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Source link: http://archive.mises.org/12821/playing-fast-and-loose-with-civilization/

Playing Fast and Loose with Civilization

May 27, 2010 by

Everyone knows that the Obama administration’s decision to suspend consideration of applications to drill in the Arctic is driven by political considerations, some attempt to “respond” to the BP mess in the Gulf. But what strikes me as just how willy nilly the state acts toward the goods and services that fuel civilization itself. The decision makes us all poorer on the margin, increases “dependency” of the U.S. on foreign oil, drives up prices, and sets back social advance in every way – all in the name of some random attempt for one guy to appear “strong” and “act” in the face of an accident. It’s rarely been more obvious, day to day, that the machinery of the state, while pretending to be the caretaker of mother earth, only destroys hope for real human beings.

{ 45 comments }

HL May 27, 2010 at 12:08 pm

This of course touches upon the real end-game for these guys: the end of civilization. This helps explain the popularity of such civilization-hater “porn” films.

Walt D. May 27, 2010 at 12:14 pm

It is an election year and this is merely an issue that panders to the environmental lobby in the Democrat base. Let’s face it the Democrats have struck out on everything else, the electorate is angry, and they have no other issue to run on. When all is said and done, the only thing that is important is hanging on to power. What is good or bad for the country in the long term or the short term does not come into their decision making process unless it wins votes. Their gamble here is that people will not feel the impact of higher fuel prices until well after the November elections.

Robert May 27, 2010 at 4:05 pm

I get the same feeling about this administration. Obama is the type of guy who would crucify an innocent man to placate an angry mob. He talks tough but his actions are driven by fear of losing power. He is highly reactive to opinion polls. The guy is fundamentally clueless about how the world works outside of politics, and it shows. Power is all he cares about in the end.

That said, the best solution to this problem of oil spills would be to remove the fed-imposed liability cap for oil companies so that insurance costs would reflect actual risk. Also, privatize the seas!

SailDog May 28, 2010 at 7:46 am

“Privatize the seas!”

Yeah right. There is of course the small problem of international law and the fundamental legal principle that nobody owns the high seas, but heck who wants to spoil the party.

Anyway. I thought you guys believe, as a cornerstone of economic “law”, that the price mechanism will ensure supply whatever the circumstances? Surely on that basis it doesn’t matter that deep water drilling is being circumscribed? The price mechanism will “create” more oil somewhere else.

I don’t think Obama is clueless at all. Certainly he isn’t a complete idiot like Bush. He knows exactly what is going on. Just why is BP drilling in 5000 feet of water again? Ask him, he knows.

I personally wish the moratorium was permanent; and that it applied to ANWR and all water deeper than greatest depth at which divers can safely operate. This will close off a lot of oil, that is for sure. But the externalities associated with deep water drilling are just too great. It will steepen the production descent curve we are now sliding down that is for sure, but it will not halt it, or even slow it very much. We are going to have to live with much less oil. If this even can help drive that message home to lots of people, then the cost will at least have some benefit. But this frantic attempt at maintaining BAU growth is doomed, whatever we do. We would be better learning a new narrative.

frank May 28, 2010 at 7:50 am

“Yeah right. There is of course the small problem of international law and the fundamental legal principle that nobody owns the high seas, but heck who wants to spoil the party.”

Not a great way to begin your post. You’re saying “We can’t privatise the seas, they’re not already privatised.” Hmm, where to begin with such “logic”.

skeptical citizen May 28, 2010 at 3:52 pm

Such an absurd idea. Who could rightfully own the seas anyway??

Craig May 28, 2010 at 6:29 pm

Anyway. I thought you guys believe, as a cornerstone of economic “law”, that the price mechanism will ensure supply whatever the circumstances?

Yes, we believe it firmly. Oil prices will rise and the shrinking supply will be preserved for those who are most willing to pay for it. This is actually the only economic principle that Obama has demonstrated an ability to understand.

We just don’t like the price-rising-unnecessarily part. We also suspect that a large majority of Americans won’t like it either come succeeding Novembers.

