.
"you're playing pretty fast and loose with other people's money"
I'd say Enron was playing fast and loose with other people's money; likewise VW was, too. Why blame me for the malfeasance of the executives at these companies, just because I think they shouldn't be allowed to do it again? The rolling blackouts Enron caused likely led to deaths (hospitals need power to keep machines and people running, refrigerators need power to prevent food-borne illnesses, etc.). It should be a really big deal when a company makes an intentional decision to harm people.
So where are the criminal prosecutions? My argument is that very large corporations wield so much power, and have disbursed responsibility so widely, that no one faces any significant consequences for making these decisions. I think maybe what I haven't really made clear is that I think we (we, as in, governments, nations, communities) don't seem to be equipped with legal tools needed to prosecute people within corporations, because responsibility for actions becomes this wisp of an idea that sort of floats around inside a company but never really sticks to anyone. And, when it does stick to someone, it sticks to low-level workers; trickle-down economics for blame.
My suggestion was barely thought out; an expression of frustration that companies like BP, and Shell, and VW will keep ticking after committing horrible crimes. And, more importantly perhaps, the C-levels at those companies still have jobs in those companies, in most cases. Blame trickled down, profits trickled up. The incentives remain for companies to skirt the law and put communities at risk.
Maybe there's some other way to hold executives accountable. I don't think this settlement has done that.
I regard it as a good thing that BP, and Shell, and VW (and so on) keep ticking along! People made bad decisions and should be punished. Companies cannot make decisions. Only people can.
There's no point in burning down the village because the mayor's corrupt. The town still has value!
I am constantly amazed at what gets written in the comments section of a site ostensibly focussed on startup companies and the tech industry. Quite frankly it can often be scary to see what people come up with in their outrageous outrage.
I find all calls to use the power of the state to destroy commerce unsettling. Seems to me the system, imperfect as it is, is functioning well enough in this case.
Certainly there should always be a constant review of regulation in light of events like this, but to confiscate and destroy an entire company for this type of cheat would be chilling for future investment and company formation. That directly leads to a lower level of living for everyone, far worse than the relatively minor increase in emissions in this case.
There seems to be an attitude around that corporations are some evil thing, and that is not healthy at all.
Not yours specifically, but yes, I find the 'herd stupidity' as displayed in your post and the many like it to be the single most scary/worrying trend and greatest threat to a prosperous, peaceful future.
One post like yours, I shrug my shoulders and/or roll my eyes and move on. A continuous barrage of populist drivel like it, anywhere 'the average voter' gets a chance to express their 'opinion' on anything really - I worry what goes through the minds of all those people I see out there walking through the city when I look out my window, and how stable they really are; and if that collective instability might culminate into a real societal upheaval given the right circumstances.
I think it's interesting that you consider my drivel "populist". I don't think I'm a populist, in the general case. And, I'm not sure I would put this in that category, either.
I'm not, at all, anti-corporation. I'm anti-criminal behavior. How is wanting the rule of law to apply equally a "populist" notion?
"Equality" is, admittedly, pretty tricky when talking about a fictional construct. But, when a company kills people we can't put the company in prison to protect people from it and to dissuade other companies from doing similar things. So, I think there should be other tools that can strip away the corporate veil that executives are hiding behind and stop the criminal company from being in a position to cause further harm.
Here's my "free market" question for you: Do you want to be in an industry where you're competing with companies that cheat on health and safety standards? They have lower compliance costs because they're cheating. What do you do? How do you deal with that? Do you want to have to cheat, break the law, and lie to customers, in order to compete effectively with them?
Dunno about the OP, but I do. I look at some comments and actually get the chills imagining what the poster would come up with, if he or she got hands on the reigns of power.
Personally, I think what was being proposed would be an awful idea, but not so odious that merely hearing idle conversation about it is disturbing. I mainly save that category for ideas with racist undertones and the likes. I suppose that's because in most such debates, an appropriate or at least plausible approach exists along similar lines to what's being discussed, albeit less extreme - in this case, what actually happened, fining a company over ten billion dollars, could be seen as a less extreme version of a corporate death penalty, and there are points in between that are at least not completely unthinkable - so the basic emotions behind the debate are a reasonable framework. Whereas with ideology motivated by prejudice, I think usually you should essentially throw the whole thing away and start fresh, because the premise is fundamentally irrational.
