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Business run dishonestly is poor government model

The scandal surrounding Volkswagen’s use of software to cheat emissions testing systems for cars is only the latest example of corporations behaving badly.

The list is long and spans across many industries.

The financial crisis of 2007-09 was, in part, triggered by a collapse in the real estate market that had been overinflated by mortgages being sold to homeowners who had filled out so-called “no-doc,” (no-document) or “liar loans” with the help of unethical mortgage brokers and bankers. Wall Street banks sold risky investments as being safe. It was a roaring market, with lots of people making money. Then it imploded and triggered massive bailouts and a severe recession.

For years, corporations have been held up as models of efficiency — at least compared to government, where inefficiency and waste seem the norm.

In some cases, political candidates, particularly Republicans, promise to make government operate more like a business.

But the VW scandal is a reminder that big business might not be the best model. Corporate cheating and unethical behavior in the corner office make news routinely.

In the VW case, software in 11 million diesel cars was designed to detect when emissions testing equipment was attached to the car so the car could temporarily reduce its emissions to much lower levels than are produced in real-world driving.

There have been other cases of carmakers being caught cheating — or gaming the system.

In the case of the mileage estimates printed on side-window stickers of new cars, investigations found cases in which carmakers cheat by giving cars being tested for mileage special treatment — overinflating tires to reduce rolling resistance, removing side mirrors to reduce air resistance and removing the spare tire to reduce weight, all to boost mileage.

Both the VW emissions scandal and past mileage cheating reports will likely result in real-world testing for cars and development of testing systems that make it harder for manufacturers to cheat.

Years ago, when faced with new government mileage standards or safety mandates, the automakers protested loudly. More recently, they’ve barely complained when the Obama administration proposed higher mileage standards and lower emissions. Maybe the reason they didn’t protest more loudly is that they knew they could simply cheat.

Corporate cheating is not limited to automakers and Wall Street banks.

The medical profession has been tarnished by cheating. One example of Medicare fraud, known as upcoding, has found doctors and hospitals using reimbursement codes for treating seniors that produce more income, but do not reflect the actual medical care provided to the patients.

The “upcodes” generate higher Medicare reimbursements, but they cost taxpayers — $15 billion, by some estimates.

Recently, the New York Times reported another example of corporate cheating. In this case, some big American companies were using special H-1B visas to bring foreign workers to the United States. But the foreign workers did not possess special skills that American workers lacked, as intended by the H-1B program — they were being brought to the U.S. to learn the American workers’ jobs, which were later moved overseas, in many cases to India.

The Times story focused on accounting jobs at Toys ‘R’ Us, the New York Life Insurance Company and others.

The list of corporations behaving badly is long and growing, which complicates the pitch by Republican presidential candidates Donald Trump and Carly Fiorina who say they will get government to operate more like a big corporation.

Waste and inefficiency in government is frustrating. But big business is not always the best model for reform.

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