Vanmind May 31, 2010 at 10:38 pm

Of course, it is the very nob-headed notion that “no one owns the seas” which guarantees that no one will ever care for or maintain the seas for any reason. Fisheries, oil, both fine examples of what happens when The Tragedy Of The Commons destroys the incentive to be responsible for one’s own property (as there is no property and hence no admission of responsibility).

W Baker May 27, 2010 at 4:29 pm

Inevitably governments cuts their own throats. Each year the Pentagon alone consumes as much petroleum as the whole country of the Philippines. I can’t find any stats on the overall consumption of petro products by the US state. But lets just assume for arguments’ sake it’s equal to the War Machine’s consumption. (I’m considering everything from school buses to the royal fleets of jets and limos which carry the Emperor around.)

That oil’s got to come from somewhere and you can bet your last gallon of gasoline it won’t come from government-run oil wells!

Incidentally, no environmentalists, newspaper editors, talking head, etc. seem too exercised about this fact.

Tim May 27, 2010 at 7:07 pm

Oh no no no. Our glorious leaders and troops deserve all the oil and natural gas they can get their hands on. Only private civilians have no right to use Mother Nature’s resources.

HL May 27, 2010 at 8:03 pm

National Prole Radio had some talking head mention in passing that the number of rigs in the gulf exceed 3,800. Over 60 have been destroyed by accidents/hurricanes. This BP well was the FIRST major leak. Wow, with that safety record, we should be tripling drilling.

SailDog May 28, 2010 at 7:50 am

Not the first actually. 1979, Sedco 135F, 3m barrel spill, Bay of Campeche in the Mexican GOM.

Read the account in Wikipedia. Change the dates and names and it sounds exactly the same as the BP situation.

Russ May 27, 2010 at 7:20 pm

The conclusion reached here is wrong, and very poorly reasoned to boot. It is not government as such that is necessarily “destroys hope for civilization”. After all, government need not reach the conclusions that the Obama administration has reached here. It is Obama’s Chicago-style politics that is at fault here, not government in general.

Dave Albin May 27, 2010 at 7:50 pm

Sadly, Russ, most politicians do things like this. I often wonder it is just them wanting to show people they are “doing something”. For example, Republicans mess around with food and agriculture policy to show they are “doing something”. This has been discussed in the “What’s Really Wrong with the Healthcare Industry” daily article. Not to mention war, which both sides do. The worst part is that I believe that most people in government are not horrible people, just very misinformed, and want to simply be “doing something”.

newson May 27, 2010 at 8:32 pm

…”doing something to somebody” is closer to the truth.

Dave Albin May 27, 2010 at 8:48 pm

Yes, you are correct!!!!!

SailDog May 28, 2010 at 7:52 am

Well Bush did nothing in New Orleans after Katrina for quite a few days and that didn’t seem to have any positive outcomes.

Tom Woods May 28, 2010 at 8:53 am

SailDog, who was in charge of the levees? It’s very touching how committed you are to defending our wise overlords at every turn — why, we can’t survive without these gun-toting monopolists! — but you have got to be the most uncreative, conventional thinker ever to post here.

SailDog May 28, 2010 at 9:23 am

Maybe that is not the question. Why were there levees? This is just another example of the fragility of man-made structures. Maybe if we had left the wetlands in place and not built all over them, leaving the wetlands in place, to do their job, the whole disaster wouldn’t have been nearly as bad. Nature has resilience, normally with several layers of alternatives. We don’t. One levee gone and the whole thing is a mess.

newson May 28, 2010 at 9:37 am

so you don’t like venice, either?

Scott D May 28, 2010 at 5:28 pm

Saildog: “Maybe that is not the question. Why were there levees? This is just another example of the fragility of man-made structures.”

Or it might be just another example of government incompetence. There were known problems with the levees and tens of millions of dollars in needed construction work that was cut over the previous few years. Sure, there’s no guarantee that the levees would have held even with the repairs, but the risk was known, the engineers and scientists close to the problem knew about it and sought to fix it and it was ignored quite deliberately by the federal government. Google it for an interesting read.