Death penalty sort of happened for Tokyo Electric after the earthquake. Turns out Tokyo Electric had a chance to prevent the disaster but didn't and things got out of control. The company wasn't able to pay fines and the government couldn't simply shut down the company that supplied 30% of the nation's electricity. So all of the executives were fired and the company went under government control.
How is this diesel-scandal the fault of the whole company and not of a few people who actively engaged in wrongdoings?!
Isn't this the whole reason for the invention of limited companies in the first place? It's considered a progress in human society to have developed limited liability laws. Besides, the good thing about not killing juristic persons is also true for not killing natural persons - it's considered an improvement by and large if a society gets rid of the medieval practice of executing prisoners.
According to Google finance, its 56 billion, and probably less after this news. The US branch is probably worth 10% of that, or 5.6 billion. That way, the 15 billion are basically a three-fold death penalty.
I don't think I see the comparison between what I've suggested (though I didn't really give enough detail to infer any real implementation plan for my suggestion, so I can see how there might be room for interpreting my comment in a lot of ways), and what Venezuela did when they socialized some companies and kicked some others out (though I am, by no means, an expert on the Venezuelan economy...perhaps you have a specific corporation in mind that committed some sort of atrocity in Venezuela and was shut down or forced to leave?).
I think I need you to be more specific, is what I'm trying to say.
Yes, I'm aware of the socialization of companies in Venezuala. I just don't understand what that has to do with what I'm suggesting. Were those companies that were socialized killing people, and was that the reason they were socialized? (And, to be clear: I'm not suggesting government ownership of companies.)
No, they weren't killing anyone. They were confiscated, which is what a "corporate death penalty" is. The result was the economy was utterly destroyed.
What do you intend by "corporate death penalty" if not being siezed?
First off, confiscating a company to keep it running at full profit is different from confiscating a company to put it through a shredder and sell off tiny remnants.
More importantly, think about the difference between a serial killer and a single person being executed. Venezuela is the former, while SwellJoe advocates the latter. Your comparison makes about as much sense as "we can't jail anyone, because if we jailed everyone there would be no workers left".
I still don't understand how you're comparing socializing a company to a bankruptcy liquidation of a company. Am I misunderstanding some dimension of this that you're intending?
In one case the government ends up owning and running the company, in the other, the assets are sold off to the highest bidder with the creditors (and in the case of a criminal company like VW, restitution for their victims, which in this case would be VW owners and public health systems, among others) receiving the proceeds.
How is that functionally the same?
And, regardless of that: The single most important element of my suggestion is that VW committed a crime (well, a number of crimes, spread over many years) and caused harm to human lives and health. Unless the Venezualan companies you're talking about were criminal companies causing harm to humans, it is unrelated to this conversation. No one (certainly not me) has suggested a bunch of random major companies should be owned by the government.
"Note you suggested more than just VW, the entire industry."
I see you're not alone in thinking my joking "line them all up against the wall" comment was intended to be taken seriously. Someone said, "everybody's doing it", and I meant to imply, "well, everyone who is doing it should be investigated and punished". I did not mean "everyone who ever sold a car should be put out of business".
I can't blame you for making that assumption, since others have made it, too. So, apologies for not being clear. I have no desire to see every car manufacturer closed down. Only the ones that have committed crimes on a level similar to Volkswagen (or worse, if there are any who've done worse things). In fact, I would like for the honest ones, the ones that are sincerely working on cleaner technology and accurately representing it in the market, to be able to compete in a market free from cheaters like Volkswagen.
If some automakers are cheating, and some are playing fair, the ones playing fair are effectively fighting with one hand tied behind their backs. They're virtually guaranteed to lose market share to the cheaters over time. That's the kind of screwed up market that no honest person wants to compete in.
I agree with you, depending on the implementation.
Many people replying seem to think you are advocating the execution of every man and woman who work for the company. I suspect that's not what you mean.
But how do you execute the entity economically?
