The limited criminal liability corporation

The modern corporation is a structure that allows investors to maximize profit while limiting their individual losses.  The Volkswagen emissions scandal shows that it also is a structure that enables lawbreakers to limit their individual accountability for their crimes.

Because the corporation is treated by law as a person separate from its owners, the individual investors can’t lose anything more than what they put in.  Any debts over and above that are swallowed by the creditor or absorbed by somebody else.

When executives of a corporation break the law, it usually is the corporation, most of whose employees and owners may be completely innocent, that is penalized and not the individuals actually responsible.

Volkswagen since 2009 installed software in 482,000 diesel vehicles to turn on emissions control systems when approaching an inspection station, but leave them off the rest of the time, which improved fuel economy and engine performance.

Dirty-burning fuel sickened many people and made already-sick people worse.  By one estimate, it caused the deaths of from 5 to 26 people in southern California alone.

Installing such software is no easy task.  Corporate executives would have had to sign off on it.

News stories say that Volkswagen could be liable for up to $37,500 per vehicle, which would mean a penalty of $18 billion.  That would be a big fine.  Last year Volkswagen reported a net profit of $12 billion on $226 billion in revenue.  I would be surprised if VW wound up paying this amount.

Lean (and mean) production: VW in the USA

German manufacturing companies have a reputation for high wages and good labor relations.  That may be justified at home, when labor unions are strong and labor rights are established by law.  It doesn’t necessarily apply to their operations in the USA.

Chris Brooks, writing in Labor News, wrote about how Volkwagen manages its Tennessee plant on the theory that workers are most productive when pushed to their physical limits.

At the Chattanooga plant, permanent employees work alongside “temporary” workers, some of whom have actually worked there for years.  Pitted against one another, both groups fear to speak up.

Workers are routinely pushed to their physical and emotional breaking points. From management’s point of view, this maximizes productivity.

“Every employee there busts their ass and is injured and is working through the pain because they don’t want their job taken by a temp,” Amanda says. “It is made clear to all of us that we are easy to replace.”

That’s lean production in a nutshell: ruthless efficiency, produced by a system of efficient ruthlessness.  Workers are deliberately stretched to their limits, by a combination of competitive pressure, inadequate training, repetitive stress, and rotating shifts—so that the weakest links can be identified and eliminated.

The case against labor unions

I wonder which of these arguments convinced workers at a Volkswagen plant in Tennessee to vote against being represented by the United Auto Workers, even though management had no objection to the union.  Or maybe the workers accepted the argument that union representation would kill Tennessee’s low-wage strategy for industrial development.

Click on Anti-Union Voce Will Kill New Tennessee Production Line by Moon of Alabama and The Completely Baffling Tale of the Tennessee Auto Workers by Charles Pierce of Esquire for background.

Also, Auto union loses historic election at Volkswagen plant in Tennessee by Lydia Depillis of the Washington Post. [added 2/17/14]

Also, A Titanic Defeat by Eric Loomis for Lawyers, Guns and Money. [added 2/19/14]

Click on Leftycartoons for more Barry Deutsch cartoons.

Volkswagen’s transparent factory

Hat tip to Bill Elwell