Killing the Geese that lay the Golden Eggs


In “Alice in Wonderland”, the White Queen recounted how as a child she had been required to believe six impossible things before breakfast.  This would be good training for European legislators – though they seem to be quite good at it already.  For example, some of them believe that the Greek crisis has been resolved.

Their own beliefs are bad enough, but it gets worse when they expect others to do the impossible things that they legislate for.  Take the banking crisis.  We asked the banks: (A) To lend more responsibly, and avoid the risk of default; (B) To lend more to industry, to promote investment and growth; (C) To rebuild their balance sheets; (D) To repay to governments and taxpayers the sums that they had received in bail-outs.

We seem to have forgotten that you can’t spend the same pound on three or four separate things.  Meantime we continue to beat up on the banks, to the extent that several majors are looking at the possibility of moving elsewhere.

And it’s not just the banks.  BP are taking terrible punishment in the US.  Of course they made some serious errors, and they have to be held to account, but I wonder if the US authorities are deliberately seeking to damage a non-American oil company to give their own oil majors a competitive advantage.

The airline industry is being brutalised by European compensation legislation, which threatens to destroy the low-cost airline business model.  In the name of “consumer protection“, we provide compensation to delayed passengers, even (following a recent court ruling) where the airline had little or no responsibility for the delay.  I strongly suspect that in these cases the administration of claims may cost more than the compensation itself.

Recent court decisions appear to be retrospective, which could hit hard-pressed airlines with a bill for many millions. If you ask a delayed passenger if they’d like £300 compensation, they’ll say “Yes”.  If you explain that this could be the end of low-cost air travel, they might think twice.

And now we have the Volkswagen case.  Volkswagen has apparently been using software that recognises when the car is being tested, and adjusts the engine to reduce admissions.  But in general use, the emissions may be many times higher.  One news report suggests that VW could be fined $18 billion in the USA.  You read that right –Billion – not million.

Let’s be clear: if VW is guilty as charged, then they were wrong to do what they did, and should face appropriate penalties.  But $18 billion is beyond reason. It amounts to more than 14% of VW’s Market Cap.  Chances are that other auto companies have being doing the same thing.  This story could run and run.

And why did it happen?  Because of mixed messages from legislators.  On the one hand, they were keen to promote diesel in order to “save the planet”, since diesel produces lower CO2 emissions.  On the other hand, they set draconian limits for other emissions like SOx and Nox and particulates.  These two objectives appear to be incompatible.  Let me repeat: I’m not trying to exonerate VW for cheating the system.  But I am trying to understand why it happened – and it happened because legislators made impossible demands.

Suddenly I feel a whole lot better about driving a petrol car.  Not that I felt too bad about it beforehand.  On my desk in Brussels I have a mug with the legend: V8: I’m doing my bit for Global Warming!


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9 Responses to Killing the Geese that lay the Golden Eggs

  1. Flyinthesky says:

    The problem with environmental legislation is it’s usually kneejerk responses to vociferous idealists.
    Diesel engines are now in comparison to a couple of decades ago spotless. The effect on public health is greatly overplayed. It’s all very well having standards and ideals but they have to be realistic.

    The biggest creator of traffic pollution comes from the never ending urge by government, local and national, to control it. Traffic planning seems to be the exclusive province of cycle riding motorphobes who wish to impede the flow at every opportunity.

    The desired end result is an end to motorised personal transport.

    • Flyinthesky says:

      On the VW situation I think this has more to do with trade than environmental concerns.
      Being in and out of the motor trade in my working life it was well a known move to reduce the metering on a diesel to pass the MOT emission test but post MOT you wouldn’t want to drive it like that. The greatest toxicity from diesel engines is atomised unburnt fuel, incomplete combustion, considering the price of fuel that phenomenon is no longer with us, manufacturers squeeze every drop of energy out of it.

  2. B Hough says:

    In the beginning I would not have even considered a diesel car, noisy & sluggish compared to petrol.
    So they were improved, made quieter and more responsive, this plus extra mpg and government persuasion got me to change over.
    Perhaps by now it was expected that bio-diesel would be more plentiful, after of course the destruction of the equatorial rain forests to grow it had been completed!
    Also of course the danger to our bee population due to the insecticide to be used.
    Of course the effects of all this could be blamed on the old “climate change”, sell `em some wind turbines, make `em pay more for their gas & electric and all will be OK.
    Though I am told that diesel gives out less CO2 does it not polute the air we all b=reathe more than petrol?

    Whatever the outcome someone somewere will make money out of the problem.

    • Nigel Greaves says:

      A mechanic told me a couple of years ago that VW were having problems with the particulate filters on their diesels. If the cars were used mainIy on short journeys then the filters were continually becoming blocked. This mechanic reckoned that the emissions regulations were ‘choking the life’ out of diesel engines generally and advised me to buy petrol cars in future. I doubt if this is restricted to VW somehow and it will be interesting to see how other manufacturers ‘solved’ the problem!

  3. Jane Davies says:

    To pick up your point about BP Roger…..” BP are taking terrible punishment in the US. Of course they made some serious errors, and they have to be held to account, but I wonder if the US authorities are deliberately seeking to damage a non-American oil company to give their own oil majors a competitive advantage.” Whenever the explosion at the Deepwater Horizon oil field is mentioned over here it is always deemed to be BP’s fault, never is it pointed out that the cap that failed leading to the worst oil spill in history was in fact installed by Halliburton an American company. It would seem to me that USA are deliberately setting out to damage BP’s reputation and here in Canada the news media simply repeat this misinformation. I yell at the TV and radio whenever I here this but to no avail!

    • Flyinthesky says:

      As at 2010:
      Most relevant sources agree that 40% of the shares of BP are held in the United Kingdom, 39% of the shares are held in the United States, while the remaining 21% are held throughout Europe and the rest of the world. The largest single holder of shares is getting harder to track down. Generally an Internet search will lead to the other 9 leaders, roughly 23%:

      It would appear that blame is to be apportioned to any entity that doesn’t have American in the title.

  4. afwheately says:

    It is interesting that you should feature the golden egg laying goose as that very bird has been in my mind for a while.

    In my case the “goose” is relatively prosperous Western democracies and it is being killed by too many immigrants too quickly.

    In the particular case of England you could simply say too many immigrants.

    This is another area where the EU decision makers are showing their ineptitude.

  5. lasancmt says:

    Killing the goose that lays golden eggs is Britain contemplating a #brexit

    Britain has a structural trade deficit with most of the world except for some strange reason with the USA.

    The UK’s balance of payment ishortfall s partly offset by a surplus in the services sector, where Britain, esspecially the City of lLondon excells.

    Leaving the EU is like killing the goose that lays golden eggs. Germany has several other top car manufacturers, they’ll get over this.

    Now financial services moving en masse to Frankfurt, Paris and Dublin, that would be a disaster for Britain: It’s credit rating would be blown overnight, Foreign Direct Investment (FDI) would come to a grinding halt and Sterling would go in free fall.

  6. Jane Davies says:

    Have I heard it right…the CEO of VW has just resigned and he was being paid 22 MILLION a year?
    Ye gods…..that is obscene.

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