Volkswagen's bombshell admission that it cheated on US emissions testing has become the latest in a string of auto industry scandals driven by the moral hazard of bailouts.
...In January of 2014, President Obama took a moment out of his state of the union address to celebrate an automotive guest of honor: freshly minted General Motors CEO Mary Barra. For Obama, Barra represented a two-fer: not only was her presence an opportunity to boast about his decision to “save Detroit,” the fact that she was the first female CEO of a major automaker helped Obama make the case that his rescue had imbued the industrial giant with a new spirit of equality and meritocracy.
But less than a month later, Barra announced that GM would begin recalling vehicles with an ignition switch that had been turning off vehicles and disabling airbags for a decade, with fatal results.
...Barra fired 15 employees for their roles in the scandal, but refused to state that they would not receive severance pay, which strongly suggested that they had.
This, along with her symbolic power as a representative of “The New GM,” allowed her to insist that GM was acting with transparency and accountability even as they clearly were not.
The Valukas Report was taken as gospel, by representatives and the media alike, with few questioning the fact that GM had an ongoing business relationship with Valukas’s firm, Jenner and Block.
And when the Department of Justice announced GM’s settlement of criminal charges, it cited the Valukas Report as evidence of GM’s “cooperation” which justified its sweetheart deal.
Though GM had admitted that its decade-old defect had caused 124 deaths and hundreds more injuries, no individual executives were charged, the firm paid just $900 million in fines, and deferred prosecution kept GM from becoming a corporate criminal....The contrast between GM’s generous treatment at the hands of authorities and the media and the brutal attacks on Toyota were enough to demonstrate a double-standard.
For its non-defect, officially linked to zero deaths, Toyota paid $1.2 billion and received universal opprobrium from regulators and congress.
For its decade-old defect, which it admitted had killed or injured nearly 400 Americans, GM paid just $900 million and received praise from prosecutors and the media for its cooperation and accountability...
...VW’s concession to this tactic has resulted in a level of public outcry and potential regulatory and legal repercussions that easily rivals GM’s, despite the fact that not a single death or injury has been tied to the scandal.
The EPA is threatening a fine that is capped at a whopping $18 billion,
...Is Killing People Worse Than Emissions Cheating?
Once again we are confronted with an incredibly selective moral outrage aimed at a single, targeted automaker.
Only this time, the difference is that the total lack of moral outrage about GM’s serial killer-eclipsing death count is still ringing in our ears.
...With our sense of moral clarity so muddled by the Obama administration’s various adventures in auto industry protectionism-by-regulatory-scandal, the public no longer seems able even to accept the modest proposition that killing people is worse than cheating on an emissions testing regime that invites gaming and abuse both in theory and practice..."
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