Dave Albin May 28, 2010 at 11:48 pm

Go back further – New Orleans grew rapidly during the early 1800′s due to its importance in the slave trade, which also brought in abundant workers. Maybe New Orleans would not have “over built”, as you say, without this aggressive, horrible, legal act? And, of course, to go on, how did we deal with this – a long bloody civil war, instead of letting slavery die out naturally, as it was doing in most other places in world at that time. Read DiLorenzo’s book on Lincoln.

Scott D May 28, 2010 at 5:02 pm

“Well Bush did nothing in New Orleans after Katrina for quite a few days and that didn’t seem to have any positive outcomes.”

As an analogy, would we be better off now if, after Katrina, Bush had outlawed new construction of waterfront housing? Bush and FEMA delayed action, and when they did, they made things worse. Government failed. Obama’s actions aren’t irrelevant and really aren’t even rational. Government again failed, just in a different way.

Walt D. May 27, 2010 at 8:19 pm

The government regulators here are the proverbial “mammary glands on the boar hog” – they serve no useful function. Unlike refineries, where big oil could save costs by venting poisonous gases into the atmosphere, there is nothing to be gained by cutting corners in deep ocean drilling. Here, BP is not only out the costs of exploration and drilling – hundreds of millions of dollars, but they are out the revenues from the oil in the reservoir – billions of dollars. To claim that some unqualified buffoon from a government regulatory agency could have provided anything useful that would have stopped this disaster is ludicrous.
If the government was so good at error-free engineering we would not have lost the Challenger and the Columbia.

SailDog May 28, 2010 at 8:10 am

This is BS. Pure and simple. Government in modern economies have an important regulatory job to do. These companies flouted the rules of basic good practice. As with all major catastrophes there was a complex chain of failure that preceded the blow out. There were several red flags flying, some very vigorously and they were all ignored. It was preventable right up to 5 minutes before it happened. It was management failure and it was regulator failure. And BP liability is capped at $75m for economic damage. This is in essence a huge transfer of value to big oil, because otherwise they would have to insure that risk. Instead the people who rely on a clean environment down there have to pay. It is all barking mad.

As always the devil is in the detail, but these circumstances, where drilling for oil, an inherently risky operation, is being done at 5000 feet, the ecology of the area is fragile, where millions of people depend on that ecology for their income should be very heavily regulated, with constant inspection of everything and the ability to shut down operations. If that had been the case, sure drilling would be more expensive, both to cover the extra cost of doing things properly; and the cost of all that inspection. But it would have been a heck of a lot cheaper than the mess we have now.

frank May 28, 2010 at 8:19 am

Such accidents do indeed involve a “complex chain of failure”. This is why they happen – they invariably involve errors and/or failure conditions interacting in unforseen and unforseeable ways. Your idea that “constant inspection of everything” by a government regulator is better than what can be done by those on the site who have their jobs and indeed their lives at risk is “BS pure and simple”.

SailDog May 28, 2010 at 9:10 am

“unforseen”: not so.

Procedures and Warnings were ignored. Shortcuts were taken. Claiming it was an accident is a cop out. It shouldn’t have happened. Lots of people had their eyes off the ball. Not least the MMS.

The moratorium will provide and opportunity for a full review of all parties and their procedures.

frank May 28, 2010 at 9:27 am

Whoa there – you think you know it all, but read EXACTLY what I’m saying.

“..errors and/or failure conditions interacting in unforseen and unforseeable ways..”

The individual errors/failures may or may not be forseen or forseeable. But the specific pattern of simultaneous errors and the way in which the failure modes introduced by these interact is where you almost invariably go from problem to disasters, which are usually just failures no’one dreamed of bothering to prevent. Learn about complex systems and how they fail before lecturing people on this.