To me, the right way to do it would be for the US government to take ownership of all the stock, and for the stock to be resold under a new corporate name. A criminal trial should then take place, with the C-suite officers and board of directors under scrutiny regarding their roles in the decisions, with clemency/immunity given to engineers and laborers for their full and complete testimony.
The only way the behavior changes is if you sanction it with meaningful consequences.
My words were probably poorly chosen; and it was a casual comment, intended to be taken casually, not as a call for a bloody revolution. I thought my disclaimer of being opposed to the actual death penalty for humans was sufficient to alleviate any fear that I actually ever want anyone killed, but the angry response seems to indicate otherwise.
The difference, obviously, is that it's not literal. In a corporate death penalty, no one is dying, everyone can bounce back and have a second chance (or third, or fourth, etc.) at success. With a real death, that's it. The end of consciousness.
I'm sorry, but I find the comparison ludicrous, despite the name.
The employees most likely will recover but the company won't. So there is no bouncing back for the company, it's not getting a second chance if it's discovered that a mistake has been made. So in my opinion the comparison can be made.
I hope that your penalty also applies to other entities such as states. In this case please relate the say 1k deaths caused by Volskwagen to the number of people killed in Afghanistan, Syria, Libya, Iraq, .. (you get the point) and multiply with approx 15 million $ per dead.
Have the US transfer this amount (should be north of a trillion) to the victims or their representatives and serve justice!
Yeah, that's worth talking about. Probably not in this thread, though, as I think it's pretty far off-topic. But, I'd prefer talking about prevention of further harm, rather than just paying off the survivors.
> There's some situations that are so ethically indefensible, wherein a corporation can cause incredible harm over a long period of time, that the only just outcome is for the company to be destroyed.
This would hurt those with claims against the company but no hand in the decisions as much (if not more) than the responsible actors.
A real corporate parallel of the death penalty -- or at least, an ultimate corporate penalty for serious violations -- should take a different form. A couple ideas:
(1) personal, joint-and-several, liability of corporate officers with responsibility over (whether or not directly involved) and those employees actively directing the offense,
(2) allowing piercing the corporate veil to make equity holders liable in the event the corporation itself and legally responsible officers and employees as described in (1) cannot meet the liability for the offense.
I think it's a conversation that should be had; I try not to be one of those folks who says hand-wavey things like, "Something must be done!" But, in this case, I don't know what the right answer is. Evil, and that's what this behavior is, on this scale is hard to fathom and hard to discuss at human scale.
You're probably right that there are better ways that cause less harm. I just don't know how to get there. Corporations at this level wield so much power, it's hard to figure out how governments or courts can effectively regulate them.
Regardless, I don't think this settlement is enough, because the people involved (generally, though I think a couple of low-level engineers were fired) will continue going to work each day, drawing their massive salaries. I'm willing to concede I don't have all the answers on what justice really looks like, but I'm confident it's not this. This just isn't enough for years of cold, calculated, destruction of human life for profit.
I agree with you. It's a corporation, not an actual human. And there are a lot of people that profited and knew about it, at some point you can't salvage any of it. It's brutally difficult to implement though, Germany isn't going to do it. It also seems easy to game as you start to liquidate the company, what stops the shareholders from investing in a new holding company that just buys up the VAG assets?
Maybe put a 30% tariffs on all of their imports for 30 years or something. What of splitting it up?
I don't think a corporate death penalty (revoking the company's license to operate) is the proper answer. Figuring out the actual damage done, a punitive fine with a multiplier on top of that, being forced to take back all products and significantly more incidences of managers going to jail would all be excellent things to try first.
The problem is that the regular factory workers are the ones that would end up paying the bigger price in a corporate death penalty situation, and that companies trading abroad would be able to escape the penalty (in this case, for instance, the US could simply forbid VW to do business on their soil).
I agree ... to a point. Instead of dissolving the entire corporation, I think that there should be (in cases like this) where the "Corporate Veil" can be pierced and individuals (in this case, Executive Officers) can be be brought to trial, sentenced, and held personally accountable for their decisions - including prison sentences.
That would get the CxO in other companies attention, in a double-quick-time fashion.
