Ah. So, you’re not saying shareholders shouldn’t be punished. You’re saying you feel shutting down the company would be out of proportion to the crime, and that I can agree with.
I don’t agree, however, that a corporate death sentence wouldn’t be a deterrent. Unlike individuals, I don’t feel corporations reach the point where they say “it doesn’t matter if I live or die, so even though I know this will result in death if I’m caught, I’m gonna try anyway.” The exception would be when not cheating would result in death anyway, in which case some unethical companies might give it a shot. This clearly was not the situation with VW.
A punishment is always an incentive for criminals to not get caught, but that doesn’t mean they can’t be also be an important disincentive to crime. At the very least you would think risk-averse investors would look harder at ways to make sure the companies are above board, instead of being indifferent, and at some point actually being above board is going to be a cheaper option.
In any case a larger scale of the crime always means more innocent people are going to be affected by punishing it. Does this mean you should save force of punishment for petty crimes and be gentler on corporate conspiracies? Because I feel like we’ve already been doing that, and it turns out it really doesn’t keep innocent people safe in the big picture.
I’m not sure that what Cory suggests is what should be done but investors sometimes lose money; that’s part of investing. Often it’s for no real reason whatsoever.
Who wrote this article? Someone not familiar with the auto industry or law in general.
Break up VW? WAT? Since when can a US agency tell a German company doing business all over the world “sorry, we gonna have to break you guys up, mmmkay?” Does that make any sense? Europe will deal with VW criminally, you know, because THAT’S WHERE THEY ARE LOCATED. VW could just give 'merica the finger and pull out of the US. VW will humor the EPA by participating in any hearings and such but in terms of sales numbers, VW could hit the road. They sold 5 million cars in July (just in July alone) which is more than Toyota.
Besides, I’m sure the world (and even the US) would be happy to know that they would no longer be able to buy Audi, Porsche, Bugatti, Ducati, Bentley, etc, They own 12 different auto/motorcycle companies.
Will other auto makers learn from VW? Not really. VW isn’t the first to cheat the EPA, Just ask Ford, Honda and Hyundai. Did we break them up? Nah, EPA only cares about the fine. Even the poster child of the USA, the Corvette and many Cadillac’s were exposed as having a defeat device enabled whenever it was smogged (or even when the A/C was on). GM was under “investigation” regarding this from 1993 until 2005. It was the largest EPA violation in the history of the US. Where’s your uproar now? Oh, I forgot, VW is a foreign company. Germans. Sigh…
This sounds great, in theory… But I can’t for the life of me think of any ways that your average investor could do that, with the thousands upon thousands of companies out there to possibly invest in. How would Joe Schmoe, investing a couple hundred or thousand bucks in VW, possibly have ever expected something like this to happen?
Of course not. But it also doesn’t mean that a scorched earth, “put thousands of people out of work and instantly dissolve millions upon millions of dollars of investment money” is anything but a silly alternative, either. Fine the hell out of them, by all means. Frogmarch those responsible for these crimes out of their corner offices in irons. Shutting the doors of VW is a ridiculous solution, though. I think a MUCH better disincentive to crime would be actually prosecuting those committing the crime.
To use an imperfect analogy, death sentences aren’t a deterrent to murder. I don’t know if breaking up the company would send a strong message; if we did this, Toyota and GM would be gone by now; I think there are others that have committed pretty serious crimes. Would there be any car companies left? How quickly could honest players (and the global auto production system) adjust to pick up slack?
But I also question the assumption that most shareholders are “mom and pop”. According to their website, VAG is 50.73% owned by Porsche Automobile Holdings SE, which in turn is owned by the Porsche and Piëch families. Qatar’s sovereign wealth fund owns 15.4%, and the German State of Lower Saxony owns 12.4%. Private shareholders (i.e. extremely wealthy individuals) own 12.3%. Institutional investors, which presumably represent most of the mutual funds etc. that “ordinary” people invest in account for less than 30%.
So it’s quite complex. We could ask how much Qatar and the Porsche/Piëch families knew about this - and whether they condoned it. But we could also say that nuking VAG would have a negative impact on the people of Lower Saxony. Then there’s also regular VW employees around the world who would be laid off or re-hired at lower wages when the parent company is dissolved. There would be a visceral satisfaction to seeing the head honchos get their comeuppance, but there would likely be a raft of unintended consequences to deal with too.
Yeah, we should absolutely make each investor responsible for every criminal act by ANY officer of any company they have invested in (even if they only own a few shares). Nationalize their investment and give them a stern scolding in the public square. After all, how could they NOT know what some exec half a world away was up to?? What, does the investor have a day job and a family that keeps them busy? If so, then they should just bury their money in the backyard and not get involved in criminal enterprises.
In all seriousness though, what is wrong with charging the execs responsible for the criminal acts (and sending them to jail for their fraud), fining the company a TON of money, and then letting the company move forward with new directors? Why do we have to “kill the company” to have effective oversight?
Over-reaction often leads to no reaction - let the regulatory agencies and courts deal with this in a sensible way!
“they’ll keep on killing the world, and not in tiny nibbles, but in huge, VW-sized mouthfulls.”
Dial it back, man. The Guardian article is full of qualifications (“could have” “up to”).
Companies need to follow the law, but pictures of smog for carbon output is incredibly misleading. If the emissions were toxins, that’s worse, but I suspect we’re going to find that actual emissions released were much more narrow and much less than is being hysterically reported.
If you buy a stolen bike, having no way of knowing it was stolen, then the owner of the bike is still entitled to have their bike back and you are out the money. When people do bad things it often hurts other people. It hurts innocent people who had no idea that they were getting caught up in it. We have created a special category in our minds for investors, and for corporations, where there can be no accountability because of the harm it would cause to innocent bystanders, but what it does is encourages people to commit these crimes because they can take the profits from doing so and walk away while the rest of say, “Oh well, what can be done?”
The execs aren’t going to be sent to prison. There will be someone else lower on the food chain who can be blamed. It would hardly be surprising if there wasn’t enough hard evidence to actually convict any individuals.
And what about that fine? How much should we fine the company? Fine it enough and it will be the same as dismantling it except there will be no control over the collapse. Fine it less and you’ll have the same people making the same decisions in charge next year. Fines are extremely punitive against the poor and extremely ineffective against the rich.
Cory just stuck the word “carbon” in there where it doesn’t belong The issue here is nitrogen oxides (NOx).
Besides being toxic in and of themselves, their release also creates or enables to creation of smog, acid rain, ground level ozone and the formation of small particulate matter (PM2.5) and fine particulate matter (PM0.1) that is extraordinarily unhealthy.
the un source bothers me, since it doesn’t say whether the emissions are cumulative or annual, and even if it should be obvious from context, there’s still a bit of nagging doubt.
another possible area of interest is that the Guardian tallied extra emissions that would not occurred had Volkswagen abided by the 2016 standards. Why is a 2009 TDi required to meet or exceed a 2016 standard?
Maybe we need different voting methods by stockholders, to make them more knowledgeable and responsible for what the company did. Though I don’t suppose you’d ever see a stockholder’s proxy ballot (or whatever it’s called) with lines like “Board will direct that the pollution levels in our cars are to be faked in order to increase profits Y/N.”
Whatever the fines are, we need to start putting the CEOs in jail. Maybe actual 20 year jail terms will curb some of these abusive practices. But when is that going to start happening?
