Lesson of VW scandal: Be wary of business executives like Fiorina and Trump

Volkswagen’s chief executive officer, Martin Winterkorn, resigned on Wednesday, the first — but not likely the last — to take a fall in the wake of the revelation that VW built cheating software into 11 million of their so-called “clean diesel” cars. The scandal ought to cause Republicans to question their blind faith in the virtue and competence of the business class and should be a warning to all voters to think twice before believing a CEO is eminently qualified to be president of the United States.

So far, it is unclear who concocted the scheme to install software that would hide how much pollution VW’s diesel vehicles were pumping into the air. Winterkorn says he was clueless, but to rig the game in such a sophisticated way, a lot more people than a few rogue programmers in the design shop had to be involved. At some higher level, this was a management decision. Why do it? Because it is easier to meet tough emission standards by masking the truth than by paying for the costly research and development necessary to honestly cut emissions.

It obviously worked pretty well for quite awhile. Volkswagen started doing this in 2009, and the company’s diesel cars became very popular. Low emissions and high performance -- what a winning combination! Then people started noticing the discrepancy between the advertised emissions claims and actual experience on the road. European regulators finally brought in an American research company to run tests on the cars and discovered emissions were 15 to 30 times higher than the cheating software was showing.

Now, VW stock has driven off a cliff and the reputation of the world’s biggest automobile manufacturer has been demolished. It would be nice to think this will be an object lesson that other businesses will take to heart, but we all know that will not happen. In the business world, greed rules and it takes a person with an exceptionally strong sense of right and wrong to resist the imperative of making a profit by any means.

This does not always involve breaking the law, of course. There was another example of obscene greed this week that was perfectly legal. Martin Shkreli, a 32-year-old CEO of a pharmaceutical company, caused an uproar when he raised the price of Daraprim, a drug that has been around for 62 years, from $13.50 per pill to $750. Before backing down under pressure, Shkreli insisted the 5,500% increase was justified because his company needed to jack up its profits. The fact that people who rely on his drug face life-threatening diseases is irrelevant, he said. He saw no reason his product should be treated any differently than any other consumer item. That qualifies either as stupidity or heartless amorality — or both.

Then there’s the case of a CEO named Carly Fiorina. You may have heard of her; she’s running for president. According to a report by Michael Daly in the Daily Beast, when Fiorina was in charge at Hewlett-Packard, she lobbied Congress and the administration of George W. Bush to get a tax holiday passed into law. The special treatment would allow big corporations like hers that had been sheltering profits offshore to bring that money back into the country without paying any taxes. The legislation was sold on the promise that it would stimulate economic growth and create lots of new jobs.

According to Daly, Fiorina’s company saved itself $4.3 billion by pushing the bill through, but the money did not go toward any new workers. Instead, 14,500 employees got laid off while $4 billion went to stockholders, including Fiorina and other HP executives.

So, be careful when candidates like Fiorina or Donald Trump come asking for your vote and claim they can do for the country what they did for their businesses. As you might do now with a Volkswagen, check under the hood.