Ted Sonnier May 29, 2010 at 11:57 am

You claiming that this was no accident implies that BP did this on purpose, as that is the opposite of an accident. That BP wanted to lose millions of dollars, with the potential for billions of dollars, is ludicrous. The opportunist mouth-breathers of the government regulatory apparatus did nothing to prevent the calamity; therefore, it is obvious that just signing regulations is not enough. The liability is what is to blame here. Should BP be legally obligated to pay every cent of liability damages, and in a matter of minutes a $14 billion corporation potentially may go bankrupt with any number of problems, then the likelihood of this occurring would be much lower in probability–though not zero. Furthermore, the ecology is not what should be mourned here. It is the loss of wealth to humanity that should be mourned. This accident has destroyed potential wealth for all of humanity, and instead of this accident’s burden being distributed throughout the the area and onto the taxpayers, the burden of liability should rest solely on BP, or whomever the courts decide is liable through fair hearing (and I shudder). The $75 million cap imposed by government and the moral hazard that comes with it is what is to blame.

Donald Rowe May 28, 2010 at 8:56 am

“Government in modern economies have an important regulatory job to do. … And BP liability is capped at $75m for economic damage.”
Perhaps this limit of liability happened by magic, but I am not convinced.
You appear to be a bit too willing to overlook a problem caused by the entity you defend. I claim no special knowledge about the cap you mention but, and I’m going out on a limb here, perhaps that limit of 75 million dollars had a wee bit to do with the decision process.

SailDog May 28, 2010 at 9:16 am

If you think I am defending BP, I am not. They should be made to pay, not only the damages, but punitive damages on top as well, even if it bankrupts BP. The head of the MMS has already rolled. Others should too..The cap appears arbitrary. It is actually there to increase “competition”, because otherwise these complex operations would be restricted to the majors; and the government wants the small companies to have a go. I am not sure that externalising the cost of the risk is the way to go though.

frank May 28, 2010 at 10:15 am

“It is actually there to increase “competition”, because otherwise these complex operations would be restricted to the majors; and the government wants the small companies to have a go.”

Reference and some logic please, not unsubstantiated assertions.

Donald Rowe May 28, 2010 at 10:49 am

“If you think I am defending BP, I am not.”
I apologize for my lack of clarity. I assumed it was obvious that you were not defending BP and allowed imprecision. I should have taken the time to write, You appear to be a bit too willing to overlook a problem caused by the entity government you defend.
“The cap appears arbitrary. It is actually there to increase “competition”, because otherwise these complex operations would be restricted to the majors; and the government wants the small companies to have a go.”
Since I lack any information about said cap, I will file that information under “pending confirmation”, but in all probability I will simply forget it entirely. (Wait, I do recall hearing rumors that one day BP may become a “big oil corporation”.) I will try to remember that it was my government that established said cap. I’d better write it down on paper.
“The head of the MMS has already rolled.”
Figuratively, I hope! Things haven’t gotten that bad yet, have they?
“Others should too…”
What does that little ellipsis, “…”, mean in that sentence? I do not want to make any unwarranted assumptions about this. Do you really have information that could lead to the “head rolling” of others in the Minerals Management Service (MMS)?
“I am not sure that externalising the cost of the risk is the way to go though.”
I agree with you that that question may be worth pondering. Unfortunately, it would be just a waste of time in this case because the decision has already been made. You were not consulted either, I presume.

Vanmind May 31, 2010 at 10:48 pm

“…an important regulatory job”

There is no such thing unless you’re one of the socialist cronies benefiting at everyone else’s expense.

Gil May 27, 2010 at 11:35 pm

“. . .big oil could save costs by venting poisonous gases into the atmosphere . . .”

Charming!

newson May 28, 2010 at 1:52 am

“. . .big oil could save costs by venting poisonous gases into the atmosphere . . .”

…but don’t. it’s called an hypothetical.

SailDog May 28, 2010 at 8:13 am

…..but don’t. It is called regulation.

In Nigeria on the other hand Shell routinely vents poisonous gas into the atmosphere. Rates of cancer and other serious sickness are very high near oil production operations.

