“[BP CEO John] Browne was distracted by his pet issues of climate change and environmentalism, and by his flirtations with the public spotlight.... he had been obsessed with branding the company and lowering its carbon footprint at the expense of BP’s real business, producing and selling oil.”
~ Abrahm Lustgarten, from his 2012 book Run to Failure: BP and the Making of the Deepwater Horizon Disaster, quoted in the post "‘Beyond Petroleum’ Now ‘Big Promises’ at BP"
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Remember the Bhopal disaster in India? It was the world’s worst industrial disaster, in which more than half-a-million people were exposed to toxic gas released from a Union Carbide plant located in a built-up area. In scale, if not in human toll, it was comparable to BP’s Gulf of Mexico debacle. Stephen Hicks reviews one of the textbook cases of so-called “market failure” that looks more and more like something else.
The 1984 disaster in Bhopal, India, is one of the major business ethics cases of the past generation. [A highly toxic gas escaped from a Union Carbine plant in a built-up area] and many people died. Awful.
But I am weary of reading the standard journalistic accounts that run like this: In the name of profit, a large American multinational corporation neglected safety; as a result, many people, especially poor people, were killed and maimed, and the corporate executives involved have never been criminally prosecuted.
Bhopal is an important case to learn from, but it is absolutely crucial to attend to all of the relevant facts, many of which the standard accounts omit.
Hicks offers five immediately relevant facts omitted in the standard accounts,
the most important [being the fact] that Union Carbide’s (UCC) presence in India was governed heavily by the Indian government and its aggressive, top-down industrial policy…
Hicks has the details, but the standard accounts also omit to mention that the decision to use the hazardous chemical MIC was the Indian government’s, not Union Carbide’s; that government directives also required the building of larger rather smaller facilities; that the Indian government was also pursuing an affirmative action programme, replacing Union Carbide’s foreign experts in engineering and agricultural chemistry with locals; and, finally, that the decision to situate the chemical plant in the middle of a residential community was the Indian government’s, not Union Carbide’s, exacerbated by a re-zoning policy that included giving thousands of construction loans to encourage Indians to build their homes near the chemical plant…
What he doesn’t say, but could have, is that it while it’s assumed in all the standard accounts that it was in the selfish interests of Union Carbide to risk lives, in truth it was no more in the long-term self interest of Union Carbide to kill thousands of people than it was for BP to risk ecological disaster in the Gulf of Mexico.
Hicks observes that even twenty-seven years later there are still many questions to be answered about the disaster, but “before jumping to conclusions about culpability, it’s important that we frame the investigative questions accurately… [and] almost 30 years later, I have yet to come across a professional and objective set of answers to those questions.”
As I said myself a few years back when just seven of those responsible for the industrial disaster were finally taken to trial, convicted and sentenced,
the disasters caused by Union Carbine and BP (and James Hardie) show that the cosy relationship of big government and big business does not lead to big justice, or provide any guarantee against environmental or human disaster. BP is one of the most politically active in its industry. The close links of BP to both government and environmental organisations should lead one to wonder whether “BP [has] been too busy spending money to [buy politicians, and to] impress the government and the public with how ‘green’ it is to look after safety adequately.” And Union Carbide and Dow Chemical, its new owners, seem to think it is easier to buy regulators and politicians—to hold its operations together “by duct tapes and bribes”—than it is to face justice, or to act justly. [Ditto for James Hardie.]
And it’s not like the governments they buy deliver any of that “bought-and-paid for” justice to their constituents either. The Indian Government’s fascistic “Think Big” policy saw them forgo their role as referee and act instead as a player, and a bad one. (“The Indian government had its heavy hand on every aspect of the Bhopal plant, from its design and construction to its eventual operation.”)
So, desperate to protect themselves and under pressure from the US Government not to charge Union Carbide’s executives, Rajiv Gandhi’s government instead accepted millions of dollars in out-of-court settlements from Union Carbide as "compensation for the victims.” But while all that money was received by the politicians, very little of that1989 settlement ever actually reached the survivors. The loop of political corruption closed out those who most needed justice from the disaster, just as that corruption and the politics that caused it helped make the disaster itself happen.