I do agree that fines that seem astronomical to us (USD15Bn is huge in any personal context), to a corporation can be just The Cost of Doing Business. Depending on how long they've been doing this, they may have made twice that amount.
The way to solve the problems that arise from the fact that organizations are not people isn't to treat them even more like people. You can't punish an abstract group. The others here are right: it would have enormous negative consequences. But that's beside the point. It wouldn't even do what you think it would do. There is nothing to punish. You're swinging your fists at a ghost.
Has there been any serious (I.e. not clearly biased by way of affiliation) study into the actual effects of the added pollution?
We're not talking smog monsters here, we're talking one chemical in particular (NPC), from one kind of engine by one car maker. I don't want to sound like I'm downplaying this, but given the kind of comments I see about this, I want to think the visceral reaction is based in rationality.
There's been some articles on the subject (which is, admittedly complicated, since so many things shoot toxins into the air, and our understanding of its impact is still uncertain):
I guess it's possible to look at these numbers, and compare them to the number of deaths caused by autos in general (even the ones that follow all the rules), and consider it a small thing; something that doesn't justify a massively disruptive response.
But, from my perspective, VW made a conscious decision, and an ongoing choice over many years, to violate the law, and caused illegal levels of dangerous emissions in exchange for greater profits.
So...I don't think I'm responding irrationally when I am extremely critical of a company that would make those decisions over a span of many years, knowingly trading human life and human health for greater profits.
I'm critical of internal combustion auto companies, in general, but I'm not calling for them to be destroyed, and I don't go out of my way to talk trash about them. I'm pretty specific in my ire toward VW (though others have suggested several car manufacturers are pulling similar tricks and emitting illegal and dangerous levels in real world environments), and if that's the case, I'd consider those to be criminal companies, as well. I hope such companies will also be investigated, and also face consequences. But, "everybody's doing it" shouldn't be a defense when the stakes are this high.
Can you define what a corporate death penalty entails?
Going off a direct analogy with a human, it appears it would require destroying the equivalent of the brain, so perhaps a forced wiping of the IT infrastructure, inventory ledgers, blueprints? Probably also a seizure of all patents.
At the end of the day it's just money, except it's probably simpler to just take it in cash. (Or however the $15B is expected to be disbursed).
Talking about the "brain" of a corporation may be pushing the analogy too far. And, I believe I've probably made this a much more contentious conversation than it needed to be by using emotionally charged language like "death penalty". And, I think a lot of folks are interpreting my opinion as much more black and white than it is.
My thinking is merely that at some point, we as a society should probably consider refusing to allow a corporation that has shown an ongoing wilful disregard of human life to continue to exist.
Fair enough. I was mostly intrigued by the concept of a corporate death penalty, or stopping one from existing (however you name it). How do you actually do it? If you block the name, they can just rename it. If you fire everybody, they can instantly join a replacement company. You could put a restraining order on the officers from working in the same industry (a la noncompete contracts).
There is lots more comments on this below, it's just an interesting problem.
I had been following this thread with a certain amount of blasé, but the thought of seizing a patent portfolio and releasing it into the public domain makes me raise an eyebrow or three.
There are many ways a big corporation could be killed. If some EU regulatory body decided that after this has happened in the US, all EU consumers are entitled to the same thing - VW would be dead instantly.
Same if they e.g. issued a ban on VW selling cars in the EU for say 5 years.
Crushing the company hits mostly the lower ranks who legitimately had no part in any of it (presumably; if you're a soldier in the Wehrmacht or the guy dumping toxic buckets, this doesn't apply).
We just need strict liability for corporate officers.
Well if we go to war with another country, there are a lot of people working for that government who did not commit the atrocities. I'm sure the accountant or janitor didn't necessarily know or approve of the war crimes, they just needed a job and didn't hurt anyone. That doesn't mean we shouldn't fight the war, you just recognize that sometimes innocent people are impacted. The blame lies with the leaders who did the bad thing. If they hadn't done the bad thing, their lower ranking innocent workers wouldn't have been impacted.
Every business decision comes with a cost/benefit analysis. Hurting your employees goes into the "cost" side, and if you do the bad thing anyway, obviously the "benefits" outweighed the "cost" of potentially hurting your employees.
