It's good that people are being held accountable, but I'm unsure that prison is an effective mechanism here (or for many other crimes, for that matter). I mean, what's the goal exactly? I'd say the risk of recidivism is about nil, so it's not about protecting society from him, or about rehabilitation. So the goal must be to discourage others from committing similar offenses. Fair enough, but there must be a better and more efficient way to accomplish that than locking people in a compound for several years. In this case, the financial penalties imposed on the companies themselves seem like a more effective tool.
> Mr. Schmidt did not identify any Volkswagen superiors who might have pressured him to lie to regulators.
I think the point here is refusal to co-operate with prosecutors. They wanted to know who at Volkswagen told him to lie, and they would have been happy to let him off the hook if he co-operated. He refused, essentially continuing to demonstrate his loyalty to VW and thus perpetuating his complicity in the criminal justice process of the very crime he was now convicted of. He failed to demonstrative effective repentance, and now must serve as warning example to other white collar criminals.
Which makes it likely that there is some kind of deal in the background between Schmidt and VW. After all his inside knowledge of the subject matter would be a very powerful weapon for the prosecutors and very dangerous for VW.
First, it's piling another crime onto all the other crimes.
Second, any such agreement, by nature of being illegal, would be unenforceable. Even if he has already collected on it, the company would be required to demand the money back if the deal is ever discovered. Yet if he had somehow managed to hide the money out of the company's reach, he would have been in a position to renege on the deal.
TL/DR: don't make illegal deals with criminals who are smart enough to understand the prisoners' dilemma.
Except, he may have a trump card significant enough that the mutual knives to throats will ensure his reward upon his inevitable early release. Enforcement doesn’t require legal means - it’s called blackmail.
Unless the CEO personally ordered it (which seems unlikely), someone somewhere below the CEO ordered this. You will eventually find someone down the chain who cannot identify a superior that pressured them to do it.
That in no way implies he's covering for superiors out of loyalty to VW.
Literally right above the paragraph I quoted says Schmidt sought lenience on the grounds that he was ordered to lie to the regulators by his supervisors and a company lawyer.
Looks like in his own mind his only crime was being loyal to a corrupt foreman. Classically German.
> In a letter to the judge before the sentencing, Mr. Schmidt said his loyalty to Volkswagen had led him to be “misused by my own company.” He cited a meeting in 2015 with a senior official at the California Air Resources Board at which he concealed the existence of software that allowed Volkswagen to cheat on emission tests.
> “A script, or talking points, I was directed to follow for that meeting was approved by management level supervisors at VW, including a high-ranking in-house lawyer, ” he said in the letter. “Regrettably, I agreed to follow it.”
None of that implies he was ordered to lie to regulators. It says he concealed software and followed a script, not that the people who wrote or approved the script knew he would be lying to regulators by following that script, or that he was concealing software.
I think you may have mistaken the justice system as fair or rational.
The justice system punishes people. There are around 2.2M people in US prisons.
Schmidt was involved in corruption --- for profit --- which duped ordinary people into releasing around 1MM tons of pollution in to the atmosphere in a single year; about the same as all the power generation for the 66 million people in the UK.
What's the scale of the damage that most of the other 2.2M people in prison did? Sold some drugs? Stole a crappy old car?
> The justice system punishes people. There are around 2.2M people in US prisons.
The justice system punishes society by failing to adequately rehabilitate offenders. As a result many go on to reoffend. So really the current system is only punishing the next innocent victims of crimes perpetrated by released inmates.
See the difference in reoffending rates between Norway and the USA, and their different approaches to prison time. For a start, the US views the inmates as "criminals", Norway views the inmates as people who did something illegal.
>"US views the inmates as "criminals", Norway views the inmates as people who did something illegal."
Interesting point you are making here. In Norway's case it's "what someone did", and if he stops doing it, it's fine again whereas if you think/say "these people are criminals" it appears as if these people are inherently bad, which is a worse basis to help people improve.
I don't disagree, but it seems to me like this has little relevance to this kind of white-collar crime. Business executives who broke the law don't need GEDs, college degrees, or vocational programs.
I don't disagree with you at all. In fact, I would hope that if one were to see locking this middle manager in prison as pointless, it could act as a mental stepping stone to reconsidering the purpose of the prison system in general.
Experience suggests the actual result will be a two-tiered justice system where rich criminals are far less likely to go to prison, even when committing serious crimes.
Emphasis on "soft touch". The punishment amounts of money are often very small compared to the profit gained.