Tom Woods May 28, 2010 at 8:56 am

SailDog, that is merely the protection of life and property against aggression. Your statement is like saying that laws against murder are “regulation.”

SailDog May 28, 2010 at 9:04 am

Exactly, but it does need regulation, just as drilling for oil needs regulation. Because it is dangerous; and many people stand to lose if the driller screws up,

Michael A. Clem May 28, 2010 at 9:41 am

Okay, let’s say that it DOES need regulation–regulation just means a set of rules for handling various processes and situations. Exactly why is the government supposed to be the organization that does the regulation? What are the incentives and feedback for government regulators? How do they know when they regulate too little or too much?

HL May 28, 2010 at 11:02 am

Your conclusion does not follow from your proposition. Who says the regulators do anything useful. Having dealt with “regulators” quite a bit professionally, I can assure you they are mostly deadweights who add to the risks. Purely theoretically, there is absolutely nothing to support the idea a guy with the badge “regulator” is in any better position to evaluate risks than the guy wearing the badge “driller.” Period.

Thinker May 28, 2010 at 11:37 am

SailDog, could you please name a necessary regulation that could not be replaced with a private apparatus coupled with a tort system? Inquiring minds want to know.

newson May 28, 2010 at 9:41 am

nigeria just needs to implement murder laws to solve their crime problem.

Dave Albin May 28, 2010 at 11:34 pm

BP, Transocean, et al., had zero incentive for this to happen. They may very well not survive this, at least in their current forms. If one of these companies had owned where they were drilling, I would think they would have been even more careful so as to not destroy their property. But, they don’t own it, so they can suck all the oil out of the ground and move on, not caring what is left behind. Of course, they may not have cared a little too much this time………..

TokyoTom June 8, 2010 at 5:14 am

“But what strikes me as just how willy nilly the state acts toward the goods and services that fuel civilization itself.”

rarely been more obvious, day to day, that the machinery of the state, while pretending to be the caretaker of mother earth, only destroys hope for real human beings.”

Jeffrey, how true – but how ironic and sad that, like Lew, you only look at the potential impact on US consumers of Obama’s much, much, MUCH delayed action to suspend consideration of applications to drill in the Arctic (and now elsewhere on the OCS), but ignore the PRESENT and very real impact of incompetent and corrupt government management of all of the others who live in, on and draw their LIVELIHOODS from the Gulf of Mexico commons that are now being despoiled by the BP spill. I mean, aren’t losses to fishermen and others in the Gulf region staring us in the face?

See, e.g., the reports here on marginalized fishermen
http://twitter.com/Tokyo_Tom/status/15689063688
http://twitter.com/Tokyo_Tom/status/15689222932

And it’s a shame that, rather than float ideas on how to end the Tragedy of the Government-Owned/-Managed Commons – such as expanding fishermen’s rights to manage Gulf resources – you see fit to suggest that the real solution lies in more Avatar-like Drill, Baby, Drill! resource exploitation under the current and obviously flawed rules.

As for the rest of you, generally my disappointment with shallow, partisan thinking continues. Perhaps a cut and paste from a recent post will serve? http://mises.org/Community/blogs/tokyotom/archive/2010/06/04/as-bp-39-s-oil-spills-into-one-of-those-inconvenient-quot-ecosystems-quot-now-even-reason-tv-rants-about-quot-dying-oceans-quot.aspx

I continue to scratch my head on the knee-jerk reactions by Austrian-libertarians on problems regarding managment of common resources: are not our physical and electronic communities commons? Don’t commons support many people directly, and us all indirectly? Aren’t there huge and obvious commons-related problems that stem from government ownership and “management” of resources – be they federal lands, the seas, our fiat currency, or our financial institutions and publicly-listed companies?

Don’t we all know that government gets in the way, frustrating the ability of people with differing preferences to search for and reach mutual accommodations, and instead putting them at loggerheads in zero-sum situations?

The unbecoming reflexive hostility indicates that even those who think they have their thinking caps on cannot see past the partisan conflict that government itself generates.

Kind regards, your resident Austrian misanthrope,

Tom

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