Anti-capitalists will often suggest that we need big government as a “counterweight” to big corporates. But is that really true? The fact is that stiff regulation protects no-one except those it shouldn’t, and simply invites big corporations to buy their even-bigger regulators. There really is no greater force for corruption than an equation that puts together a big corporate desperate to escape justice, and a politician in pursuit of power and campaign funds. As PJ O’Rourke once observed, “when buying and selling are controlled by legislation, the first thing to be bought and sold are legislators”—some of whom, like Al Gore, take that relationship with them even when they retire from the legislature.
Just one reason that a complete separation of state and economics is called for, lest the poisoners and the parasites make common cause.
As they have done all too frequently.
Every president has a defining moment. Washington’s moment was his stepping down after two terms “to head back to the plough,” setting a precedent that every subsequent president (but one) then followed. Lincoln’s moment was signing the Emancipation Proclamation into law, giving meaning to six years of carnage. And Jimmy Carter’s, of course, was his endless hand-wringing over the Tehran hostages.The bubble is bursting for him not because he has disappointed real expectations but because he dealt in unreality all along, and his followers are betrayed because the unreal is the unreal and never had any value….
“Obama…promised a world where the government can control everything. Like [Kevin] Rudd since the failure of [Australian] cap-and-trade, he will not even be able to control his own followers when the truth of his impotence over the Gulf oil spill stands fully revealed.”
Power. The Postmodern Left promised power could do all things. If you ask, “Why is it the president’s job to deal with the oil spill?” then the answer has to be that his own all-encompassing power-lust made it so. His will to power makes his micro-managing of the crisis necessary. But the nature of the crisis reveals his impotency.Barack Obama and Australia's Prime Minister Kevin Rudd both belong to a new class of leftist leaders: postmodern ones [explains Tim Michin]. This distinguishes them from either the Old Left or the New Left. The Old Left (led by men like Franklin Roosevelt) were class-warfare-focused but claimed to believe in economic progress: they said they wanted a modern world with the government in control of the means of production. The New Left (the hippies and their contemporary descendants, the Greens) witnessed the failure of that socialist/fascist ideal in every country it was tried and, in bitterness, threw economic progress overboard to adopt a policy of living at the mercy of nature.
“Unsurprisingly, the New Left failed to attract wide support. Its contempt for human survival was too apparent. Thus the postmodern left was born. The Postmodern Left combines a thirst for an ever-growing centralized government power with cunning levels of disguise to appear to be all things to all men. Hostility to science is wrapped in the language of science (global warming theory). The shackling of capitalism is dressed up as saving it (the stimulus packages). Hostility to US predominance is dressed up as a desire for a new world order in which US strength is ‘restraint.’ In fact, under all its disguises, the postmodern left believes in nothing but power for itself and the weakening of the institutions of the West.”
And threats are all they have as a remedy.The spectacle of watching an actual physical fact of reality playing out before this kind of mindset is both humorous and tragic [explains Doug Reich at the Rational Capitalist]. After all, there is no option in the leftist playbook for dealing with a fact of reality. Can Obama pass a law forbidding the oil to leak? The oil can't be put in prison. Can he expropriate BP's cash or imprison the BP executives? BP needs money to pay for the clean up and he needs the technical know how of the company. Can he convene a panel of experts and central planning apparatchicks? He has appointed an oil cleanup czar which Matthews and Olbermann rightly excoriate as ‘a lot of blue-ribbon talk’ accusing Obama of being a mere ‘Vatican observer’ and threatening to ‘barf’ if he mentions the Nobel prize credentials of his Secretary of Energy again. In other words, they recognize this is all talk and no action.
"Yet, the oil continues to spill.”
That’s the rule that might bury BP.
The calculation is simple. The cleanup bill for BP’s fiasco in the Gulf of Mexico fiasco looks to be around $100 billion. And after last week’s collapse in its share price, BP’s market capitalisation is still around $100 billion, just enough to pay the costs of all those whose livelihoods have suffered damage by their actions. And therein you see the big problem for the big oil company—and for the big British pension funds that have relied on BP’s returns to bankroll Britons’ retirement
It’s not good enough to argue that BP is too big to fail. Damage your neighbours’ property—or the fishing grounds and shrimp harvests in which your neighbours have property—and it’s your responsibility to pay for the cleanup, even if that buries you. (Note that it buries you, but not your assets, which still go on after your demise, just in other hands.)