In the EU, fines can be expressed as a percentage of annual revenue. So imagine something strict enough to work. I'm sure a fine of 25% of annual global revenue for 10 years would put a lot of pressure where it needs to be, for example.
The issue with that is that it’s effectively collective punishment for everyone working at VW, whether they had any part in the cheating or not. If also fails to punish individuals who may since have moved on or retired.
Targeting the individuals responsible seems more fair and efficient on the whole, if more difficult to implement.
Well, maybe its time to start looking at a corporate death penalty. We kill people who do really bad and are convicted. Take it out of the shareholders. Oh, and yes, also imprison executives who do that. This doesn't have to be an either/or. Do both.
Or, maybe a few million dollar fine, after they got a profit of a few billion. That'll learn 'em!
I've seen people say this often, how do you envision it working?
What happens to all the employees, assets, shareholders etc.?
If VW is "executed" do you mean all the shares are seized and re-sold or do you mean everyone loses their jobs - discs are wiped, factories demolished etc etc.?
Seeing how most corporations care more about pleasing shareholders than pleasing the government, workers, or customers, then yes, this kind of behavior needs to negatively impact investors as well. That would powerfully disincentivize profitable behavior that hurts society overall.
Collective punishment incentivises the company to put safeguards into place. Papertrails for all decisions, four eyes principle, transparency etc.
Corporations are people, right? Punish the person. The corporation can decide whether to shift the punishment down to the responsible people (conduct their own internal investigation to find the responsible people, and punish them appropriately), and work towards a structure where these things won't happen or can be detected early.
> In this case, the financial penalties imposed on the companies themselves seem like a more effective tool.
I disagree with this part. Fining the company just pushes prices up to compensate for the loss. It might cause the company to not be competitive and go out of business but that's mostly punishing people who didn't do anything. We need to hold the individuals responsible for their behavior. I agree with you that prison doesn't seem effective but if we use financial penalties they should be harsh and targetting the individual. I suspect someone who has been very rich for decades suddenly being lower middle class or poor would be much scarier than going to a country club with an ancle bracelet for a few years.
In a sane world the fines which would the bottom line of the company get the attention of the shareholders who challenge the million+-dollar salaries of the executives who oversaw all this and boot them out. I would hope there's stuff in their contracts to prevent these executives from receiving a golden parachute or receiving compensation for unvested options etc in this situation (i.e I think normal firing rules don't apply when you're fired for "gross misconduct" and this sounds pretty much like that to me).
But then that is in a sane world. You're right that most companies would just either eat the losses, or hike up prices to compensate - leaving the executives with another jolly story to tell at the country club.
Why? As far as I know, recidivism in corruption is rather common. And if you send the corruptors home with a pat on the back, it will probably be more common.
Fair point, speaking of corruption in general. I meant more along the lines of doing specifically this again. The situation has changed such that companies are not likely to get away with gaming emissions in this way anymore. But yes, someone inclined to cheat in one way might be inclined to cheat in others.
Why can't we have both (which seems to be happening in this case)? It seems like it's appropriate and efficient, and will actively discourage people from similar activities, at the individual level.
OP seems to dance around saying the idea that punishing people is wrong.
OP is wrong.
We want cultural and financial incentives not to do wrong. We also want raw primal fear, if you do this evil shit they’re gonna get you and lock you away forever type fear... if you do this stuff.
I don't believe that punishing people is wrong. I believe that punishing people is a waste of resources unless it accomplishes useful goals, such as discouraging that person or others from behaving in a similar manner in the future.
And if you accept that that is the goal, it is then logical to put resources toward the most efficient means of accomplishing it, to maximize your chances of success. I find it unlikely that long prison terms are that most efficient means in most cases (an exception might be dangerous likely re-offenders), given considerable evidence that it is ineffective in discouraging most forms of crime, and in some cases can increase likelihood of engagement in crime by ex-convicts.
Edit: there probably is value in some amount of prison time as a deterrent though, as I elaborate on in the comment below. My main point is that I highly doubt there is anything like a linear relationship, if any relationship at all, between the length of prison sentences and the effectiveness of the deterrent. And given that (if in fact it's true,) we might as well keep sentences reasonably short, and use the resources saved more effectively.
So what exactly do you propose? I agree that yes drug dealers and likes don’t stop selling drugs or killing people because of prison sentence. But they are afraid of cops because they prefer not to get locked up.
Likewise capital punishment does not prevent or lower murderer rate. There is no correlation at all.
