The Volkswagen debacle

[NorthStar]

Wow! ...That last link from post #19...right on time with this topic...totally fresh from today.

 

[DaveyF]

while I agree with the theory of what you say, unfortunately the real world means that many companies are 'too big to fail'. in the case of VW the local government owns 20% of it, and it's the largest company in Germany with over 200,000 employees. so the solution will have to be a political one that has to make sense for all parties.

I very much doubt that the high up bean counters ever got wind of this train wreck waiting to happen. if the board of directors or top level managers knew about it at all (until recent months) I would be surprised. this likely stopped at the desk of the head of the group in charge of that engine. otherwise the 'secret' would have been out much sooner and some sort of exit strategy would have been in place long ago to avoid this situation.

this situation clearly lacked any sort of strategic thinking that higher ups would have brought.

That is the supposed dogma. However, while the idea of "too big to fail" is obviously logical in some ways, it is also illogical and unjust in others. The idea that any organization or company is too big to fail is a very flawed and dangerous one, IMHO. That would include government entities, or any other organization that sees themselves 'above the law'. The detrimental aspect of ignoring the law has to be large enough to not only dissuade any institution or corporation from even considering the action, but to insure that if they do, such a consequence will be untenable. Hefty fines are IMO, NOT the way to go.

 

[jazdoc]

That is the supposed dogma. However, while the idea of "too big to fail" is obviously logical in some ways, it is also illogical and unjust in others. The idea that any organization or company is too big to fail is a very flawed and dangerous one, IMHO. That would include government entities, or any other organization that sees themselves 'above the law'. The detrimental aspect of ignoring the law has to be large enough to not only dissuade any institution or corporation to even consider the action, but to insure that if they do such a consequence will be untenable. Hefty fines are IMO, NOT the way to go.

The ultimate irony is the "too big to fail" unintentionally incentivizes bad behavior and destabilizes the economy. If VW misled consumers, they should be made whole. If they misled regulators, punitive fines are in order.

 

[Mike Lavigne]

That is the supposed dogma. However, while the idea of "too big to fail" is obviously logical in some ways, it is also illogical and unjust in others. The idea that any organization or company is too big to fail is a very flawed and dangerous one, IMHO. That would include government entities, or any other organization that sees themselves 'above the law'. The detrimental aspect of ignoring the law has to be large enough to not only dissuade any institution or corporation to even consider the action, but to insure that if they do such a consequence will be untenable. Hefty fines are IMO, NOT the way to go.

The ultimate irony is the "too big to fail" unintentionally incentivizes bad behavior and destabilizes the economy. If VW misled consumers, they should be made whole. If they misled regulators, punitive fines are in order.

what if this was about Airbus instead of VW, and 25 airplanes crashed? 10,000 people died?

Airbus is owned by multiple European Governments, and built in many countries. 300,000 direct employees and 5x indirect employees.

would you put them out of business?

it would have to be political and brokered. OTOH heads would need to roll.

it's the way of the world.

 

[DaveyF]

what if this was about Airbus instead of VW, and 25 airplanes crashed? 10,000 people died?

Airbus is owned by multiple European Governments, and built in many countries. 300,000 direct employees and 5x indirect employees.

would you put them out of business?

.

Absolutely. If Airbus was culpable for the disaster.

 

[Mike Lavigne]

Absolutely. If Airbus was culpable for the disaster.

it could never happen.

we can debate that it should to make us feel better.

 

[microstrip]

what if this was about Airbus instead of VW, and 25 airplanes crashed? 10,000 people died?

Airbus is owned by multiple European Governments, and built in many countries. 300,000 direct employees and 5x indirect employees.

would you put them out of business?

it would have to be political and brokered. OTOH heads would need to roll.

it's the way of the world.

Mike,

Why Airbus and not Boeing? I agree with you - heads would need to roll, but the consequences of putting such companies out of business would be disastrous and socially unacceptable.

More seriously, what is terrifying is how such practice went on unnoticed for seven years. I own a Mercedes diesel, and my friends who own similar size Volkswagen cars always reported that their average fuel consumption was about 30% lower than mine. I now know why ...

Also it is remarkable that other manufacturers never tried to test or reverse engineer their motors. At less we know that a few high-end manufacturers compare their products with the competition!

 

[asiufy]

It depends, no? I mean, a company is much more than its leaders/execs.
In the Airbus/Boeing situation, you don't have to penalize the entire company to make an example out of them. But it's important that every single person that's in any way guilty should be accountable. If those individuals are put to trial, and found guilty, THOSE should be punished enough to serve as an example, so other employees/execs will think twice (or thrice) about playing dirty too...
Now, I'm hearing about this VW CEO stepping down with a ridiculous large severance package. That doesn't seem like the right thing to do, no? What kind of example that will give to the market?


alexandre

 

[amirm]

Now, I'm hearing about this VW CEO stepping down with a ridiculous large severance package. That doesn't seem like the right thing to do, no? What kind of example that will give to the market?

Hadn't thought about that but a quick search shows to be true: https://www.washingtonpost.com/news...wagen-ceos-exit-package-could-top-67-million/

"Outgoing Volkswagen CEO’s exit package could top $67 million...."

And this funny bit at the end:

"Amid the uncertainty surrounding his severance package, there is at least one perk that Winterkorn will almost certainly get upon leaving. Volkswagen's pension benefit, naturally, includes the use of company cars for departing executives. "Let's hope it's not a diesel," Hodgson said."

 

[BlueFox]

Just this week, an executive of a peanut butter company was sentenced to 28 years in jail for knowingly shipping salmonella tainted peanut butter.

