Volkswagen Latest Casualty of Big Government – How does this affect you?

24 September 2015 AD/11 Tishrei 5776

Global Warming, Benghazi, Iran Nuclear Deal, Operation Fast & Furious
Adding to the ’round table’: Global Warming, Benghazi, Iran Nuclear Deal, Operation Fast & Furious

Automobile Manufacturer Cheats to Satisfy Federal Regulations

Fox News: Volkswagen CEO Quits Over Emissions Cheating Scandal

Fox Business: Volkswagen CEO Resigns Amid Emissions Scandal

Here’s what happened. Somewhere in the line of authority at Volkswagen, someone made a decision to have a software means to defeat emissions testing. Manufacturing enterprises, particularly very large ones, put a lot of pressure on employees to meet deadlines and cost projections. Ultimately, it’s all about upholding “shareholder value”. In this case, shareholder value suffered and will continue to do so for a season.

Why would Volkswagen decide to install “defeat devices” to evade clean air standards? Why would any decision maker choose to get around U.S. federal emissions standards?

Let’s start with automobile dealers and work back to the factory

2012 report to the American Automobile Dealers Association by the Center for Automotive Research (CAR) describes the effects of overburdensome federal regulations on dealerships.

  • (Page-1) “…the average dealership incurred $182,754 annually in federal regulatory compliance costs for regulations pertaining to employment, business operations, vehicle financing, sales, marketing, and vehicle repair and maintenance. These regulatory costs comprised 21.7 percent of the average dealership’s 2012 before-tax net profits, or nearly $2,400 per dealership employee. Regulations pertaining to employment, accounting, and vehicle financing made up more than 63 percent of the estimated federal regulatory compliance costs.
  • (Page-1) “The $3.2 billion spent on regulatory compliance in 2012 was passed on to consumers in the form of higher prices; resulting in an estimated economic cost (total of lost sales revenues and lost consumer plus producer surplus) to light vehicle dealerships of $7.7 billion, and a 10,550 reduction in direct dealership employment. The overall impact on the U.S. economy—including direct, indirect, and expenditure-induced effects—is estimated at $10.5 billion in lost economic output and more than 75,000 fewer jobs in 2012. Every $1 increase in a dealership’s regulatory compliance costs results in $3.28 in lost output in the U.S. economy and a net loss to the U.S. Treasury of $0.44.

The CAR report of 2014 indicates ever increasing costs of compliance.

When considering both new and used vehicle sales, the mean cost per vehicle is $100. While this figure does not seem very large, the average dealership would have needed to sell 106 new and used vehicles in 2012 to recoup its regulatory compliance costs.

Impact of Federal Regulations on Automobile Manufacturers

A 2012 study commissioned by Manufacturers Alliance for Productivity and Innovation (MAPI) reports (page 29):

“The annual number of economically significant regulations affecting the manufacturing sector has grown by approximately 80% since 2009 after maintaining a relatively stable level between 1995 and 2007, and the number of non-major regulations has been generally growing since 2004 with a clear acceleration after 2009. While the figure shows a dramatic drop in the number of non-major regulations after 1993, this is an illusion because, in September 1993, President Clinton issued Executive Order 12866, which modified the OIRA regulatory review process. In particular, EO 12866 focused OIRA’s review on major or “significant” regulations,34 (i.e., those having an annual impact of $100 million or more on the economy), a measure that greatly reduced the agency’s review of non-significant regulations.”

Conclusions

As government grows, liberty diminishes. As government grows, so do taxes to support it.

Nameless, faceless bureaucrats not elected by the People work tirelessly and endlessly to create ever more onerous regulations that drive Americans to find ways around those regulations.

A book authored by Harvey A. Silverglate, “Three Felonies A Day: How The Feds Target The Innocent”, we learn how each of us is probably committing as many as three federal felonies each workday.

Excerpt

The average professional in this country wakes up in the morning, goes to work, comes three felonies a dayhome, eats dinner, and then goes to sleep, unaware that he or she has likely committed several federal crimes that day. Why? The answer lies in the very nature of modern federal criminal laws, which have exploded in number but also become impossibly broad and vague. In Three Felonies a Day, Harvey A. Silverglate reveals how federal criminal laws have become dangerously disconnected from the English common law tradition and how prosecutors can pin arguable federal crimes on any one of us, for even the most seemingly innocuous behavior

Fascism and tyranny are inversely proportional to the size of government. Isn’t it time to tell Congress to pare down the size of federal agencies and eliminate all that do not conform to constitutional enumerated powers.

John White
Rockwall, Texas

 

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