The Real Fallout from the Volkswagen Disaster: TRUST (What we need to transition to a green economy)

Reports are emerging that Volkswagen suppliers and employees had been raising concerns about emissions “evasion” as far back as 2008 and 2011.  In fast, an emissions testing software "defeat device” in the form of a secret code subroutine arrived in the US with 2009 “clean diesel” VW models and has been helping the cars cheat and defeat US emissions standards ever since.  

In 2008, Martin Winterkorn, Volkswagen’s CEO, stated that he wanted "to take [his] group to the very top of the global car industry,” a vision which included  tripling US sales.  Today, we of course have to ask at what cost.  Mr. Winkerton had reached his goal for a few weeks, only to have to resign in the face of economic and environmental scandal.  

What is the fallout from the discovery of Volkswagen’s actions as a company?  For one thing, people have and will continue to lose their jobs.  Some of them likely knew what was going on (someone wrote the subroutine, after all), but others were certainly innocent victims who had a lot of pride in their well regarded company and in their careers there.  Some employees will just end up victims of a market share crisis, caused by this dishonest practice.  Others may even face criminal charges for clearly deceptive and intentional practices.  Then there are the people who believed they were making environmentally friendly decisions by buying these vehicles, and who now own something that isn’t what it claimed.  Remember those clean diesel ads?  The could (and did) make some people feel almost guilty for buying a hybrid!  If diesel was really cleaner, why not….  What an arrogant lie that seems like now.  And of course, investors have also already taken a significant loss. It remains to be seen if Volkswagen will be able to gain back the market’s trust.  Ever. Maybe VW will be inspired to pull  Nike-style turnaround?  Is there possibly a way the planet could come out ahead? 

And then there is the matter of people and planet generally.  80 million cars producing  30-40 times the emissions they should for how many years?  The numbers and pollution and health effects are potentially staggering.  A recent NPR interviewee calculated back of the napkin costs for the US alone at $80 million per year.  Total scandal costs have been rumored to approach the BP-level $18 billion mark.

The fallout and loss is really also about trust.  Trust in Volkswagen, which has been a trusted and really beloved brand by so many.  Trust in global and even national corporations to do what’s right even when it’s difficult, unless they are caught.  We want to believe as consumers that there are some companies who are in it with us, who as a company and as a group of employees aren’t out to make ill-gotten gains from the environment or their employees and that mke great products which can help us begging to transition towards a greener planet.  

This mess needs to be cleaned up, but we also need to ask why it happened.  How does a company go down this path, and why doesn’t someone stop a terrible decision like this - and get rewarded for it.  Is growth and profit so important?  And if so, don’t people realize that the house of cards IS a house of cards and will come apart anyway?  The environment loses, customers lose, employees and shareholders lose, and really it all should have been preventable.

This feels like a significant step back in the transition to a green economy.  Why? Because we all have to be in this together to make it work.  And being in the same boat isn’t possible, when you can’t trust the people in the boat to do the right thing. We can’t cut corners and cheat to make fake profits.  Instead, we have to count environmental and social costs in business decisions (externalities, to an economist), so that we have the true measure of what’s going on. Can we install defeat devices and fool ourselves?  Yes, and we do all the time.  We’re over-fishing, over-driving and over-developing ourselves into a corner.  Honesty is the key to fixing our environmental and economic problems - and right now, Volkswagen has made this critical need into a fairy-tale that doesn’t quite seem possible right now.  I want my morale back, and I am sure glad I didn’t buy into the lie of a clean diesel car.  Shame on the people who did this - to all of us.  

We can’t lie or delude our way out of pollution and climate disasters - We need more from companies and governments to solve some serious and pending environmental challenges.  And this wasn’t it.  Far from it.  

For more information/recent articles:

http://www.usatoday.com/story/money/cars/2015/09/27/reports-volkswagen-emmissions/72923064/

http://www.nytimes.com/2015/09/27/business/as-vw-pushed-to-be-no-1-ambitions-fueled-a-scandal.html