That's different. Sometimes you have to defend yourself and then it's justified to go to war. Going to war without being threatened is a crime (like it was done numerous times by the US governement and is done now in Syria. Only because there is no judge makes it no less a crime.).
But you don't have to defend yourself from this company. You aren't in danger. As a result punishing the workers would be nothing but a crime.
Does one really believe that German soldiers had zero idea of the atrocities that were being committed? There were reports in internation news, rumours, physical evidence and millions upon millions of people being rounded up.
As for being the person dumping toxic buckets - they are doing the crime. They are culpable.
If all affected countries punished VW as hard as the US, the cumulative fine would be hundreds of billions. That would indeed be a death penalty. In fact, 15 billion is disproportionate in my opinion.
15 billion disproportionate ? Depends on how many people where effected (or even died) by this. Time there cost. I personally have no idea on these numbers, and it would largely be speculation.
Allowing some New World Judge the power to destroy all international subsidiaries of a global corporation with 610,067 employees at the stroke of a pen might not improve the situation.
WikiPedia places the economic cost at $39+ billion, by one measure.
"A peer-reviewed study published in Environmental Pollution estimated that the fraudulent emissions are associated with 45 thousand disability-adjusted life years (DALYs) and a value of life lost of at least 39 billion US dollars."
Citation? Why wouldn't the experts who studied this have accounted for that? I tend to want to trust the science, if it comes from reputable sources.
Anyway, CO2 is not comparable to NOx in terms of danger to human health; CO2 is a real problem, of course, but as I understand it, this was an environmental and human health trade-off that is not at all well-balanced. It produced out-sized harm in exchange for small reductions on the CO2 side. Even if the amount of NOx produced only increased by the same amount that CO2 decreased (which is not the case, if I understand it correctly), it would still be a bad trade. I'm no expert, but the experts I've read on the subject haven't been saying, "oh, it's really no big deal because CO2 went down."
The world police allow themselves to do this to countries, so why not corporations? And at what deaths/corporation employee number does killing the corporation become ok? Presumably there is a value? I don't know it.
Does anybody remember when Volkswagen blamed the scandal on "the engineer culture" or something like that? like those engineers at Volkswagen called the shot and not the management ... ridiculous , like these engineers weren't asked to cheat ... I can't wait for the criminal investigation.
"The federal government struck a $35 million settlement with General Motors after the company failed to act for 10 years on an ignition switch defect that led to the death of at least 13 people and recall of approximately 2.6 million vehicles"
"General Motors agreed to pay $900 million to fend off criminal prosecution over the deadly ignition-switch scandal, striking a deal that brought criticism down on the Justice Department for not bringing charges against individual employees."
"Also Thursday, GM announced it will spend $575 million to settle the majority of the civil lawsuits filed over the scandal."
"The twin agreements bring to more than $5.3 billion the amount GM has spent on a problem authorities say could have been handled for less than a dollar per car."
So because they marketed it as "Clean diesel" in the US their 2009 2.0 tdi owners get $5-10k plus an estimated value of the car as of 2015. Meanwhile in Europe we get a "fix" that reduces engine power and/or increases fuel consumption, and while the car has depreciated in value we get no other compensation, and seem to have no way of winning a class action against VW (Of course, if we did, we'd could kill VW instantly which I assume is not what any of the EU member countries want). I'd be perfectly happy with a much smaller sum or even a rebate on a new car. But no. Nothing.
The low emission 2.0 TDI models (Such as Audi's TDIe) were very much marketed as very eco friendly, and it meant a lot of corporate buyers with CO2 caps bought it in stiff competition with other cars. If the engines had met the NOx emissions, the consumption (and thus CO2) would have been higher, and the cars couldn't have been boughy, or wouldn't have been bought because of being less attractive with lower power or higher consumption. If this isn't marketing it as "clean diesel" I don't know what is.
I am surprised that no one mentioned the other fraudulent actor in this whole mess: the CARB, California's Air Resources Board.
They are the ones who lied about their diesel engine standards for air quality. Under the guise of making tough standards they basically outlawed diesels in California.
Since CA is such a big car market this prevented most manufacturers from selling any diesel cars anywhere in the USA.
