Media coverage of Volkswagen’s astounding emissions-rigging scandal continues, for a good reason: the company’s (the executive’s who authorized the cheating and of all those who went along with it) immoral conduct led the company’s share price to fall by 35%, and the company can now expect $18 billion in fines as well as class action lawsuits from betrayed customers. Many commentators have attributed VW’s cheating on emission tests on 11 million of its diesel cars to selfishness, as reducing emissions of nitrogen oxides (NOx) would lower performance and fuel-efficiency, and therefore, decrease sales and profits. Reflecting the widely held view, these commentators imply that selfishness—pursuit of profits—leads companies to employ immoral means.
But such commentators are wrong. In deceiving customers and shareholders, Volkswagen was not acting selfishly at all.
The dim view of selfishness as predatory exploitation of others—such as VW’s deception of customers and shareholders and any others—is utterly mistaken. Selfishness, in its dictionary definition, means “concern with one’s self-interest.” But was VW concerned with its (the shareholders’) self-interest when cheating? Perhaps—but it definitely was not acting in its self-interest, no matter what was motivating its actions. Moody’s, the bond-rating agency, lowered VW’s outlook to negative and wrote: “This could be a long-lasting image, which could weaken Volkswagen’s market position, brand equity and pricing perception by customers. This could ultimately affect Volkswagen’s future earnings and cash-flow generation.”
Deceiving others, or any form of dishonesty, cannot be in a person’s self-interest, no matter what temporary “benefits” one seems to be gaining. VW sold 11 million diesel cars before it was caught, and Bernie Madoff managed to run his pyramid scheme for 20 years before being found out. However, frauds cannot be sustained forever. VW’s “clean diesel” cars are emitting 40 times more nitrous oxides than the company has claimed they are. Bernie Madoff was not creating wealth for his “investors” but destroying it. It is never in one’s self-interest to fake facts—because values—profits, brand name, reputation, etc.—cannot be obtained by faking, not for the long-term. Faking is futile, because it does not change the facts—the facts we must adhere to if we want to achieve values. Honesty is a basic principle of ethics and easy to grasp. Therefore, VW’s violation of it is so senseless.
But why do people confuse acting on self-interest with deceiving others and other forms of predatory behavior? In his new book, In Defense of Selfishness, Peter Schwartz explains that thanks to modern intellectuals, selfishness has become a “package-deal” concept and lost its original, dictionary meaning. The modern concept of selfishness packages together the original meaning of a person’s genuine self-interest—pursuing one’s values without violating anyone else’s rights—and exploiting others through fraud or force. The former is a requirement of human survival and flourishing—and the latter is its impediment.
As a consequence of the modern package-deal concept of selfishness, most people think about a selfish person as a ruthless brute who tramples over others in getting what he wants, and therefore they consider selfishness as evil. As an example, students in my business ethics class initially recoil when I first introduce the (proper) concept of selfishness, because they have come to equate selfishness with predation.
In cheating customers and others, VW was not acting selfishly but self-destructively. However, it may well recover (as Terence Corcoran suggests in a recent column). This is not a driver safety issue. No-one has died because of higher than claimed emissions of nitrogen oxides, which apparently are not a major pollutant. As Corcoran reports, the U.S. Environmental Protection Agency (EPA) reports that nitrogen oxide emissions have dropped by more than a half in the last 30 years. They account for 3% of California’s greenhouse gas emissions, and the transportation sector’s share of that 3% is 5%. (I have to state that it is not the government’s role to regulate emissions, but that is a topic for another post).
Despite the moral lapse, Volkswagen makes excellent cars and has the capability of developing a technological solution for emission control that does not reduce fuel efficiency and other performance attributes. Doing that would be selfish.