So we have to seperate prevention and fear. The fear that you’d have to go to jail is the reason why punishment exists. we want people to know their actions are always held accountable in the perfect system - but unfortunately not.....
Prevention is education and make sure every community has a fair balance of income - a poor community is of course going to have a high crime in theory.
I don't have all the answers. And I do think some amount of prison as a deterrent is probably effective. But consider this: how many things would you consider doing if getting caught would mean a year in prison, but wouldn't do if it could mean 10 years? I can't think of very many. Like, assume you have no other reason to avoid doing these things, so it's something you saw as a completely moral act. Either one I'm going to do everything possible to avoid; I'll avoid the act if it isn't completely necessary, and if I perceive that it is, I'll do whatever I can to avoid getting caught. But I can't see my behaviour really changing based on the length of the term - what would be _worth_ a year in prison but not 10? (Especially considering that in any kind of theft or something along those lines, you're not going to get to keep what you took if caught.)
Now, I'm a pretty analytical person, so I'm probably most likely to be affected by deterrents (although perhaps also most likely to believe I could avoid getting caught!) A more impulsive criminal might not consider the possible consequences much at all; certainly not enough to distinguish between a low or high number of years locked up.
So if we take it as a given that long prison terms are not particularly more effective at deterrence than short ones - and I believe there is evidence to back that up, but I'm not an expert; if I were actually in a position to change these things I'd obviously do the research! - and that keeping people in prison costs a large amount of money, it seems to me best to reduce prison terms to the minimum degree possible while maintaining their deterrent benefit, and to redirect the savings into things that evidence suggests are effective in reducing crime (education, social programs, etc.)
Ironically, given my initial comment, this kind of highly calculated crime (the VW emissions) is probably most likely to be deterred by prison sentences. Once again though, I don't expect a long sentence (and 7 years seems long to me for a non-violent crime) would be any more effective than a short one. I mean, would you risk _any_ non-trivial amount of time behind bars just to help your bosses make more money?
> In this case, the financial penalties imposed on the companies themselves seem like a more effective tool.
Why do you say that? Depending on their size, financial penalties can be seen merely as "a cost of doing business."
The ultimate goal here is to hold car makers accountable for their systematic fraud and violation of emissions standards. Accountability will deter future violators.
There's no better way to convince "golden-parachute" executives to take these transgressions seriously than to put violators in jail.
GDPR in the EU grants authorities ability to fine businesses €20 million or 4% of global revenue, whichever is greatest, when they have a data breach where neglect played a role. I imagine that a fine of similar proportion will have some effect on other companies to not do it. The risk is too great.
Well this is the maximum punishment, the fine doesn't have to reach those limits if the company can't pay it anyway. In practice I suspect that small businesses either fly under the radar or are given some degree of leniency.
> I suspect that small businesses either fly under the radar
Off topic, but this is what I dislike about the GPDR, the subjective enforcement. Do I as an SMB stop selling to EU because I can't afford the potential fine (risk management of course, never would intentionally violate)? Or do I trust arbitrary selective enforcement?
I agree with you in principle, but how would you have punished the banks post-2008, for instance?
Would you fine them $100 billion? While many were already on the brink of bankruptcy, because of the self-inflicted damage? If anything, they received money from the government to survive.
Granted, they should have never been allowed to get to the point where not saving them meant an even bigger crash for the economy. They shouldn't have been allowed to leverage their money as much as they did, and they should have been split up into dozens of smaller banks.
But failing that, it seems like imprisonment of wealthy billionaire executives who thought "they've got nothing to lose" if they risk their customers' money the way they did seems like the best option there.
The unfortunate reality is that most of the people who win the lottery of life, and luck their way into high levels of the financial industry are essentially untouchable.
Reaches for bailouts with one hand, and then does million dollar refurbishments. Then cracks jokes about it later, after moving on to being a shill wasting space on Ubers board, essentially wasting the time and resources of Uber, by being a paid voice of Kalanick.
His decision to piss money so thoughtlessly, and get precisely nothing as punishment is depressing.
My friends from Eastern Europe share stories of outrageously corrupt politicians, that everyone knows is corrupt. I sometimes wonder, if many parts of the western world are really so different. Instead of politics, the corrupt parasites congregate at the head of large businesses. It does seem to work out better for them.
I’ve always looked at prison as more of a deterrent for committing crimes. If he wasn’t criminally charged maybe others would think committing similar actions would be worth just paying fines. You might say that people in the auto industry wouldn’t copy his actions but I’d say prison works this way on a societal level.
