Accidents happen, but the BP mess in the Gulf was an accident waiting to happen, which is not the same thing — faulty blowout preventer, faulty shears, faulty cement job, lack of blowout plan, possible lack of required permits, definite lack of oversight by the US Mineral Management Service.
At the same time, quite below American radar, something almost as telling has been happening in Australia. That country, where the mineral sector has been going gangbusters, is in the middle of a huge political flap over Prime Minister Kevin Rudd’s move to institute a 40% “super tax” on mining profits. Needless to say, the huge mining conglomerates are up in arms over this, threatening to limit expansion, threatening even the very government in the upcoming elections. Okay, 40% is a lot, but many extraction companies are willing to pay a lot in other production situations in the developing world— if required. Why not Australia?
I don’t think it is only the oil/gas/mining companies that believe they have the whip hand over governments, people, and institutions; it’s the banks and their cousins, it seems anyone in the corporate world feels they can flog a government over taxes and royalties, and then demand bailouts or protections. It’s the attitude that they are the engines that keep the economy going and without them the world will collapse. Which is like the designers of the Titanic throwing women and children out of the lifeboats so they themselves can be saved because in the future, the people on land will have a need for steamships only they can fill. Instead of welfare queens of the 1970s gaming the system, we have these monolithic corporations, filled with their own sense of entitlement and slyness. Companies must not be allowed to ignore or duck laws just because they are inconvenient or have a cost attached.
It cannot be coincidence that in the past couple days both the New York Times and the Economist have posted blogs much angrier and more populist than I have seen in more than a decade. The New York Times one ( http://economix.blogs.nytimes.com/2010/05/14/companies-what-are-they-good-for/?emc=eta1by Uwe Reinhardt) compares the “liberal” theory of business, where the business of business is all about shareholders (which one cannot even say is the modus operandi of Goldman Sachs), with the currently strengthening shareholder approach, which takes into account the social environment the business operates in. Businesses today may believe in the former, but find they must give at least lip-service to the latter. For example, every energy company — especially BP — showcases their corporate social responsibility and environmentalism on their website.
The Economist’s blog “Democracy in America” (http://www.economist.com/blogs/democracyinamerica/2010/05/employment_and_jobs_bills) cites recent blogs by Brad DeLong (of Berkeley) and Kevin Drum (of Mother Jones). All three writers focus is on the jobs crisis and why unemployment seems so unimportant (unless you are in the ranks of the unemployed) to Washington in the middle of our Great Recession. The writers trace it back to Ronald Reagan’s Administration and its wholesale attacks on labor and the poor. (Really, I saw it when I was young. It wasn’t nearly as triumphalist as it became after 1991 and the end of Communism and after the Republican mythmakers had 20 years embroidering it. Whatever you think about Ronald Reagan, pretty soon, the mythmakers will have him chopping down a cherry tree.)
In the first of these columns, Delong wrote
I think most of the answer to the difference in tone this time around is the ideological shift produced by the Reagan Revolution, which has over the course of a generation led more people to view economic problems as forces of nature about which the government can’t do anything.
It’s more than that. We live in an age of economic solipsism, where we are told what is good for Goldman Sachs is good for Goldman Sachs — who cares about America? And we must needs believe it. We are terrified of what we will find if we unravel the whole mess at the banks, perhaps all our holdings are worthless. Perhaps the Emperor will have no clothes. But regarding energy and commodities, should we really be afraid that if we put down too many rules or royalties, Exxon or BP won’t want to drill in our waters? Really? When they are willing to drill in Iraq for $2 a barrel or work in Nigeria? England has a better safety regulations than we do; Norway and Brazil have better environmental safeguards. The company threats on the US and Australia strike me as bloviation.
Still, as our work force (including the media and those with well-developed 401Ks) has become increasingly college educated, it believes more and more in the wholesale conservative economics taught in college, even though these doctrines have now been shown to have no more truth than their predecessors. (Being educated not being the same thing as being smart.) Two years ago, it was apparent that the political Right had run out of ideas — even the most extreme Tea Partiers have no new ideas. But now it is apparent, neither does the Left. Fighting in Massachusetts over windmills for green energy versus the beautiful views of visible environmental protection does nothing to inspire faith. These are goals or issues, not vision. At the end of the day, we need a new vision, a new national destination that encompasses our corporate, social, and economic policy — or just a new economic philosophy — and we do not have it.
The extraction companies have forgotten one thing, or think they can control it — China. China saved the entire extraction sector during the long cold winter and spring of 2009. Now it is a fallback for those countries not too chauvinistic to sell to them. The example of Unocal (whose sale to the Chinese was prevented by the US in 2005) notwithstanding, why shouldn’t any country, not just developing ones, work with the commodity-hungry Chinese? Unlike most of the giant Western companies, China doesn’t seek to squeeze every penny from the countries where they work — they give full payments and sometimes nice freebies. For China, it is not about the shareholders and their own bonuses; for them, it’s national security, a much bigger rationale. The extraction companies seem not to realize the ground is beginning to shift under their feet. What can they offer that China cannot?
