Stephen Foley: How the hysteria over Toyota's tribulations spiralled out of control

US Outlook: Call it "The $5bn Injustice". For the best part of two years, Toyota has been fighting a tide of innuendo about the safety of its cars.

It has had to contend with crackpots and fraudsters on the evening news, the political theatrics of Congressional hearings and selective quotations from subpoenaed documents, plus an internet mob in full cry.

And this week, the best scientists in the world confirmed what the Japanese car maker has been saying over and over: there is nothing wrong with the electronics of its vehicles. Those terrifying cases of "unintended acceleration", where cars were said to have raced out of control, for the most part had a very prosaic cause: drivers were holding down the accelerator.

The story of how a few genuine cases, caused mainly by ill-fitting floor mats that slipped over the accelerator pedal, which were fixed by Toyota in a series of recalls beginning in 2008, turned into a circus of ever-more exaggerated claims should terrify every executive of a major company. The unreasonableness and extremism that we often decry in US political debate is just as prevalent when it comes to business.

The reasons are hardly a secret. There are more rolling-news minutes than there are experts to fill them. The imperative to "move the story on" entails speculating about worst-case scenarios. Two-bit science is elevated and indistinguishable from more informed discussion. There is no mileage for a blogger in accepting the scientific consensus. No clicks on a headline that says, "Don't panic". Website comment sections fill up with cynicism and anti-corporate invective.

It is part of a wider, more philosophical problem. We are conditioned to believe that cleverness lies in seeing through the statements of a corporation or a government, to a truth they are trying to obscure; our whole mode of thought means we don't listen to what anyone says any more, we go straight on to asking why they might be saying it. To simply accept something at face value? How dumb!

The impact on Toyota's market share has been profound. Its sales in the US fell 0.4 per cent last year, while the industry as a whole rose 11 per cent. Earlier this month, a consulting firm called Interbrand calculated that the value of the Toyota brand had slumped 16 per cent, almost $5bn, in the past year.

The US government of course did find flaws with Toyota's procedures for the timely reporting of safety issues to regulators but, absent the level of hysteria, it is unlikely these would have led to the $48.8m in fines that Toyota eventually agreed to pay.

I have been struck by the parallels with the reaction to the BP oil spill last year. Without in any way dismissing the massive economic and environmental cost of the spill, the amount of two-bit science being peddled during the outcry was very depressing. Remember those two chaps demonstrating how you could soak up oil in their kitchen saucepans, using just a bale of hay? Remember the hunt for those imagined plumes of oil, before it turned out the spill was dispersing naturally? In the end, one of the most profound scientific statements during that crisis was Tony Hayward's, when he said: "The Gulf of Mexico is a very big ocean."

Even this week, the report of Nasa scientists wasn't good enough for some of Toyota's critics. Steve Berman, attorney for some of the purported victims of "unintended acceleration" and presumably not himself a rocket scientist, immediately began critiquing the methodology of the study and signalled his legal fight will go on.

In the cacophony of modern communication, from mainstream media to the raised voices of everyone on the internet, we must strain to hear the real experts – but it is getting harder. For executives, this is a terrifying new reality. The modern crowd, like markets, can stay irrational longer than you can stay solvent.

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