VW deserves this. Hopefully this penalty will discourage other automakers from cheating in this way. It would also be nice if Mr. Winterkorn and the executives who were complicit in this were prosecuted. I wonder how well they have covered their tracks.
I am glad to see there will be some money going to the owners of the affected diesels. A lot of these people bought the cars because they were marketed as more environmentally friendly. Then, they were left with an embarrassing car with near-zero resale value once the revelations came out.
I feel like the US has a bizarrely inconsistent attitude towards air pollution. The standards for NOx emissions for diesel construction equipment and ships are almost non-existent. If VW's actions are reprehensible, surely the lawmakers who created such a bizarrely fragmented regulatory regime are also to blame. http://www.greenhoustontx.gov/reports/closingdieseldivide.pd...
I am really amazed by the comments I read so I am voluntarily going to "defend" VW while I would not in other circumstances. To make sure this is understood: yes VW is guilty, it has violated customers' trust, they are a shame for the entire car industry and should receive strong punishment for that.
Yet, how can everybody forget about all other car manufacturers - especially US? They pretty much all lie about their gas emissions as proven by different experts and agencies [1] [2] [3].
Why? Because we have improved our gas emission limits to a level that most car manufacturers couldn't reach over the short run. Take the example of European car makers. The European Commission started to really regulate car emissions in 2010. At that time, car makers were faced with dropping sales (double crisis 2008 and 2010), stable/slightly increasing costs (wage inflation and poor labour market flexibility - German is an exception in Europe) and stable/slightly decreasing prices (due to competition and few new vehicles). In this context, how can you expect car makers to invest in "traditional cars" to reduce gas emissions and in electric and autonomous vehicles to fight against the competition of tech car companies like Tesla or Google. That is just not possible.
So who is responsible? Of course VW and other car makers are all responsible for that mess and the disastrous consequences on environment. But WE are also responsible: we want safer, cleaner, cheaper and stronger vehicles from traditional car makers but but you can't have everything all at once. Tesla can do it because that they start from a "blank page", with no turnaround costs. For VW, GM, Toyota, that's another story. Maybe we should just keep that in mind before charged them with a "corporate death penalty"...
We need transparency and clarity about the damage that individual cars cause, both for the drivers and the public. Something as simple as displaying the numbers to the driver with an obvious statement about the health impacts would help. Maybe even create taxes based on actual emission values for individual cars.
Surely those toxins are much more containable than gas released into the air? A mobile phone is also horribly toxic, but I am not going to go onto the top of a skyscraper and blend it into tiny particles for the people below to breathe.
The report this morning said the government gets $5b for environmental clean up and customers get $10b in fixes or buy backs.
We'll see.
There was a GM settlement like this (the pickup gas tank problem) and customers with existing pickups got a coupon good for $1000 off the price of a new pickup. So GM gets to sell you a new pickup and probably keeps any rebates or low financing.
Also the recent Ticket Master settlement for $420M. There's a daily allotment of coupons worth $5 off the ticket price on select concerts (read: not the popular ones) that are buried in a series of hard to follow links. They still have the same service charges like before, they're just more transparent about it.
Not sure why the government attorneys should get paid anything here. Government was so much incompetent here that they failed to catch VW well in time, besides arresting few people in VW I think some people from the government side need to be fired too.
The only worry here is that attorney generals might end up with more resources to harass small people now.
"Only" $15B for this part, but they still face Clean Air Act penalties and another 80,000 vehicles with larger engines that aren't a part of this deal.
I lament the days where HN was a place for intelligent discussion. Today the top post to submissions like this is an idiotic populist gut feeling, complete with dubious metaphors, calls for violence, a complete lack of any understanding of why things are the way the are and how we got there, as well as a blissful ignorance of proposed and/or tried solutions to age-old problems.
There must be something in the water these days that spurs these insults on sane discourse, I have a vague feeling of recognition when going over current events in politics across the world the last few weeks...
The original opinion describes an abstract organization of people in anthropomorphic terms as something that can be punished. That's absurd on its face.
