Friday, January 27, 2023
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media
No Result
View All Result
Macdonald-Laurier Institute

How do you stop companies like Volkswagen from behaving badly?: Brian Lee Crowley in the Globe and Mail

October 2, 2015
in Columns, In the Media, Latest News
Reading Time: 4 mins read
A A

Brian Lee CrowleyThe scandal engulfing German car manufacturer Volkswagen has raised an important question: How do we prevent companies from perpetrating fraud on consumers?

Macdonald-Laurier Institute Managing Director Brian Lee Crowley, writing in the Globe and Mail, says we need to get more creative than simply piling on more government regulation.

By Brian Lee Crowley, Oct. 1, 2015

A couple of years ago I bought a Volkswagen Jetta with a diesel engine. I love this car; it’s roomy, comfortable and thrifty. It generates fewer greenhouse gases than gasoline-powered engines. Even though I paid a premium price for it, I thought VW’s reputation for Teutonic engineering, reliability and service were worth it.

Like about 11 million owners of VW diesel cars worldwide, however, I was sold my car under false pretences.  While it remains to be established how high the scandal reaches into the executive suite at the German car manufacturer, what seems beyond dispute is that some VW employees knowingly conspired to mislead regulators about the emissions performance of the company’s diesel engines. Not only is this intentional fraud perpetrated on consumers, but a flagrant flouting of the laws in various countries intended to protect both people and the environment.

There seem to be altogether too many fools out there willing to risk everything for a paltry advantage in the marketplace

Things like this shouldn’t happen, but they do. So the question is what to do about it. Some people believe that much of the regulatory burden placed on companies to protect consumers and public health is costly and unnecessary because market relationships are based on trust and repeat business (presumably VW wants you to buy more than one of its cars over your lifetime) and only a fool would endanger the company’s most valuable asset, its reputation, in this egregious way.

Yet there seem to be altogether too many fools out there willing to risk everything for a paltry advantage in the marketplace. And not just in the car business, although there are lots of other examples of scandalous behaviour by GM, Toyota and others failing for years to fix problems that they knew were harming their customers. Banks and other financial institutions, for example, took outsized risks with people’s money and endangered the entire economic system. With impressive effrontery they then sent taxpayers the bill.

The lazy response is that smart regulation by an omniscient and benevolent government will sort this all out.  This is no more convincing than the belief that no company would put its reputation at risk in the hope that no one would catch them in the act.

Governments take unwonted risks too and for all the same reasons companies do, including greed, ambition and fear. After all it is hardly as if the existing and extensive regulatory edifice designed to test car safety and emissions compliance prevented the current scandal or its many predecessors.

Big companies like VW are politically powerful. Its home state of Lower Saxony owns a fifth of the company’s shares, and one in seven German workers owes his job one way or another to the auto industry. In an effort to keep the European auto industry competitive on the world stage, that continent’s regulators have a famously complaisant relationship with local manufacturers.

In a fraudulent manoeuvre no less despicable than that of VW’s, governments have set tough standards to appease voters and consumers, only to look the other way when companies gamed the testing regimes on which the regulations rely. This is why it is the rare driver indeed who actually gets the fuel economy promised by his car’s manufacturer; the otherworldly conditions under which fuel economy tests are carried out just bear no relation to real driving conditions.

America’s regulators are tougher, but it is only a matter of degree. For years GM and its regulators in the US were aware of faulty ignition switches found directly responsible for over 100 deaths. Toyota bucked and shied at taking responsibility for dangerous unintended acceleration problems that eventually led to over 8 million cars being recalled. These problems were ultimately corrected, and the companies fined, but it took too long, the fines were small relative to the scale of the infractions and the individuals responsible for such reprehensible criminal behaviour have not been brought to book.

It is worth remembering that it was not the regulators, despite all their resources, who caught VW in its nefarious behaviour. It was a tiny NGO who stumbled on the evidence when carrying out its own independent tests and then spent several years trying to get regulators to take notice.

We need more such outfits independent of both the companies and governments. A monolithic regulator is no better than a single car company that monopolises the market. Competition and contestability work, including through class actions suits where legitimately-harmed people can seek redress beyond what politically constrained regulators can do.

Finally there is a strong case for piercing the corporate veil and prosecuting individuals within these companies when they knowingly abet the defrauding and endangerment of the public. A few executives headed to the big house in handcuffs may be just the ticket pour encourager les autres.

Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.

Tags: Brian Lee CrowleyGlobe and Mail
Previous Post

Quietly, change has arrived in Aboriginal Canada: Coates and Poelzer in Sun papers

Next Post

Restoring balance in Canada’s courts: Dwight Newman for Policy Options

Related Posts

Canada can help Ukraine in better ways than sending tanks: Richard Shimooka in the Hub
Columns

Canada can help Ukraine in better ways than sending tanks: Richard Shimooka in the Hub

January 27, 2023
Just as Canadians see smartphone bills head down, the cost of watching online content on them may be going up: Peter Menzies in the Financial Post
Columns

Want cheaper cellphone bills? Allow more foreign investment in telecoms: Aaron Wudrick in the National Post

January 27, 2023
Face it, millennials – There is no realistic alternative to capitalism: Philip Cross in the Financial Post
Columns

Face it, millennials – There is no realistic alternative to capitalism: Philip Cross in the Financial Post

January 27, 2023
Next Post
MLI welcomes Aboriginal law expert Dwight Newman as Senior Fellow

Restoring balance in Canada’s courts: Dwight Newman for Policy Options

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario
K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Follow us on

Newsletter Signup

First Name
Last Name
Email Address

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

Inside Policy Magazine

  • Current Issue
  • Back Issues
  • Advertising
  • Inside Policy Blog
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
    • Jobs
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy Program
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Energy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Foreign Policy Program
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs Program
  • Projects
    • COVID and after: A mandate for recovery
    • COVID Misery Index
      • Beyond Lockdown
    • Provincial COVID Misery Index
    • Centre for Advancing Canada’s Interests Abroad
      • Dragon at the Door
      • The Eavesdropping Dragon: Huawei
    • An Intellectual Property Strategy for Canada
    • Speak for Ourselves
    • Canada and the Indo-Pacific Initiative
    • DisInfoWatch.org
    • The Transatlantic Program
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Talkin’ in the Free World with Mariam Memarsadeghi
    • Past Projects
      • Justice Report Card
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy Magazine
      • Inside Policy Back Issues
      • Inside Policy Blog
    • Papers
    • Columns
    • Books
    • Commentary
    • Straight Talk
    • Video
    • Multimedia
    • Podcasts
    • Leading Economic Indicator
    • Labour Market Report
    • MLI in the Media

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.