And it’s not going to be good enough to argue that British pension funds are too big and too important to be able to fail. Risk must come with consequences, if law is to mean anything at all.
SO WHAT WENT WRONG and who was responsible? The mainstream answer was put up by Rachel Maddow last week, who demonstrates that brains are no good unless you use them. “Tonight on the show,” she says on her blog, "we're looking at why BP wasn't prepared to deal with the Deepwater Horizon disaster. Short answer: No one made the company get ready.”
It might be a short answer, but it’s sure as hell a wrong one. It isn’t a who that makes a company formulate plans to mitigate or avoid disasters, it’s a what.
Contrary to Rachel’s contradictory world-view, what does (or should) motivate companies like BP to mitigate or avoid disasters is one very basic thing, and that’s their own long-term self-interest.
I can almost hear Rachel’s “WTF?!” as I say that. But as BP’s imminent demise demonstrates, if you’re not set up to properly handle the many things that can go wrong in unleashing something as unsavoury (in the wrong places) as BP’s product, then your long-term future is a dismal one—as is the future of all those who were relying on your acumen and decision-making ability, like the beneficiaries of those pension funds for example.
Clearly, if your long-term survival and prosperity is important to you—and why wouldn’t it be?—then the more unsavoury the stuff with which you deal, or the more damaging the consequences of its uncontrolled release, then the more care you must take to insure against its unplanned release, and to deal with it if that happens.
On the basis of BP’s obvious unpreparedness, it looks like BP has betrayed its own self-interest, and after paying the bill for that failure they will be left only to provide the fertiliser for the better management of their assets by others. In that, there is a powerful ethical lesson for everyone involved in business.
“…the likes of Tiger Woods and Bernie Madoff and Elliot Spitzer, all of whom would conventionally be called “selfish” for what they did, should actually cause you to call into question your conventional view. None of these mean at all look like they’ve been rationally selfish—in fact they’ve all been decidedly unselfish in any rational sense--and that, in fact, is the leading cause of their downfall.”
The Unselfish Actions of Today’s “Selfish” Men - THE UNDERCURRENT
UPDATE 2: Another memo to Rachel Maddow [hat tip Gus Van Horn]:
"’If you could control an oil spill with lawyers and regulation-writers, and by signing papers and obtaining court injunctions . . . then maybe the U.S. government could do something’ said Byron W. King, an energy analyst at Agora Financial. ‘But really, Uncle Sam has almost no institutional ability to control the oil spill. For that, you need people with technical authority, technical skill and firms with industrial capabilities.’"
And also, one might add, a keen sense of their own rational self-interest.
UPDATE 3: You think maybe a tantrum from the president might fix things? Um . . .
“’Since the oil rig exploded, the White House has tried to project a posture that is unflappable and in command.
“’But to those tasked with keeping the president apprised of the disaster, Obama’s clenched jaw is becoming an increasingly familiar sight. During one of those sessions in the Oval Office the first week after the spill, a president who rarely vents his frustration cut his aides short, according to one who was there.
“‘Plug the damn hole,’ Obama told them.’
“That’s the politician’s answer to every intractable problem: give orders, issue threats, and wait for obedience. But the creative human mind cannot take orders like that. Notice I didn’t say, ‘refuses to take orders.’ I said, ‘cannot take orders.’
“By that I mean, the task of plugging a leak 5,000 feet below the surface of the Gulf of Mexico is an engineering feat. BP’s acknowledged role in causing the leak does not alter the fact that careful study, creative thought, and the exacting deployment of technical and mechanical skills over long distances are all necessary in order to fix the leak. No amount of jaw clenching or bug-eyed threats from politicians can bring the solution one inch closer to reality. The human mind does not operate by force from outside. If engineering achievements could be conjured up by barking orders, the Soviet Union would be a thriving nation overflowing with engineering marvels, instead of a dead husk…”
“Plug the damn hole!” – THOMAS BOWDEN
The implacable enemy that Obama faces is not BP, but reality:
“Now, as the economy implodes under the weight of government debt, taxes, and every manner of statist intervention, (including environmental regulations that resulted in deep water drilling! [HT: Gus Van Horn] and now, the shut down of oil rigs that work!) Obama and his supporters find themselves up against an intransigent and implacable force - reality.”
