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Posts Tagged ‘government’

A while back I wrote about Toyota and the question of whether the free-market may have failed in regulating itself by the presence of the safety failures that occurred in their cars and trucks.  And now we are facing back-to-back tragedies with the mine explosion in Virginia, and now the BP oil-drilling rig explosion in the gulf.  Both companies had numerous fines and citations to their record (but, ironically BP was up for two government safety awards meant to be held this month).  So what is the deal here?  Has regulation failed?  Capitalism?  Does it all boil down to greedy CEO’s?

I would say a little bit of it all… plus other intangibles.

Did regulation fail?  I’m thinking, yes.  How exactly is it that a company receives 500 citations and fines a year and is continuing operations?  Look at the mine example:

Among the hazards are infractions related to air quality; development of a mine ventilation plan; equipment testing; and accumulation of combustible materials, such as coal dust, according to U.S. Mine Safety and Health Administration records.

As production at the mine has increased, so, too, have the violations.

In 2008, the mine produced 363,923 tons of coal and received 197 citations. Last year, it produced 1.2 million tons of coal and racked up 515 violations, the highest amount of violations in the past decade. The proposed fines for those violations amount to nearly $900,000.

I understand that companies are able to appeal certain decisions, and continue operating while working on citations.  But perhaps there should be a limit to that – say your first 20 violations?  I’m not completely versed in this world, so perhaps these are tickey-tack violations that should not disrupt the flow of operations… but they sound pretty big to me.  I’m curious if there is a combination between owners bent on profit, regulators enjoying revenue from fines opposed to work-stoppages, and some serious connections to lobbying efforts in DC to keep things running smooth.

BP meanwhile is an interesting study.  The CEO of BP had apparently done great work in the name of increasing their safety record and costs.  And the oil rig belonged to a contractor, not BP, though the British giant certainly is the overall boss here.  But this case includes not only loss of life, but an extreme environmental catastrophe with a deep-water gusher spewing out thousands of barrels of oil a day into the gulf – with no convenient way to stop it.  So, again… who or what deserves the blame?  Again, I will have to say I don’t know.  But I’m inclined to think it is dysfunction between government and business.

It’s not business completely, because there are lots of companies out there that have sterling reputations for safety and low accidents – so why should these bad examples eliminate the good ones’ self-regulating behavior?  It’s not government completely… they are finding the issues many times.  As I was talking to my brother this weekend I was discussing how libertarian’s are not anti-regulation, or law.  That’s anarchy – rule of law is entirely necessary even in a limited-government view.  My problem with regulation is more typically reserved for personal liberties (such as the ability to smoke, or ride a motorcycle without a helmet) that over time serve to create a nanny-state that creates even greater dependence on government and absolution on personal accountability.  The ability of a government to safeguard our coastline from anybody drilling willy-nilly is not something I oppose.

I think the overall failure could in the area of follow-through.  If your punishment for an infraction is a fine not a fix, then expect people to often just pay the fine.  If your punishment is an order to fix something within a year… expect it to take a year.  I don’t think we need new regulations per se, just better and stricter enforcement of the ones we have – a similar argument to that of our immigration laws.  Bernie Madoff was flagged for his investment scheme – but without follow up.  Massey Mines was flagged but allowed to continue operations.  Deepwater Horizons (the leased rig at the center of BP’s problem) had a history of issues… but was not considered above average by any means, and hadn’t had a reported issue since 2005.  I would say that is pretty successful, but when dealing with oil and environment perhaps even one issue can be one too many.

This is a more fully nuanced discussion than we can have here… but the fact remains, these are tragic events and we should rue them happening.  Where the problem and solutions lie I think is not entirely in one camp, but a failure of many… as is the case quite often.    But be sure, that despite where the fault completely lies… the financial cost of all this will be borne by Massey and BP, not by the United States government or any regulating body.  Which in my mind causes me to think the companies needed to do better to stave off these accidents, and that their share of the fault is higher than any other entity I could drum up.

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In my continuing tirade against government and my love affair with libertarianism – wink wink Sgt. Grumbles – I present to you this article from Fox News (gasp) about the coal-fueled power plant that powers Capitol Hill:

On Friday the House announced that it was abandoning its goal to be carbon neutral and would no longer buy offsets to make sure it was removing as much carbon dioxide from the atmosphere as it releases. Those offsets were key to zeroing out the remaining emissions at the power plant that could not be reduced by other means.

They have been trying to reduce the carbon dioxide release at this facility for a long time, potentially using carbon sequestering, but the costs ($112 million) were deemed too high.  And further, as the article goes on to say about the offsets:

…the House said it would no longer purchase offsets because there is no way to verify whether the investment actually results in carbon neutrality.

So, this relatively small plant that powers Capitol Hill alone is too expensive to be converted to the ideals of government and global warming alarmists… and the very cap & trade system that is touted by them is abandoned as unverifiable?  But every other power plant that actually powers entire cities should be able to make this happen no problem?

