Actually, it has nothing to do with catalytic converters. The classic VW engine is air-cooled, and because of that it is carbureted to run rich, so that not all of the gasoline is burned. This assists in the cooling of the engine in much the same way as perspiration cools your skin, but results in a very dirty exhaust. The amount of unburned gas would overwhelm a catalytic converter in no time. The rich mixture is required if you want your VW engine to last very long at all.
The point is all those hippies who thought they were saving the planet were actually polluting it more than the SUV's they were sneering at. But they cared so it didn't matter.
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