Comparing GM penalties with threatened VW penalties

General Motors fudged on reporting problems with its ignition system and killed people as a result.  The fine, announced last Thursday, was $900 million.  Volkswagen fudged on testing its diesel cars for air pollution, killing exactly nobody.  The fines being contemplated are well into the billions, in addition to refunds and civil lawsuit penalties for consumers, also running into the billions.  Steven Hayward of Powerline writes:

Yesterday a spokesperson for the EPA said that VW could be liable for fines as much as $37,000 per vehicle, or $18 billion for the 500,000 or so models then reported to be offending vehicles. If that same scale were used for 11 million scofflaw VWs, the fine could be over $400 billion, which is likely higher than the total market cap of VW, though who can tell as VW stock fell 17 percent yesterday, and is down another 20 percent today on the European bourses. (I wonder: how you say “Government Motors” in German?)

That last parenthetical remark raises the fact that GM (and its UAW workforce) has been a pet project of the federal government.  And note that VW is partially owned by a German state government and is a mainstay of the German economy. D on’t rule out some sort of bailout for VW.

Nobody is in favor of polluting the air (although note that in Europe, which is normally pretty stringent on pollution, the VW cars pass muster apparently without cheating, for U.S. standards are much higher), but are these penalties commensurate with the damage?

What could explain this situation?  The person writing as Tyler Durden of Zerohedge has a pretty good hypothesis, backed by a lot of graphs.  I recommend that you read the entire piece.  But here is the summary:

I will be blunt here, in a way that none of the foreign auto executives with whom I have worked over the years ever would be.  There is a strong and growing suspicion that the United States conducts economic warfare against foreign manufacturing competitors of United States companies using the extensive regulatory apparatus for consumer safety and pollution.

One other factor: GM was organized by the United Auto Workers.  Volkswagen is heavily unionized in Germany, but in the United States, its manufacturing arm avoided organization by the UAW.

General Motors fudged on reporting problems with its ignition system and killed people as a result.  The fine, announced last Thursday, was $900 million.  Volkswagen fudged on testing its diesel cars for air pollution, killing exactly nobody.  The fines being contemplated are well into the billions, in addition to refunds and civil lawsuit penalties for consumers, also running into the billions.  Steven Hayward of Powerline writes:

Yesterday a spokesperson for the EPA said that VW could be liable for fines as much as $37,000 per vehicle, or $18 billion for the 500,000 or so models then reported to be offending vehicles. If that same scale were used for 11 million scofflaw VWs, the fine could be over $400 billion, which is likely higher than the total market cap of VW, though who can tell as VW stock fell 17 percent yesterday, and is down another 20 percent today on the European bourses. (I wonder: how you say “Government Motors” in German?)

That last parenthetical remark raises the fact that GM (and its UAW workforce) has been a pet project of the federal government.  And note that VW is partially owned by a German state government and is a mainstay of the German economy. D on’t rule out some sort of bailout for VW.

Nobody is in favor of polluting the air (although note that in Europe, which is normally pretty stringent on pollution, the VW cars pass muster apparently without cheating, for U.S. standards are much higher), but are these penalties commensurate with the damage?

What could explain this situation?  The person writing as Tyler Durden of Zerohedge has a pretty good hypothesis, backed by a lot of graphs.  I recommend that you read the entire piece.  But here is the summary:

I will be blunt here, in a way that none of the foreign auto executives with whom I have worked over the years ever would be.  There is a strong and growing suspicion that the United States conducts economic warfare against foreign manufacturing competitors of United States companies using the extensive regulatory apparatus for consumer safety and pollution.

One other factor: GM was organized by the United Auto Workers.  Volkswagen is heavily unionized in Germany, but in the United States, its manufacturing arm avoided organization by the UAW.