FRAUD IN THE AUTO INDUSTRY

18 October 2015 | By ken in Society

Conflicts of Interest or Worse?

The blatant fraud of Volkswagen’s emissions was disclosed just a few weeks ago. Now it appears that virtually the entire automobile industry is compromised. The “cozy” relationship between those designing cars and those testing them, as The New York Times put it, demands a bigger and better explanation than the desire of any one company to beat its rivals.

According to a researcher for the International Council on Clean Transportation, responsible for overseeing the testing of emissions: “There is a financial dependency between the technical services and manufacturers that at some point should be rethought to improve the confidence in the system.” But why wasn’t that recognized from the start?

Those of us who are professionals are schooled to understand the dangers of such conflicts of interest. Leaving aside the obvious dangers of willful collusion, there is the risk that objectivity will be lost, biases will creep into perceptions, desires will shape outcomes. That happens under the best of circumstances, which is why we know that research has to be carefully designed to correct for such inevitable distortions.

But maybe the problem in the automobile industry has an entirely different explanation. Maybe that industry, like the financial industry, far from being worried about the problem, views compliance as a nuisance, an obstacle to get around, perhaps even a challenge to their ingenuity in defeating pesky regulations. Their single goal may be to get bigger and bigger and make more and more money, regardless of the indirect costs to the public.

It appears now that the auto industry, in Germany at least, like banking here, has an active revolving door so that the difference between one company and another, or between a company producing cars and one testing them, or between all those companies and the governments that regulate them are fluid and constantly shifting as people move back and forth. That would mean, increasingly, that such goals would be shared. And there would be a widespread complicit understanding that the façade of regulation and compliance needs to be maintained to avoid public outrage and the risk of government intervention that would disturb this “cozy” arrangement.

If that is the case, there is no conflict at all. All parts of the industry are aligned in the service of growing and generating profits. Like a sport, encouraging fierce rivalries, what becomes paramount is ensuring that the sport itself thrives.

In other words our assumption that there are inherent adversarial relationships inside the industry, protecting the public, is an outsider’s perspective, kept alive partly through ignorance, and partly though an unwillingness to grasp how vulnerable and unprotected the public really is.

This industry-wide collusion would not require clandestine meetings or secret communications. Subtle psychological processes, implicit understandings, unarticulated and unconscious assumptions would do the job. People moving around the industry can easily spread the necessary information in personal communications.

Nor would everyone need to be actively engaged. To be sure, it would require tacit acceptance by virtually everyone, but their silence would be guaranteed by the well-known shunning and ostracism that is the lot of whistle-blowers.

All that would be required is for most people just to look away.

Leave a Comment