Dieselgate Is a Political Disaster
Contrary to usual practice, we’ll begin with the punch-line: less than 4/1,000ths of a degree Celsius. That’s how much warming might be spared half a century from now thanks to Europe’s decision, starting after the Kyoto treaty in the late 1990s, to switch more than 50% of its passenger cars to diesel.
For this negligible result, Europe got significantly dirtier air. Paris, on some days, suffers worse smog than Beijing. Though his methodology may be questionable, a U.K. government scientist estimates that thousands of citizens die each year because of increased nitrogen oxide and soot emissions.
The word “microcosm” was invented for Europe’s diesel snafu—a microcosm of the governance failures that are breeding political revolt in much of the advanced industrial world. Europe has gone overnight from pushing and subsidizing citizens to adopt diesel vehicles, to punishing them with taxes and excluding them from downtown areas. Britain is contemplating a scheme to pay owners to scrap their diesel cars.
Europe’s entire auto industry was led down the primrose lane of adopting a technology that now appears to be a commercial and regulatory dead-end. More than 70% of BMW and Daimler cars made for the European market last year were diesel. When honestly tested, one study shows the latest “Euro 6 Standard” vehicles miss their pollution targets by a whopping 400%.
Virtually everyone agrees Europe’s “dash for diesel” was a monstrous policy error, not to mention the proximate cause of the emissions-cheating scandal that has engulfed Volkswagen and other auto makers. Yet the overarching imperative today is to vilify the car companies and insist they do better at achieving meaningless reductions in CO 2emissions, now by forcing them to build electric cars that customers must be bribed and pressured into buying. Not to be questioned, though, is the green agenda or the competence of Europe’s political class.
When a government conceit goes pop in such a disastrous way, we usually get reform. That won’t be the case here.
But at least, in this maelstrom, Volkswagen’s outside shareholders and German corporate-governance reformers saw a chance to solve one real problem—the excessive influence of government and labor appointees on Volkswagen’s supervisory board, where they work together to inflate employment. It takes VW twice as many workers to build a car as it does Toyota.
And VW reformers looked set to prevail at this past summer’s annual meeting until, at the last minute, the company’s ruling families, the Porsches and the Piëchs, caved to a jigged-up rescue of the status quo.
In place of depoliticizing the company and improving efficiency, Volkswagen adopted a set of faddish promises to invest in electric cars, ride-sharing and the new “mobility economy.” All this was cover for the real agenda—a big pay hike and fresh promises of job security for unionized workers despite the $25 billion (and growing) cost of the diesel cheating scandal.
As a lengthy Reuters report frankly summarized, Volkswagen’s new “strategy” is chiefly a political kludge designed to create a simulacrum of change so real change doesn’t have to happen.
We have here an emblem of the Western world’s infirmity. Multiple irrationality loops have taken over. Climate policy is the primary example—a pure traffic in costly gestures that create no real benefits for the public. In the U.S., the totality of Obama climate policies—his fuel mileage targets, his coal regulations, his wind and solar subsidies—would not make a detectable difference in the earth’s climate even if given a century to work their nonmagic. Yet the cost will be hundreds of billions.
The alleged chaos in America that Donald Trump has wrought, we should remember, was deliberately sought by millions of American voters. Maybe this is why.
In the business world, it’s widely understood that the essence of “job satisfaction,” even more than pay or benefits, is a belief that the people at the top are making good decisions. Think of Trumpism not as a bundle of policy solutions but a scream of frustration from an electorate that knows America hasn’t been making good decisions lately. Next up are German, French and Dutch elections this year where similar dissatisfactions are roiling.
Congrats to those who can discern at this early moment whether the populist upsurge is a symptom of our further unraveling or the start of a turnaround. Much may depend on our reviled elites. The Trump cabinet is full of them. So is the Democratic opposition that is taking an increasingly unreasoning and rejectionist stance toward Trumpism. As a class, these experienced operators unavoidably will be needed to lend a hand to correct the failures that their own class has so much contributed to.