As you may know from other posts, I am very much in favor of changes and advances that help reduce pollution and waste in our country and the world.  This is an area that I am not fond of though, because of my skepticism of CO2 being a culprit of climate change (see this post).  But my main contention with this post is just to point out that I find it revealing whenever our government asks of the nation to do things that it won’t or can’t do itself.  The amount of money being lobbed around as needed for stopping CO2 is insane, and will be unforgivable if a time ever comes where consensus is shown against CO2 causation.

UPDATE: Powerline has a timely post about Obama’s CO2 cap & trade.  The stats on CO2 and evolution are very interesting.

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I was recently finishing up a book called The Top Ten Myths of American Health Care by Sally C. Pipes, and was struck by two examples that were brought up in regards to mandates ordered for the good of public health and what the perceived results were.

One, was the Nutrition Labeling and Education Act of 1994 that mandated nutritional and caloric info be printed on all food products.  The argument was, if people knew what they were eating, they would eat healthier.  As the book points out, from 1995 to 2007 “the percent of obese Americans increased by two-thirds.”

Second, was the example of the educational efforts at informing Americans of the hazards of smoking.  Pipes includes this quote from Dr. Daniel Horn who said, “You could stand on the rooftop and shout ‘smoking is dangerous’ at the top of your lungs and you would not be telling anyone anything they did not already know.”  In fact Pipes references a study that show smokers overestimate the potential health risk, with the average smoker reckoning their risk of developing lung cancer at 43 percent, when it is actually between 5-10 percent.  So even when people are theoretically “over-informed” on a hazard, they may still well participate in it.

These are clearly not proven causal reactions, but are certainly indicative of the fact that government intervention is not a panacea for poor public choices.  These two examples (along with our cigar smoking post) caused me to try and think of other areas where mandates for the public good go unheeded.  A few quick ones off the top of my head are:

  • Auto Insurance – Around 14% of drivers are uninsured despite the law requiring it
  • School truancy – By law children of a certain age are required to be in school.  However a quick search of truancy rates in public education will show that behavior does not follow the law
  • The Tax Gap – Close to $300 billion a year is estimated to be owed, yet unpaid, to the government.  There is good proof that as taxes increase people’s tendency to evade or avoid paying taxes increases
  • California cellphone law – Anecdotally, from what I see on the freeway and roads, I can attest to a severe refusal to obey this law
  • Long Beach water prohibitions – Again, anecdotally, I can tell you that people do not follow the rules laid out by the Board of the Long Beach Water Commission, such as times to water lawn, use of hoses for car washing, etc… despite our extreme water situation

I certainly don’t mean to imply that we should rid ourselves of all laws because they aren’t all followed 100% of the time.  I mean this just to show the gut reaction to regulate something does not necessarily produce the desired results.

That said, I would love for us to start to peel back some of the laws that affect personal liberty (ie. helmet laws) and exist solely to “protect” the very individuals that they regulate.  Would love to see more thought/examples in the comments.

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Classical Education

Walter Williams has a column today about a survey conducted by the Intercollegiate Studies Institute (ISI).  ISI surveyed people about “basic” civics questions, such as about the constitution, or congressional powers, Abraham Lincoln quotes, etc.  The findings are less than impressive, and Williams expresses his concern that when people don’t know what the government’s rights are, then people are liable to let government take over many concerns that aren’t their responsibility.  His column poses two concerns – 1) That our educational system is dysfunctional (correct), and 2) That we should be wary of government intervention (also correct).

While I almost always agree with Mr. Williams, I have to say that I don’t think government intrudes on us because people aren’t educated enough to realize they have the power to stop them, but because people actually think government performs better than it actually does and so they allow it more area of influence.  Which is a paradoxical point that many of my friends and I talk about.  Many of the same people that would welcome government control over many aspects of our life, are the same people who will consistently complain about the DMV, or the police, or lack of response to fix your curb, or high taxes, or public schools, and any number of things.  What makes people think that the group that is so delinquent in handling your problems in these areas are going to be magic when handling health care, or the economy?  I find that a strange disparity that goes unacknowledged quite often.

Ummm... your name is Joaquin actually.

Ummm... your name is Joaquin actually.

As for education, I would wholeheartedly agree with Mr. Williams that it is in a sad state.  And I am willing to put myself in the category of uneducated as well.  Many of these polls or surveys they conduct I might possibly score poorly on – while studying for the GMAT I was reminded how much I had forgotten about grammar and algebra.  Our standards have definitely changed and not for the better.  You can find endless amounts of material on what the average 8th grader knew in 1950, that the average collegian doesn’t know now.  If you read the biography John Adams by David McCullough (fantastic! highly recommended) there are many letters reprinted in it from John Adams son John Quincy to his father.  I was blown away by the letters.  John Quincy wrote more eloquently and succinctly at 10 years old then I could even try now.  The book points out how important education was to that family and what strictures they were put under to learn.   There may be many reasons that our educational standards have changed, but the fact is it is easier to get high school and college diplomas now then ever before.  I’m inclined to think it might not be a bad thing to look back to our past for lessons, rather than always trying to come up with new progressive philosophies on how to teach.

More to come on this topic.

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