Wednesday, September 23, 2015

Why we need corporate regulation


The latest corporate cheating scandal with Volkswagen is just the latest in a long line of efforts by corporations to weasel out of following government regulations. The auto mobile industry has been especially active in this field of endeavor.
Long before Volkswagen admitted to cheating on emissions tests for millions of cars worldwide, the automobile industry, Volkswagen included, had a well-known record of sidestepping regulation and even duping regulators.

For decades, car companies found ways to rig mileage and emissions testing data. In Europe, some automakers have taped up test cars’ doors and grilles to bolster their aerodynamics. Others have used “superlubricants” to reduce friction in the car’s engine to a degree that would be impossible in real-world driving conditions.

Automakers have even been known to make test vehicles lighter by removing the back seats.

Cheating in the United States started as soon as governments began regulating automotive emissions in the early 1970s. In 1972, certification of Ford Motor’s new cars was held up after the Environmental Protection Agency found that the company had violated rules by performing constant maintenance of its test cars, which reduced emissions but did not reflect driving conditions in the real world. Ford walked away with a $7 million fine.

The next year, the agency fined Volkswagen $120,000 after finding that the company had installed devices intended specifically to shut down a vehicle’s pollution control systems. In 1974, Chrysler had to recall more than 800,000 cars because similar devices were found in the radiators of its cars.

Such gadgets became known as “defeat devices,” and they have long been banned by the E.P.A. But their use continued to proliferate, and they became more sophisticated, as illustrated by Volkswagen’s admission this week that 11 million diesel cars worldwide were equipped with software used to cheat on emissions tests. The scandal played out on Wednesday with the resignation of the automaker’s chief executive, Martin Winterkorn.

Beyond emissions, the industry has long been contemptuous of regulation. Henry Ford II called airbags “a lot of baloney,” and executives have bristled at rules requiring higher mileage per gallon. Robert A. Lutz, the former General Motors vice chairman and Chrysler president, often said the rules were like “trying to cure obesity by requiring clothing manufacturers to make smaller sizes.”
The story is pretty much the same every time, corporations complain about regulations, spend a fortune trying to evade them and ultimately follow them at a greatly increased cost than if they had not tried to cheat. But what do they care, it all gets passed to us as a cost of doing business.

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