Sadly we often do not value what we have until we no longer have it. This dictum can apply to people, objects or ways of life. Trust is a cornerstone of our society and our civilisation. Our day to day lives are predicated on trust. We work throughout the month, trusting our employers to pay us. Our employer trusts us to graft and toil in an increasing mobile work environment without checking on us every second and then at month end we trust that our remuneration is transferred to a bank that will defray and look after our funds as directed. But – things can go wrong as seen by the employees of Lehman Brothers and the account holders at Northern Rock who stood in line to withdraw their money. We saw similar scenes in Greece recently.
Trust is the bedrock of our economy and it is frightening to consider the consequences when it breaks down.
Which makes the Volkswagen scandal so worrying, not merely for Volkswagen but for the car industry, diesel and indeed Germany. Emissions of nitrogen oxides cause an estimated 58,000 deaths each year in America alone. Volkswagen has admitted that it installed software on 11 million diesel cars which allowed the cars to pass stringent tests. In order to comply with testing in the laboratory, sound systems were extracted from cars, doors taped up and goodness knows what else. When the vehicles left the laboratory and the software was deactivated the fumes from the vehicles were 40 times above the permitted level.
I understand that testing in Europe is self administered whereas in USA it is conducted by an independent authority. Europe is not being viewed favourably in the USA following their interventions to prevent alleged fraud at FIFA and now this scandal which was identified by American authorities.
The current and potential cost to Volkswagen is massive. The company has put aside $7.3bn for costs, it’s share value has dropped $26bn and the finance costs for it’s car loan division have trebled.
But the cost to the Germany economy is even more cataclysmic. Almost 15% of all Germans are employed directly or indirectly by the motor sector. We have lived on a daily media diet of the engineering and safety standards of German made cars. And, until now we have trusted this information.
About 50% of all cars in Europe are run on diesel in the belief that this is a cleaner fuel. Following, this scandal there is strong doubt cast on this assertion as there is on the future of diesel. It will certainly have a very weak following in the future in the USA.
Without trust it is impossible to expect people to commit to products, institutions or ways of life. A breakdown of trust leads to fragmented relationships on a personal level and chaos in an economic environment. This is why the Volkswagen scandal is so shocking and worrying