VOLKSWAGEN PROVES: Exactly Why Government Regulation Hurts Businesses

Written by Chuck Gruenwald on October 18, 2015

While attending a few symposiums on gangs and gang crime, I had seen several confiscated “zip guns”, which are homemade guns that range in complexity from simple, to sophistication that made one police officer state that their builders could’ve enjoyed a bright future in engineering. For some people, engaging in illegal activity is a breeding ground for creativity.

After the news broke regarding Volkswagen’s creative ability to program its diesel-powered vehicles to “cheat” when undergoing emissions tests, I was expecting a much more vocal backlash from not only the environmental types who believe that all businesses want to contaminate the environment for the pleasure of doing so, but also from socialists who are looking for excuses to call for the nationalization of all companies, since they are supposedly corrupt by nature when they are not owned and operated by some government bureaucracy.

This is one case where one “bad guy” is hard to identify, since there is plenty of blame to hand out.

After leaving a comment on a post about this story on WGN TV’s Facebook page, someone who seemingly believes that all government intervention is necessary for our protection, replied to my comment by stating that businesses do not like regulations. I replied that businesses — with the assets to comply — do indeed like government regulations in the form of regulatory capture, which is the practice of writing complex and restrictive laws that not only discourage competition, but may also force smaller competitors out of a business market, or out of business. In the name of fairness and bipartisanship, members of both parties are more than willing to participate in regulatory capture.

In other words, the concept of regulatory capture is similar to one sports team and the umpires/referees writing the rules for an upcoming game.

Yes, it is possible that the emissions restrictions that Volkswagen employees tried to circumvent are the result of regulatory capture. Was VW a willing accomplice in writing those restrictions, if those laws were written to minimize competition? Maybe the answer is forthcoming as this story continues to unfold.

As for the intended over-bureaucracy of regulatory capture, I’d read a Car and Driver article in the early nineties about a small auto manufacturer which could have been Panoz. In the article, it was explained that Chrysler door handles were used on their cars, since the government restrictions on the design of door handles made custom manufacturing too expensive to justify.

Politicians and bureaucrats could write laws and restrictions with the cavalier attitude of “if we write it, it will be obeyed.” However, regardless of what the intended results are for a law or bureaucratic restriction, all government-invented laws are ultimately at the mercy of the laws of physics.

A law requiring zero-emissions vehicles before a specific model-year could be passed overwhelmingly, but there will never be a true “zero-emissions” vehicle.

From the manufacture of its parts, to the assembly process, to regular maintenance – which includes the disposal of damaged and worn parts – to refueling, even if the vehicle is electric, emissions and waste are a by-product of building and operating just about anything that is mechanical. And there comes a point where trying to reduce emissions and waste could jeopardize the purpose of trying to reduce emissions and waste.

One of the more counterproductive attempts to conserve water is probably the waterless urinal, due to the fact that not only is water needed to occasionally “flush” the waste within the urinal, but those urinals require filters to keep odors from escaping into the restroom.

First, how much energy is used to manufacture and dispose of a waterless urinal filter, compared to the amount of energy to filter wastewater from a standard urinal? Second, will there be a point in time when government restrictions will dictate the proper disposal of urinal filters, since they could possibly qualify as a biohazard? Keep in mind that compact florescent light bulbs are environmentally-friendly, until they shatter or need a proper disposal.

From locomotives that must meet Tier IV emissions requirements, to added parts on heavy-duty trucks that could not only add $30,000 to the cost of a truck, but could also increase maintenance costs while reducing fuel economy, the true cost of trying to meet increasing restrictions falls within the wallets of everyone who is affected by road and rail transportation, which happens to be almost everyone.

If an audit of every mandate regarding the design and assembly of a vehicle were conducted, is it possible that there is no such creature as a truly street-legal car or truck? With the possibility of overlapping laws that contradict, mandates that are physically-impossible to meet, and cost limitations, it is possible that no vehicle is “street-legal,” and Volkswagen may not be the only manufacturer that is turning out the corporate equivalent of zip guns.


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Born in Chicago and raised in northwest suburban Cook County, Chuck Gruenwald developed an unfavorable opinion of machine politics quite early in life. In addition to cars, electronics, law enforcement, and politics, Chuck enjoys writing, and is also a horse racing fan. He has recently written op-eds for