Pride Goeth Before a Fall
Much like David Halberstam’s The Reckoning recounted the fall of the Big Three’s supremacy by the Japanese auto invasion, and Bryce Hoffman chronicled Alan Mulally saving Ford in American Icon, in Faster, Higher, Farther Jack Ewing recreates the circumstances, arrogance and fall of Volkswagen and the Porsche and Piech families from the pinnacle of European dominance and worldwide auto industry influence. It’s the classic story of German determination misguided by ambition and power.
If you’ve been living under a rock then you probably don’t know about Volkswagen’s ill-fated attempts to skirt European and US EPA smog regulations. Beginning in 2008, they skirted emission standards and miraculously got away with it for eight years before the house of cards finally fell. They knowingly violated and concealed the nitrous oxide emissions for diesel engines and employed software defeat algorithms to fool emissions testing into thinking their cars complied with regulations. The defeat devices were on about 11 million Volkswagen, Audi, Porsche and probably other Volkswagen branded cars sold during those years. Not only did Volkswagen executives from the top on down know about the deception, they ordered it be utilized. Then, they brazenly proceeded to brag about how clean their diesel engines were, all in an attempt to aggressively gain more of the US market and overtake Toyota to become the world’s largest automobile manufacturer. They briefly reached that lofty goal, but at a very dear price. As of mid-2020, the fines, settlements and car buyback costs were up to $33.3 billion. A number of Volkswagen, Audi, and Porsche executives were fired, suspended, and/or even charged with fraud and conspiracy. But, even that was not enough, as the likes of masterminds Ferdinand Piech and his cronies were never charged. Was it worth it?
The Porsche and Piech families exerted control over Volkswagen for many years. Ferdinand Porsche essentially ruled the roost at Volkswagen, either as Chair of the Executive Board or the Supervisory Board from 1993 to 2015. He ruled with intimidation and an iron fist. Everyone did as he directed or they were gone. His master plan was world domination – sound familiar? For some reason, Germans have this cultural need to show their superiority. It probably won’t happen anytime soon, but they would do well to get off that bandwagon – it’s not doing them any good.
Ferdinand Piech was the grandson of Ferdinand Porsche, father of the VW Bug. He inherited most of his grandfather’s take no prisoners business mentality. It’s never a team environment; it’s always about protecting and expanding your turf in a dog-eat-dog world that just wears everyone into submission. This kind of micromanaging, intimidating style of leadership works if you can surround yourself with cronies who also see something in it for themselves and, as in Germany, you can extend your influence to the labor union side of the equation. Since local government’s also have a say, structuring a Supervisory Board that is loaded with a majority of pro-labor politicians and union leaders ultimately neuters shareholder influence. This is exactly what Piech did, and as a sitting member of the supervisory board he was able to shape policy and exert total control; his authority was never questioned. He had no rival.
You know what they say: power corrupts, and absolute power corrupts absolutely. Piech had absolute power.
As I read books like this, I am always struck by how many people feel they have no choice but to comply. Has someone threatened you with bodily harm? No. Could you lose your job? Well, in Germany that’s really hard to do, unless you decide to quit. So why do people put up with this bullshit intimidation? Do people really have that little belief in themselves? Are they really that scared another job isn’t out there waiting for them? Is their moral compass really that prone to misdirection? Unfortunately, my experience tells me yes to all of the above.
People do what their told because they want to be told. It relieves them of having to think about the deeper questions, of having to drum up the courage to stand up for what they believe. When that happens a few times, it becomes easy to simply ignore the guilt, the rationalize simply going along with no sense of evaluation or judgement. It just is, and you just are. You’re the robot following instructions. It’s what intimidating leaders count on and it’s how they hold power. Confrontation may or may not work; it’s a political world after all. But, in this world there is always the choice to move on, to leave. This book intimates no one did that, and certainly no one of influence. How sad is that?
This to me speaks to the bigger picture of what is wrong with people in general. How easily they can be intimidated, influenced and led down a path that leads over the cliff. I want to believe in the strong individual, the man who stands up for himself, for what is right, what is moral, what is just. But no one, NO ONE, here did that. Unbelievably sad, and a poor commentary on the state of our societies.
Further to that, here in the US, where VW sold the most of the noncompliant diesel engines and people were justifiably angered at being duped, VW still sells a good number of cars. Why would they not be banished for a number of years from selling any cars here? Shouldn’t that be the punishment? But, it will never happen because our political ally, Germany, would loudly protest. A punishment like that would be a huge deterrent and, in my mind, a just punishment. The fact VW can absorb $33+ billion dollars in fines and restitution and still conduct business relatively unscathed shows the punishment is not enough. If a US company was caught doing this, there would be prison sentences, shareholders would lose millions, demand change, and a lot of those people would never work in the industry again. None of that happened in Germany, and prosecutors in the US had to catch the perpetrators on US soil before they could be tried. This did happen on a couple of occasions, but the main characters escaped prison time and kept all their ill-gotten gains.
So, what’s to be learned? I like that changes have been made to EPA testing standards to include actual driving condition emissions. I’m fairly confident no American auto company is stupid enough to roll down this path, because in the US the consequences of getting caught are too great. Europeans, for some reason, don’t get it. While they have also adopted more sophisticated test methods for emissions, they don’t have the government, legal, and open market checks and balances to avoid a repeat. So, don’t be surprised if someone tries something again someday. The lure of power can’t resist.
