Volkswagen’s “Clean Diesel” Scandal and the Rule of Profit
The first car I ever bought was a 1969 Volkswagen Beetle (pictured above). I’ve had dalliances with Ford, Toyota, Subaru, and Saab, but my heart has always belonged to VW. I currently own a 2010 Jetta Sportswagen TDI, and I feel like my heart is broken.
Along the way, I chose to forgive the fact that Volkswagen’s roots are intimately co-mingled with Nazi Germany. I grieved when my father’s best friends were killed by a drunk driver who hit their flimsy little VW bug head-on, and I probably should have suspected that the TDI clean diesel story was too good to be true.
Volkswagen’s deception, fraud, and regulatory and criminal violations are sickening. While it’s tempting and necessary to figure out what happened and who is responsible, it’s not sufficient. We need to question the underlying values and assumptions of a system that would tolerate this kind of behavior. And we need to examine our own complicity in this system.
Volkswagen is not the first, nor will it be the last corporation to cross the line from competition to crime in the name of profit. This time might seem different,perhaps because of VW’s brand image as the fun-loving yet efficient and eco-conscious choice, or because we expect more from German engineering.
But as information continues to emerge, we learn that this time really isn’t any different. Like all “good” corporations, Volkswagen set its sights on getting bigger and bigger. VW wanted to be the number one automobile company in the world. To do so, it needed to increase sales in the US, and it identified a potential market opportunity in “clean diesel”. Then, again just like any corporation worth its stock price, it exploited that market opportunity. It’s rather ironic that, after nearly a decade of concentrated effort, Volkswagen claimed the number one spot in June of this year only to lose it virtually overnight – how long the climb to the top and how quick and precipitous the fall from the summit.
There appears to have been a company-wide disregard for environmental regulation and compliance coupled with a single-minded focus on increasing sales. Never mind that the vehicles couldn’t meet EPA standards—just use technology to game the system and fool the regulators. As long as sales were up, what’s a little software tweak here and there?
Isn’t this the name of the game? Anything goes in the name of profit. Drivers wanted to believe them. We wanted to reduce emissions, get great mileage, and feel virtuous while driving zippy little “cars of the people”. As a loyal customer, I am deeply disappointed. As an investment advisor, I am unfortunately not that surprised. Lying and cheating are inevitable by-products of a system dominated by ego, growth, and greed. Yet we are so accustomed to the belief that economic growth is good, and so hyper-focused on that one metric (for ourselves, for our companies, for our country), that we are continually blinded to its dark side. Even now, when so many people have been harmed and so much damage has been done to our earthly home, the financial news is filled with speculation and opinions as to whether the company will survive to become “investable” again. Forget the opportunity to consider the physical and social implications of VW’s actions, the financial gurus go right back to whether we can keep feeding on their bottom line.
It is extremely difficult, if not impossible, to live outside the dominant economy and all its inherent problems. Investing in that economy is also difficult, if not impossible, to avoid. What, then, do we do? First, we take off the blinders. We face the facts of our current condition. We confess our sins, but without seeking or claiming absolution. We live with the ambiguity, tension, and complexity. We admit that we are “walking contradictions”. We do what we can. We don’t claim to have all the answers. We finally admit to knowing deep down that there is no such thing as “clean diesel”.
Share this post: