Who is to Blame? Making Sense of The Gulf Oil Disaster

After the American Century

I gave an interview to the New Orleans Times Picayune a few days ago. The reporter was rightly interested in the American tendency to believe that all problems have technological solutions. If oil drilling technology created an underground gusher of oil, surely some other technology ought to be able to stop it. And if the solution was not found quickly, then it must be someone's fault. Lately the media has been debating whether it is the President's fault.

Karl Rove - surely the least trustworthy man in American politics - has made the argument that the oil leak is "Obama's Katrina" -  one of the most idiotic arguments ever. But logic has never been the strong point in American politics, and perhaps not in the education of journalists either. So let us do a comparison of Katrina and the oil leak, and see how well they compare.

Katrina was a hurricane, and the last time I checked that makes it a natural phenomena, of the sort known often to hit Louisiana. The federal government had spent years making plans and building defenses to protect New Orleans against a category 4 or 5 hurricane. However, the Bush Administration cut back funds to improve the levees around New Orleans, and George W. Bush specifically appointed a political hack as chief administrator to deal with such crises. The entire world knew that Hurricane Katrina was headed for the Louisiana coast, and the failure of the local, state, and federal authorities were many, both before and during the disaster. People died because of their incompetence, not least in the evacuation of the city.

A deep-water oil drilling disaster is a man-made phenomena. Moreover, no one saw it coming on a radar screen for days beforehand, as was the case with Hurricane Katrina. The explosion, fire, and oil leak resulted from the failure of a new kind of oil drilling, and unlike a hurricane, the specific accident was not foreseeable days in advance. The permit to do this kind of drilling came from the Bush-Cheney government, and it is worth noting that both Bush and Cheney worked as executives in the oil industry before coming to Washington. 

In contrast to a hurricane which is beyond human control, oil drilling is a human activity, in this case run by British Petroleum or BP. They were responsible for building the platform, and drilling from a point that was about one mile down in the ocean. BP was present at the site before, during and after the accident and "leak", so one might think that BP and more generally the oil industry, is to blame. People died because of BP's incompetence, but no one died because of anything Obama has done in this matter. 

Moreover, the oil industry gave the federal government assurances that deep water oil wells would be safe. Perhaps they lied, perhaps they are just incompetent, but one thing is certain: the oil industry was a whole was not ready to deal with the disaster. They failed to make contingency plans. They failed, in effect, to construct the protections, the levees if you will, that were needed. The oil industry was not prepared to defend the shoreline or the fishing industry against a massive oil spill. The oil industry decided, as it usually does, to put profits first.

And speaking of profits, BP had a profit of more than $4 billion in the fourth quarter of 2009, and it made even more in the first quarter of 2010, a rather tidy $6.1. That is more than $10 billion in the last six months. Why is BP making so much money? The price of crude oil has almost doubled in the last year, but the cost of extraction has actually gone down slightly, (see CBS news). BP, which is not even the largest or most profitably oil company, could have afforded to make contingency plans. Exxon made a profit of $45 billion in 2008 and continues to rack up big profits. If such companies cared about more than the bottom line they would have jointly funded a permanent task force  that is always ready to deal with oil leaks and spills. The oil industry could have been prepared. Instead, they just kept drilling and hoped to pass on the bill, and the responsibility, to someone else.

Yet even had they prepared, and this was my point when speaking with the Times Picayune, Americans tend to think that there is a technological fix. Not all problems can be quickly solved, and not all powerful natural phenomena can be stopped. Human beings might be able to provoke a volcanic eruption, but we cannot stop one.  BP opened a hole that let the oil escape into the Gulf of Mexico. Plugging that hole is harder than drilling it in the first place. Tampering with powerful natural forces can get us in over our heads, and Americans need to understand that  smart technology may not always be immediately available to get them out of trouble.

So, blame the oil companies for not being prepared, for not investing very much of their enormous profits in accident prevention or oil leak protection. Blame the Bush-Cheney oil-friendly administration for allowing this kind of drilling in the first place, and for not assuring that the safeguards were adequate. But do not imagine that just because human beings can create a problem, we can always create a solution. As our technologies grow more powerful, the responsibility to use them carefully increases exponentially.

If you want to read more along these lines, most libraries have a copy of my Technology Matters (MIT Press, 2006).

After I wrote this blog, BP admitted that it did not have adequate technical know-how to deal with the problem they had created.

Sonia Sotomayor: Superbly Qualified

After the American Century

President Obama has named Sonia Sotomayor as his first nominee to the Supreme Court. It is a good choice. Many are saying it is a good choice because she is a woman, because she is Hispanic, because she is in favor of affirmative action, and because she has risen from humble origins, making her personally aware of the hardships faced by the poor in American society.

This is all well and good, but I applaud her nomination for a different reason: because she has the right credentials. Sonia Sotomayor is very bright. She went to Princeton on a scholarship and graduated summa cum laude. For those less familiar with the American education system, this means that she was at the absolute top of her class, receiving high grades in a wide range of subjects as part of a liberal arts education. Then she went to Yale law school, where she again excelled, becoming an editor of the law journal. Even to make law review at all would have been a great accomplishment, but to be selected as an editor means that she was judged to have the capacity to grasp a wide range of legal issues and to prod some large egos to work together. All of that bodes very well for a future Supreme Court justice.

In short, I am tired of hearing that someone will be good at a job because they are of a particular gender or social background. Relevant? Absolutely. The decisive factor? No. Want proof? Consider Clarence Thomas, an African American who rose from humble origins to become a mediocre justice (at best), appointed by George Bush, Senior. Or that pathetic female nominee, Harriet Miers, the evangelical Christian tort lawyer that George Bush Jr nominated but had to withdraw because even his own party could not stomach her. We need smart, hard-working justices, not party hacks who provide the illusion of diversity. Most of the issues that confront the Supreme Court are not about abortion or race, but about extremely complex legal problems, that have to be understood in terms of the continuing interpretation of the Constitution during the last 220 years. I want to see people who have exception talent and also worked exceptionally hard, and so graduated summa cum laude on the Court. Sonia Sotomayor is one of those rare people.

Just as importantly, Sonia Sotomayor has years of practical experience. She has worked in a district attorney's office, prosecuting cases of theft, murder, robbery, rape, and child pornography. She also has worked as a lawyer in private practice, and she knows a good deal about intellectual property law, which is a burgeoning area where many cases are likely, because digital technologies demand new interpretations of the legal tradition. Most importantly, she has been a Federal Judge, nominated first by that notorious radical George Bush Senior, and later promoted to her present position in at the United States Court of Appeals by Bill Clinton.

The Senate approved her elevation to this new position by a more than 2 to 1 majority, which in 1998 included many Republicans, notably Orrin Hatch, hardly a lefty or a liberal. Conceivably the Republicans will try to mount a challenge to this appointment, but Sonia Sotomayor probably is more intelligent than any of the people who will be questioning her at the confirmation hearings. If the Republicans want to get something out of this, they probably ought to celebrate the fact that Sonia Sotomayor entered the judiciary because a Republican president appointed her. The recent Republican project of self-destruction (by appealing to the rabid base and alienating moderates) may not be quite over yet, however.

However, it also seems likely that, unless some fantastic revelation comes out in the hearings, Sonia Sotomayor will soon be on the Supreme Court. She deserves to be there because of her excellent education and experience, and not merely because she is a woman or a member of a racial minority. And since she is 54, one could hope to see her on the bench for two decades.

Obama's Tax Plan Would Increase Equality

After the American Century

President Obama has been forced to spend much of his first month in office dealing with Bush's mistakes, particularly economic mistakes. With the submission of a new budget proposal, however, he has begun to present his own vision. He does not want to spend all his time being a fireman putting out Republican fires. Rather, he wants to redesign the economic fabric so that the economy is stronger and more resilient.

In the short term, Obama is spending lavishly to try to escape the mess Bush created. That is the gigantic budget one reads about. But longer term Obama wants to return to the tax system of that most dangerous radical, Dwight D. Eisenhower. During Ike's presidency (1953-1961) taxes on the wealthiest Americans were high, and although adjusted they remained so during the 1960s as well.

During these years the real income of the middle class (in other words their income once adjusting for inflation), rose steadily. After the weak economy of the 1970s, however, Ronald Reagan pushed through dramatic reductions in the tax rate on the wealthy, which began a sizable redistribution of wealth that has lasted for almost thirty years. I lay out the basics of this change in Contemporary American Society (161-166). Just before Reagan lowered taxes on the wealthiest Americans, the top fifth of all US citizens received 43.7% of all income, while the bottom fifth got just 4.3%. In other words, the top fifth made ten times as much as the bottom fifth. By 2005 the poorest fifth had sunk to just 3.4%, while the top fifth received 51.3%. The top fifth made fifteen times as much as the bottom fifth.

What about the middle 60%, the second, third, and fourth fifth? During the same 25 years all of them, the entire middle class, lost out to the wealthiest fifth. In short, between 1980 and 2005, fully 80% of all Americans saw their share in the nation's wealth drop.

With the collapse of the Reagan-Bush economy and its favoritism for the rich, it is time for a new tax code. Something radical. Something that Dwight D. Eisenhower and Harry Truman each supported. That something is familiar to anyone in Scandinavia, and is called progressive taxation. The object of public policy is not to take money from the poor and middle class and give it to the rich, but to give all classes an equal chance to increase their stake in society.

Expect to hear howls of protest from the Republicans and cries of socialism and fears of big government, and the usual rhetoric of the right. For Obama wants to reverse the Reagan revolution. He wants not just to end the Bush tax cuts that threw the budget into deficit years ago, but also to raise taxes on the top fifth of society, in order to pay for the sweeping changes he wants in energy policy, education, and medical care. Over the next decade, Obama wants to get almost $1 trillion in new taxes from the wealthiest Americans. In case you want to know, they are defined as people with incomes of more than $250,000 a year. (More than 1.4oo,000 DK).

Obama is also hoping to save some money through cuts to the Defense Department, partly from winding down the engagement in Iraq and partly through cutting spending on programs that have outlived their usefulness with the end of the Cold War. I wish him luck but am not too optimistic about this phase of his plans. One would have thought that the fall of communism might have reduced defense spending drastically. Back in c. 1990 there was lots of talk of a "peace dividend." There was talk of spending more money on infrastructure, notably decaying bridges and roads. But there was not much of a peace dividend then, and Obama's first defense budget is larger, not smaller, for the two year period of 2009 & 2010, weighing in at a gigantic $1.3 trillion.

Realistically, Obama is more likely to move in the direction of fiscal responsibility via higher taxes on the rich. He will probably be accused of class warfare, but he is trying to end the pillaging of the poor that began under Ronald Reagan. Obama is rejecting "trickle down" economics. He wants the US government to take more responsibility for health and education, and to give Americans back the growth and equality they had in the prosperous 1950s and 1960s. No doubt he will be called a radical and a socialist for trying to do this. Few sensible people ever mistook Dwight D. Eisenhower a socialist.

For a Nobel Prize-winning economist's positive evaluation of the Obama budget, click here.

Obama and the Bush Economic Legacy

After the American Century

The final debate is over, and again the American public has said in polls that Obama won. He has defeated McCain now three times, by a wider margin each time. Joe Biden also defeated Sarah Palin. If this were the World Series, then at 4 - 0 it would be all over. But there are 18 days or so left, when conceivably the Republicans can pull some improbable rabbit out of their economy-battered hat. I doubt it, however.

One thing that has become quite clear in these encounters is that Obama is not easily ruffled. Throughout the campaign, whenever McCain let off a nasty remark or a made an attack, Obama remained cool, even-tempered, often smiling. Voters clearly prefer a man who remains dignified to one who is irate, one who has specific proposals to one who mostly repeats the same generalizations over and over. (See, for example, McCain's utterly vague remarks on Social Security in the second debate.)

It also seems likely that McCain's endless claim that Obama was going to raise taxes simply did not convince anyone, even "Joe the Plumber" in Ohio, who, it now turns out, is not a plumber after all. What I do not really understand is why the Democrats have not said more often that all they want to do is go back to the tax system that worked so well in the Clinton years. No need for fancy explanations, just say the truth, that Bush lowered taxes on the rich, creating a deficit for all Americans to pay off.

While Obama seems likely to win the election on the economy, however, the financial mess he inherits is daunting. I checked the statistics today, and it is absolutely true that the average American, white or Black or Hispanic, lost real income during the Bush years, even before the current financial collapse. According to the Statistical Abstract of the United States, from 2000 until 2005, the average white family lost $1,300 in annual income, in constant dollars. It was worse for African-American families, who averaged a $2,700 loss, and they were starting from a lower income to begin with. For Hispanic Americans the loss was "only" $1000. They did a bit better, on paper, but bear in mind that the undocumented immigrants, of which there are an estimated 10 million now, are largely Hispanic, and they get the lowest wages.

These losses continued in 2006, 2007, and the present year, so that the average American quite literally has been worse off because of George W. Bush's tax policies combined with no real support for unions or for a higher minimum wage. Indeed, as many commentators have pointed out, the Bush Administration oversaw the redistribution of wealth to those who least needed it. The poorest 40% of the American population, who are largely working poor and lower middle class, collectively got more than 13% of all income in 2001 when Bush took office. By 2005, however, this hard-working group, whose health care expenses shot up far faster than inflation, were collectively much worse off, with only 12% of the total income. While they were falling, the next 40% was holding even, i.e. keeping the same share as before. The only group that was getting higher incomes after Bush were the top 20% of wage-earning Americans. This is nothing short of a disgrace, when the economy as a whole was doing well (until two months ago). But it may be hard to redress this economic injustice when the economy is in recession.

Should John McCain somehow win, of course, the unfairness will worsen, and class discrimination continue. It was quite ridiculous to hear McCain call Obama's tax plans a form of class warfare. The unfairness began in 2001, and the Republicans knew exactly what they were doing. If they were honest, they would admit that their fantasies of a deregulated economy lifting all boats led to a tsunami of bad debt.