Sunday, May 23, 2010

BP: Too Big to Fail?

It’s been over a month since 11 men lost their lives when the Deepwater Horizon exploded in the Gulf of Mexico, setting off an environmental disaster of biblical proportions.

Like a slow-motion nightmare, the whole situation just becomes more ominous and tragic by the day, as thousands of people try and fail to contain the damage or stop the gushing of oil and other contaminants into the most productive fisheries in the world.

Cable news networks snag environmental scientists, government officials, and oil company executives for in-depth interviews. Each guest, however, can only take one bite out of the elephant: this is a big, big story.

The little, one-minute human-interest pieces on half-hour network news shows really do a better job of giving people a sense of what this calamity is all about. It’s not about tons of oysters and shrimp that will never get to market or billions of dollars in lost revenue and cleanup costs. It’s not about numbers.

This story is about a woman who will soon file bankruptcy on her seaside restaurant, which now overlooks a gooey slick of toxic chemicals instead of a pristine beach. It’s about a tough-looking good-ol’ boy choking back tears as he tells of finding a young turtle of a highly endangered species gasping for air. It’s about third- and even fourth-generation fisher folk watching the only world they and their families have ever known disappear, for decades if not forever.

This is about fast, permanent, and measurable degradation of the planet by human actions. But mostly it’s about immeasurable suffering and despair. There’s human suffering, and there’s the suffering of millions upon millions of birds, sea mammals, fish, turtles, and countless other creatures—some of which will undoubtedly become extinct as their tiny, unique ecosystems are destroyed.

This is also, of course, a story about power, greed, and arrogance.

Is there anybody out there who still believes that the market is self-regulating and that companies can have the wisdom to protect their own interests, along with that of people and the planet? If so, which “planet” are they living on?

Clearly, when we get finished cutting some of the megabanks down to size, it’s time to consider whether there aren’t a lot of companies, too, that are “too big to fail.”


Idna said...

HUH?? CJ, there are a few words I'd recommend you look up in the dictionary.

You claim that the oil spill was because of "human action, power, greed, and arrogance." Please look up the word ACCIDENT. Yes, it is a tragic event as you point out so well in your emotional examples. But what in the world does it have to do with your anti-free market theory of economics? Would a government run oil company have been immune to accidents just because it's run by a bunch of politicos? So now you should look up Non sequitur.

Since you demonize BP - and I assume ALL oil companies - I will assume that you no longer use any of their products. Do you walk, bike or skateboard everywhere, or do you visit the despicable gas station at times to fuel your car which is causing "degradation of the planet" by your actions? Do you use natural gas to cook or heat your home? Do you own any plastic products? Do you use electricity -some of which is produced by combustion turbines fueled by oil or natural gas? Now look up self-righteousness and hypocrisy

And finally, I assume your notion of "too big to fail" seems to imply that companies that are not making it financially should be allowed to fail. I AGREE!!!! But BP has never needed to be bailed out by the Obama regime. Your suggestion that viable companies be deliberately 'cut down to size' by the government is a totally disturbing and atrocious idea. I don't even know what words to suggest looking up at this point. Maybe the opposite of freedom and liberty. said...


I suggest you review some of the emerging facts. It is no longer an "accident" if negligence or willful interference is involved. Apparently, the backflow preventer was modified, the cement was done badly, etc. I agree that some, shall we call them, incidents can be attributed to purely accidental causes. But, if you look at some of the most infamous "accidents," you will find other factors came into play. TMI, the Bhopal incident, and Chernobyl can all be attributed to human factors.

I do, however, agree with your second point. We all have a part to play in this. Until the US (and its citizens) owns up to its responsibilities, accidents like these will keep on happening.

Six said...

We did not have an unregulated market where oil companies are solely left to protect thier own interests through normal market-channels. The government has given oil companies operating an oil platform special protections from lawsuits and caps on the amount they could be required to pay out in the event of a disaster such as this. Further, they can limit their liability exposure by showing that they had met the governments regulatory standards - which it appears they had. The oil companies have basically hired the government officials to rig the legal system in their favor - that is NOT an unregulated free market as you suggest. Had there been NO damages cap and BP forced to bear the full potential liability perhaps a couple of things would be different. Instead we have a quasi-government/private cronism.

If there woere no liability caps, maybe oil would be priced higher in order to compensate for the high liability risk associated with off-shore platforms, tankers and other spill hazards? Maybe because the oil was priced higher there would have been more market innovation to either further perfect the process of safely extracting or even better, develop new technologies and alternatives of energy production?

Allow each of the businesses affected to sue. Allow every property owner and resort affected to sue. All without a liability cap. And so on.

So while you pile on this as some sort of lack of regulation, I disagree... I think this is precisely BECAUSE of the regulation that more than likely BP was not as cautious and did not invest as much as they would have otherwise (or maybe even not bothered to put that rig there increasing natural market pressures for alternative energies) if they knew they would potentially bear the full weight of real liability.

Similarly, if investment banks, etc been forced to actually mearsure and carry the risk associated with the investments they were packaging and selling, as well as Fannie/Freddie were to be foreced to exist without government backing, well... you can see where I am going with this.

Citizen Jane said...

Hi, Idna,

To suggest that companies should be limited in their scope and power is not to say they shouldn't be allowed to exist. At present, we still need oil, so we still need oil companies.

And we agree that mismanaged or unproductive companies should be allowed to fail. One question, though, is how much damage such failure should be able to inflict on the economies of the world.

If there is a finite amount of damage that one company or industry should be allowed to inflict on the world, then it may be that there should be some limit to their size.

These are important questions to be discussing now because. for the first time in human history, it's possible for one company or conglomerate to literally and irreparably damage the earth. Our responsibilities as a nation and as a species are greater than ever before.

Just six weeks ago, the disaster at the Upper Big Branch Mine in West Virginia killed 29 men. This occurred after the megalithic company that owns the mine (and who knows how many Southern politicians) ignored countless safety citations and all the federal government's feeble attempts at meaningful regulation. Just as much coal could be mined by two or several smaller companies with adequate safety regulations and oversight.

Examples abound of companies and corporations too big to be managed properly and literally "too big to fail."

Six said...

The only way a company can get 'too big to fail' is if the government enables them. You see this as some sort of market problem when it is exactly the opposite.

Citizen Jane said...

Agreed, Six. But a government shaped by Bush and Cheney--themselves products of the oil industry--is a very different thing than a government shaped by a president and a party that believes in balance and accountability.

The links in this article contain some interesting historical background:

A balance of power needs to be maintained between business and government--and yes, they both bear watchin.'