It's called "competition"-- consumers naturally gravitate toward higher numbers, be they performance figures (horsepower, torque), or gas mileage. Having to lower those numbers (in this case, both performance AND efficiency) in order to meet the emissions controls puts one at a competitive disadvantage.
True, VW should have complied with those regulations--I've never said they were right to market a product they knew did not meet enacted regulatory standards-- but they saw an incentive not to, even though they had the ability to do so. I wonder why...?
And, by the way, the original regulations may have been enacted decades ago-- but they are revised to an ever more-stringent set of standards pretty frequently.
So knock it off with the feigned outrage and your cartoonish caricaturizations of anyone who has a different opinion than you (or, in this case, an actual grasp of the facts).