"Former peanut company executive Stewart Parnell was hit with a virtual life prison term Monday for his 2014 conviction on crimes related to a salmonella outbreak blamed for killing nine and sickening hundreds."

http://www.usatoday.com/story/money...nut-executive-salmonella-sentencing/72549166/

 

[DaveyF]

Just this week, an executive of a peanut butter company was sentenced to 28 years in jail for knowingly shipping salmonella tainted peanut butter.

"Former peanut company executive Stewart Parnell was hit with a virtual life prison term Monday for his 2014 conviction on crimes related to a salmonella outbreak blamed for killing nine and sickening hundreds."

http://www.usatoday.com/story/money...nut-executive-salmonella-sentencing/72549166/

I wonder if this guy's company is going to continue to be in business. IMO, it does set a good example that he ended up with considerable jail time.
Problem is that the guy is small fry in the big picture. The likes of VW and their minions, and the examples above with Boeing and Airbus are more to the point. Like Dave C pointed out, DuPont committed a major crime against society. They may have even been fined heavily...BUT the issue is that you really cannot do damage to a company that large, with that kind of punitive action. To VW, a fine of billions is really nothing more than an inconvenience...same for DuPont. There is no true punitive action to it. Jailing all of the guilty parties in the company would be a start, BUT I still think that it is too easy to deflect liability as a corporate member. Therefore, a forced cessation of the company and jail time for anyone who is proven guilty would seem to be far more punitive. Plus, the consequence would be far more likely to change the attitudes/behavior of the corporate hierarchy that currently do not fear such an action. IMHO.

 

[NorthStar]

This is truly awful! Those are some of the worst crimes against humanity...the fair sentence is the same to what they did to others...nothing less than death.
There is no pardon here, no free lunch in jail. What's this...28 years! Why?

And that Volkswagen story is no better...killing our societies by hiding the pollution! ...Just extreme measures that demand extreme sentencing. ...Equal for equal, an eye for an eye.

 

[DaveyF]

This is truly awful! Those are some of the worst crimes against humanity...the fair sentence is the same to what they did to others...nothing less than death.
There is no pardon here, no free lunch in jail. What's this...28 years! Why?

And that Volkswagen story is no better...killing our societies by hiding the pollution! ...Just extreme measures that demand extreme sentencing. ...Equal for equal, an eye for an eye.

Well Bob, I think that is a little too severe, but ok, lol.

 

[rockitman]

This is truly awful! Those are some of the worst crimes against humanity...the fair sentence is the same to what they did to others...nothing less than death.
There is no pardon here, no free lunch in jail. What's this...28 years! Why?

And that Volkswagen story is no better...killing our societies by hiding the pollution! ...Just extreme measures that demand extreme sentencing. ...Equal for equal, an eye for an eye.

Lol... Look at the next diesel tractor trailer driving down the road and then talk to me about pollution

 

[Ronm1]

Justice is rarely served when lots of money is involved. It brings up IMO the idiom ' Forget about it '

 

[NorthStar]

Yes Christian, but that tractor doesn't have a secret device that turns On and Off when going through the Pollution Inspection Control Office.
...No hiding from Mr. Tractor. /// Obvious polluter.

And Davey; "too severe" ...really? ...And that Mr. Peanut guy...with nine deaths and hundreds of sick hospitalized people to his repertoire...nothing "severe" here?

 

[NorthStar]

Justice is rarely served when lots of money is involved. It brings up IMO the idiom ' Forget about it '

Ron, it is one of the most disturbing and sad reality of this planet: He killed people...but yeah he provided jobs to hundreds...money forgive, people still die.
What a great capitalist concept!

______

Small interlude (if up to it):

 

[asiufy]

I wonder if this guy's company is going to continue to be in business. IMO, it does set a good example that he ended up with considerable jail time.
Problem is that the guy is small fry in the big picture. The likes of VW and their minions, and the examples above with Boeing and Airbus are more to the point. Like Dave C pointed out, DuPont committed a major crime against society. They may have even been fined heavily...BUT the issue is that you really cannot do damage to a company that large, with that kind of punitive action. To VW, a fine of billions is really nothing more than an inconvenience...same for DuPont. There is no true punitive action to it. Jailing all of the guilty parties in the company would be a start, BUT I still think that it is too easy to deflect liability as a corporate member. Therefore, a forced cessation of the company and jail time for anyone who is proven guilty would seem to be far more punitive. Plus, the consequence would be far more likely to change the attitudes/behavior of the corporate hierarchy that currently do not fear such an action. IMHO.

Dave,

I agree a fine won't be enough. I'm assuming they'll have to "fix" every single one of the diesel cars they sold, to comply with regulations. Either that, or give brand new cars to everybody.
That, coupled with penalties (including jail time!) for the execs that knew about the issue, should work as a proper example.
Maybe I'm wrong, but I always thought a punitive measure was not only for "revenge", or to "set things right", but also as a deterrent, so the society at large will feel safe. All that a billion dollar+ fine will do is make the lawyers rich(er).


alexandre

 

[PeterA]

This is truly awful! Those are some of the worst crimes against humanity...the fair sentence is the same to what they did to others...nothing less than death.
There is no pardon here, no free lunch in jail. What's this...28 years! Why?

And that Volkswagen story is no better...killing our societies by hiding the pollution! ...Just extreme measures that demand extreme sentencing. ...Equal for equal, an eye for an eye.

She yelled, "What difference does it make?" Well, four people are dead and no one has yet been punished. Disgraceful.

 

[amirm]

This is truly awful! Those are some of the worst crimes against humanity...the fair sentence is the same to what they did to others...nothing less than death.

Now there is an idea. We take their responsible employees and stick them in a chamber to breath the fumes for a few days.