The Failure of Government Regulation

Chapter 8,356,471,307: Volkswagen diesel engines.

No link, you know the story.  A quick summary: Volkswagen apparently manipulated engine management software to trick US EPA emissions tests.  This began with the model year 2009 – almost seven years ago.  In the last few days, the EPA got their man, so to speak.

So why is this a failure of government regulation?  You mean, besides it took seven years?

Daniel Carder, an unassuming 45-year-old engineer with gray hair and blue jeans, appears an unlikely type to take down one of the world's most powerful companies.

But he and his small research team at West Virginia University may have done exactly that, with a $50,000 study which produced early evidence that Volkswagen AG (VOWG_p.DE) was cheating on U.S. vehicle emissions tests, setting off a scandal that threatens the German automaker's leadership, reputation and finances.

$50,000.  A small research team.  Does this sound like a federal government operation?

But, you say, the EPA must have funded the research.

The results of that study, which was paid for by the nonprofit International Council on Clean Transportation (ICCT) in late 2012 and completed in May 2013….

ICCT is a European-based organization.

I know, I know – a research team at a state university, a European non-profit; not exactly the free market in action (although both entities secure funding from private corporations and other private entities).  But whatever they are, they aren’t the EPA; they don’t come with a monopoly of enforcement; they don’t receive 100% of their funding through coercion.

As an aside, it still isn’t clear why the story explodes only now – more than a year after the results of the study were published and also presented to the EPA and the California Air Resources Board:

Carder said he's surprised to see such a hullabaloo now, because his team's findings were made public nearly a year and a half ago.

"We actually presented this data in a public forum and were actually questioned by Volkswagen," said Carder.

There seems little doubt that VW legitimately stepped into one – no one is suggesting that the NSA placed a bug in the software…mmmm….

For now, I think it is reasonable enough to accept that VW did this to themselves.  But why would the EPA and media break the story now?

Maybe happenstance.  Or maybe leverage over Germany.  As I don’t believe such things happen in politics by happenstance, I will vote for the latter.

This story cuts at the heart of engineering excellence and Volkswagen – both as German as beer and sausages this month (well, every month, but especially this month).

Why would the US want leverage over Germany?  Russia, China, refugees, placing nukes on German soil, financial support for the failing southern countries.  Who knows?

But there are plenty of possibilities.