Which as King Canute should have taught them, is the one thing over which politicians really do have no power.
UPDATE 4: Noodle Food has another good link:
“The standard argument [made by Maddow and others is] that the problem behind the BP oil spill was a problem of capitalism. Instead, [this article by Wendy Milling] shows how it was an industrial accident significantly worsened by anti-capitalist government policies to become a disaster.”
Read Milling’s article, "No Thomas Frank, Capitalism Is Perfect.” Great title, great arguments. For example:
“Assaults on capitalism are rooted in a crybaby metaphysics, and they rely on obfuscations, equivocations, and an attitude of militant evasion. One trick is to make inappropriate demands of capitalism, then stomp and pout and denounce capitalism when those demands are not met.”
Stomp and pout? You’d think she’d been reading Martyn Bradbury.
Those of my age and above will remember with horror the news of the 1984 Bhopal disaster.
It seems astonishing that it has taken all of twenty-six years for just seven of those responsible for the industrial disaster in Bhopal to be taken to trial, convicted and sentenced. And what a sentence. For those of you unfamiliar with what is still the world’s largest industrial accident, around 3000 people were killed when a cloud of methyl iocyanate gas leaked out of a Union Carbide pesticide plant in central India, and up to another 20,000 died in later years, for which these seven executives have belatedly received just two years in jail, with every expectation they will appeal--“a process that can take years.”
As a family member of of those killed has said, it’s like these executives “have essentially been set free.”
Worse, after years of trying, Union Carbide chairman and CEO at the time Warren Anderson remains free and unencumbered by any hint of justice for his part in his company’s manslaughter—remaining at large with the help, it has to be said, of politicians in both the US and the Indian Governments.
The disaster at Bhopal is still the world’s worst industrial accident, worse even than the mercury poisoning of Minamata, the asbestos poisoning by James Hardie, the ammonium nitrate explosion in Texas City ,the Triangle Shirtwaist Factory fire in New York City, and the Piper Alpha disaster in the North Sea.
Between them they rather put into perspective the Deepwater Horizon disaster still bubbling up into the Gulf of Mexico, don’t they. And sad though every death is, the greatest tragedies are when people are killed, not wetlands, dolphins and sea turtles.
Nonetheless, the disasters of Bhopal and BP (and James Hardie) show that the cosy relationship of big government and big business does not lead to big justice, or provide any guarantee against environmental or human disaster. BP is one of the most politically active in its industry. The close links of BP to both government and environmental organisations should lead one to wonder whether “BP [has] been too busy spending money to [buy politicians, and to] impress the government and the public with how ‘green’ it is to look after safety adequately.” And Union Carbide and Dow Chemical, its new owners, seem to think its easier to buy regulators and politicians—to hold its operations together “by duct tapes and bribes”—than it is to face justice, or to act justly.
And it’s not like the governments they buy deliver any of that “bought-and-paid for” justice to their constituents either. The Indian Government’s fascistic “Think Big” policy saw them forgo their role as referee and act instead as a player, and a bad one. (“The Indian government had its heavy hand on every aspect of the Bhopal plant, from its design and construction to its eventual operation.”) So, desperate to protect themselves and under pressure from the US Government not to charge Union Carbide’s executives, Rajiv Gandhi’s government instead accepted millions of dollars in out-of-court settlements from Union Carbide as "compensation for the victims.” But while all that money was received by the politicians, very little of that 1989 settlement ever actually reached the survivors. The loop of political corruption closed out those who most needed justice from the disaster, just as that corruption and the politics that caused it helped make the disaster itself happen.
Anti-capitalists will often suggest that we need big government as a “counterweight” to big corporates. But is that really true? The fact is that stiff regulation protects no-one except those it shouldn’t, and simply invites big corporations to buy their even-bigger regulators. There really is no greater force for corruption than an equation that puts together a big corporate desperate to escape justice, and a politician in pursuit of power and campaign funds. As PJ O’Rourke once observed, “when buying and selling are controlled by legislation, the first thing to be bought and sold are legislators”—some of whom, like Al Gore, take that relationship with them even when they retire from the legislature.
Just one reason that a complete separation of state and economics is called for, lest the poisoners and the parasites make common cause. As they have done all too frequently.