Now, I don't necessarily disagree that it's a bad idea overall, but the anthropomorphic quality is NOT what makes this absurd. Not at all, not even a little. An abstract organization of people can be invested in, have its collective behavior driven by regulation or investment pressures, and can, out of 'fear' of losing value, allow regulation to override investor pressure. The point of things like massive fines and suggestions like the corporate death penalty is to create a situation where a CEO or VP will, despite knowing there's a lot of money to be made by, say, selling protected patient health information (and therefore substantial shareholder value to be generated from so doing), categorically refuse to do it, because they know the ensuing violations will ruin/bankrupt the company.
In other words, if you told me that anthropomorphizing an organization like this were absurd on its face, I would accuse you of rank ignorance of the law, the rationale behind the law, and the whole idea of behavioral incentivization.
The reason why we're all discussing this AT ALL is because the fines are often losing their ability to disincentivize the bad behavior - if a company can make 19 billion in a year using only 1 billion, and then be fined for 15 billion, then they can pay the fine can and pocket the 3 billion difference, and report a hefty profit to shareholders.
Trying to influence collective behavior through incentives and disincentives is not 'absurd on its face,' dionidium, and I challenge your grasp of the overall context for asserting that it is.
That's all fine, but we have a far simpler alternative, which is to punish individuals when they break the law. There is no need to target the organization when you can target individual lawbreakers.
Except that this allows organizations to participate in fallguyism. Organizations that cannot be punished and individuals who can create an effect where the individual can do something illegal but extremely beneficial for the corporation, bear the consequences, and then be received into lifelong benefits after their punishment is complete, jail time over, etc. The extreme rub here is that even if an individual is hit with a finance demolishing, unbankruptable fine and extended jail time, that individual's situation can STILL be VASTLY improved, finances strengthened, etc. by being the fall guy for a large organization. (If you've ever thought, "I would go to jail for ten years if I got 10 million dollars at the end," then you understand the incentive structure there already.)
There is no way to effectively punish saavy, loyal individuals when individuals from within their respective organizations can shelter them from the consequences and/or incentivize them to break the law despite the consequences.
If the whole matter is implicit, it doesn't even necessarily require the organization to 'rescue' their fall guy afterwards, people are just another resource in an organization, if the benefit to the organization of breaking the law is greater than the benefit the organization derives from the person who would ultimately be the fall guy, then even the potential of a 'rescue' is enough, if the incentives are otherwise strong enough!
Only if BOTH the individual AND the organization must pay a price for misbehavior is it possible to truly disincent illegal but profitable behavior. Under your scenario, an organization can simply shuffle through its minions until it finds one willing to break the law and offer the profits for a given incentive package- indeed, organizations under your model are incentivized to seek out and hire criminals who lack analytical depth, and then implicitly make the desired course clear, and then allow the criminal to take the fall for them, while the organization and its investors pocket the profits.
His account is much older than mine, yes. I've been reading for about as long as his account. No sure what the relevance of that is.
Anyway, I'm just using your comment to respond to several others at once that all make roughly the same point. It's rather meta to the OP though, so maybe it would better be detached from here (seeing that my response now seems to be the top voted reply out of many, which is rather ironic in the light of the following).
But on to my point: not all points or opinions should be 'reasoned' with, or deserve an intellectually honest debate, or even a reply. To paraphrase the old quip, 'don't wrestle a pig in the mud. You'll get dirty and the pig likes it'. Many other commenters try to engage the GP in a fact-based 'debate', but that is impossible with sophistic extremists who use terminology like 'corporate death penalty'. It's meant to incite an emotional reaction only. There is no point in refuting Stormfront posters either, or Truthers, or pick the fringe of any group that you ideologically disagree with.
Now I know that the general rule for posting here is 'don't post negative things' and 'stick to substance and not the person' etc.; and my off handed reply is essentially contrary to all those things; and I fully realize that with this reply I'm polluting even more. My point is: there seems to be some sort of naive believe that 'all opinions are equally valid', 'all viewpoints deserve equal consideration' and 'the only way to respond to fringe/populist rhetoric is with meticulous fact-based refutation'. That's simply not true. Call me a 'reactionist' or a 'fascist censor' - but I liked the days when 'letters to the editor' from lunatics were thrown in the bin and only those with substance and without inciting language were published (I mean that metaphorically, I was born in 1979, I'm from a generation where 'letters to the editor' were already an anachronism). I'm not talking about shunning content because of its content; but rather shunning content that employs mala fides sophisms like purposefully using incendiary phrasing.