"So the goal must be to discourage others from committing similar offenses. Fair enough, but there must be a better and more efficient way to accomplish that than locking people in a compound for several years."
I mean, if you've got an idea, I'd love to hear it. But it seems to me that's it's not just the thought of, "This is illegal; I might go to prison," but it's "This is illegal; I might go to prison, and they're actually pursuing executives responsible for these things."
"In this case, the financial penalties imposed on the companies themselves seem like a more effective tool."
The problem with just punishing the company as a whole, instead of also pursuing the executives responsible, is that it doesn't actually discourage acting badly. Any individual action tends to get lost in the amorphous blob of the company. The company might suffer, and the individual might be asked to resign with their golden parachute, but they're not going to suffer. They're not going to feel any actual pain that would stop anyone else from doing the same thing.
Agreed. Some prison time seems warranted but 7 years seems harsh, even considering what he did was very bad and harmful to a lot of people. (But Americans simply love prison, apparently).
The ones who are getting off easily, IMHO, are the regulators. Their job would be to make sure cars respect emissions limits in all contexts, and that would mean actively testing the cars in many different configurations.
How is it possible that it never occurred to anyone there, to test cars in real-world conditions, just to make sure the results they were getting weren't contaminated by the normal testing setup?
This is utter intellectual laziness and should incur some kind of reprimand.
Or maybe regulators should hire Mr Schmidt and put him in charge of future testing. He would know what to look for.
> The ones who are getting off easily, IMHO, are the regulators.
...and the politicians who are supposed to oversee them.
I agree 100%.
> This is utter intellectual laziness
It's not.
Of course this was done under a laughably thin guise of impartiality ("if we use real-world tests, we would introduce an unfair element of randomness"), but in truth it was clear to anyone who cared that the regulations are deliberately softened to make it easy for manufacturers.
Boring example: the European driving cycle only defines measurements up to a top speed of 130km/h. So it's legal for manufacturers to ignore regulations from 131km/h onwards. Why not enforce adherence up to the rated top speed? Because... uh...
> How is it possible that it never occurred to anyone there, to test cars in real-world conditions
It has occurred to many people. Manufacturers have fought it tooth and nail -- I wonder why.
Even in Germany, which all but depends on its automotive industry, this is widely considered a disgrace (except, of course, in the circles relevant to the inception of regulations).
In fact, many people consider it a strategic mistake to go soft on the German auto industry, allowing them to fall behind. I'm sure it'll bite them. But only after the current politicians and CEOs have left office, so why should they care?
>Boring example: the European driving cycle only defines measurements up to a top speed of 130km/h. So it's legal for manufacturers to ignore regulations from 131km/h onwards.
Just because it's not on the cycle, does not mean regulations don't apply. It means they are not verifying compliance.
No. To be considered a criminal, you need to be found guilty of a crime, and for that the prosecutors need to prove beyond all reasonable doubt that you committed the act.
Good point. Furthermore, those deaths would have probably been caused anyway, since diesel technology doesn't suddenly make 2x less emissions. Maybe fewer diesels would have been sold, so
there would have been 800 deaths instead of 1200
deaths, because the drivers would have bought one running on gas, but yeah, the law isn't designed for these number games.
It is proven that he was complicit in faking emissions tests, and it is proven that those extra emissions will lead to the premature deaths 100s of people.
That’s quite simply not how the law works. To convict someone of murder, you need a direct causal link between VW’s actions (as opposed to another car company’s actions) and a particular person dying. Statistics games don’t cut it.
Thank you for the lesson, but I never said the man should be guilty of murder. I'm merely stating that since his actions lead to the death or injury of hundreds or thousands of people he should be duly penalised to dissuade future would-be law breakers.
He literally helped trick people to think they emitted less than they were, probably leading to a higher emission rate overall.
That effects everyone on the entire planet. I think committing a crime that affects ever single human life should be considered a very serious crime. That should lead to very serious punishments.
Obviously you're missing the most critical words of my sentences. This effects all of humanity, including you and me. Even if your comparison is utterly silly, a spray fight would not emit more than it would otherwise since you still have manufactured the bottle already.
When lying about emissions people tend to get taxed lower for the lower emissions (at least in many countries in the EU) and also people rather buy a car with a low emission than a car with a higher emission rate.
We should demote police officers who run a search warrant and fail to find an obvious piece of evidence that was right in front of them because they didn't think of opening a door.