So in summary: no I won't be seduced into a useless 'debate'. And on top of that, I would much prefer much more heavy-handed moderation where many more posts were simply and summarily deleted (and yes that includes some of my own, that were written too hastily) in order to increase the intellectual content per 1000 words in the comments; failing that, we (as in, all posters) need to ignore and/or shun extremism instead of giving it a podium by replying with well-intentioned fact-based answers and thus attracting even more attention to it.
I'm not sure if you're meta-trolling me by doing the exact thing I'm agitating against (i.e., dishonest selective quoting, flippant dismissiveness, dialectical rigidity), but I'll take the most generous interpretation and just assume you're short on time and haven't fully internalized the point.
We're beyond the point of 'just' downvoting and 'moving on'. Sometimes some needs to take a stand against moronification. I'm not volunteering to be that person and maybe my original reply wasn't even in that category, but not speaking up (and let's face it, downvoting doesn't count) lets this sort of thing fester on. At the risk of beaten an old cliche'd horse - "first they came for xyz [...] and then there was nobody to speak up left" etc. etc. I don't mind the occasional post calling out utter rhetorical garbage; if only to affirm that there are people left who don't mind debate as long as it's done in honesty and in an informed way, rather than 'I have a [deity-given|natural] right to shout whatever springs into my head at everybody else'. If someone were to gauge opinion from online discourse, they'd have no alternative but to conclude that there is nobody left who can hold an opinion that is more complicated than 'THIS ME LIKE' or 'THIS ME HATE, MUST SMASH'.
"If you make a comment make it a substantial one."
That's rather ironic coming from someone who with two dismissive one-sentence posts ignores a whole complex point being made - a point that, while it may not be 'novel', is certainly contrary to the majority's concept of 'democracy' and 'fairness'.
There is a time and a place to make that 'complex point' and I highly doubt that hijacking a thread with wall-of-text posts like these will make that point effectively.
As for your entry paragraph: such veiled accusations are also not worthy of HN.
Examinations of the analogies between individuals and corporation, from a legal perspective, are actually very interesting (at least, I think so), being much more complex than trivial "populist rhetoric".
As a matter of fact, regardless of "corporate death penalty" making sense or not, the debate thread immediately below your (non-)argument has many informative points.
"That was a reflection on how according to roel_v HN was a place of intelligent discussion when he joined."
Tss, rose-colored glasses and all, and the world is a different place from what it was 10 years ago; still at least back then the main 'problems' were the excessive focus on nootropics and quantitative finance; not that it was overrun with populist high-school angsty political drivel.
And holy monkey, your comment is about as self referential as they get. You don't offer any coherent points to argue, you make a comparison so vague that, indeed, you do not actually tell us what it is, but rather just that you have a 'vague feeling of recognition,' and a bevy of insults that you don't elect to justify with specific reasoning (is the corporate death penalty idea violent, or is it something else that causes you to call the parent comment violent?).
You have every right to complain about situations you don't like, but because your comment so clearly exemplifies the very situation about which you are complaining, I would be foolish to give your complaint much credence.
[1] NY Times: How Volkswagen Got Away With Diesel Deception http://nyti.ms/1ZjAV1w
[2] Vox: VW's appalling clean diesel scandal, explained http://bit.ly/1MhJVuA
[3] FHWA: Annual Vehicle Distance Traveled and Related Data http://www.fhwa.dot.gov/policyinformation/statistics/2013/vm...
[4] EIA: How much CO2 is produced by burning gasoline? http://www.eia.gov/tools/faqs/faq.cfm?id=307&t=11
[5] EPA: Does the fuel used in fuel economy testing contain ethanol? http://www3.epa.gov/otaq/about/faq.htm#ethanol
[6] DOE: Fuel Economy of 2015 Volkswagen Jetta http://www.fueleconomy.gov/feg/bymodel/2015_Volkswagen_Jetta...