Can Obama plug the hole?

The Gulf oil spill is producing two crises. The obvious one is the disaster with coastal fisheries, but it poses an ideological crisis as well. For liberals, government is supposed to be the solution to all problems. The oil spill is a big problem. So if the government is impotent in solving it, what does that say about the possibilities of government? If the oil spill is a problem that government cannot solve, might there be other such problems? That thought is too horrible to contemplate.

It is boldly apparent that government cannot plug the hole. The government does not have the technology, the expertise, or the equipment. If government did have the technology, expertise, and equipment that would mean that those resources had been diverted out of the productive private sector into the non-productive government sector. That’s not a good idea. People who know how to drill for oil ought to be left to do that, not put behind desks in faceless bureaucracies.

Every time government fails, the outcome can be spun as (a) poor leadership in government, (b) not enough regulation, or (c) regulators tied being too lax because of industry ties. Katrina was a disaster, the Left would have us believe, not because it was a large hurricane striking New Orleans, but because George Bush provided poor leadership. The bust in the housing market was supposedly due to not having enough regulatory laws, so Congress passed new laws regulating largely-unrelated activities — as if the weight of the paper the laws are printed on suppresses underlying problems, never mind the relevance. Airline crashes are supposedly due to cozy relationships between the airlines and government regulators.

In a pinch, there are two more options: (d) increase the number of regulators, and (e) ban the activity altogether. Increasing the number of regulators is surprisingly unpopular. That is because the notion on the Left is that not only is government all-knowing and good, it accomplishes its work cleanly and efficiently. That’s nonsense, but it is part of the ideological package. There is a final method of preserving the good name of government. What happened as a consequence of the Bernie Madoff scandal? There were plenty of laws and plenty of regulators; the regulators looked at Bernie’s operation. He simply scammed them, with surprising ease. So were the regulators all fired? Was there a call for a private rating agency to be set up, like the bond rating companies? No, as a lesson in government, it was ignored. The final refuge is to ignore the lessons of failed government.

Now here comes the oil spill. It was the consequence of chance events accumulating, typical of the scenario behind many air crashes or auto accidents. The oil companies suffer tens of billions of dollars of financial loss when such events occur. The financial penalty is so great, it is unrealistic to suppose that adding some additional regulatory hoop to jump through will make much difference. If a ten billion dollar penalty doesn’t work, would ten billion plus an official reprimand turn the trick? the situation is different if it involves companies that cannot cover the risks they take. Big oil covers their bets.

Obama cannot plug the hole and he has, correctly, said so. That is not a satisfactory answer for the Left, because it is contrary to the ideological principle that government ought to have the solution to every problem. Insofar as the reality penetrates that government cannot prevent oil spills, the leftist alternative is option (e), ban drilling. In this particular case, decreasing domestic oil production means that much more will be imported by tanker. Oil well blowouts are rare. Oil tankers are probably no safer.

I am all in favor of technology as a way to solve problems. Whatever the causes of the BP spill, they ought to be investigated and a solution put in effect. It is virtually impossible to stop a solution from being found, government or not. Oil companies are no more fond of losing tens of billions than anyone else — well anyone else in the private sector. My objection is to demands for complete safety, guaranteed by government as a sure thing. We should minimize risks and then get on with living. In that respect, it is like airline crashes or auto accidents. Auto crashes take over 30,000 lives a year in the U.S., and despite seat belt laws and all else, government cannot completely solve the problem.

I think there is a role for government in cleaning up the mess, though it would be better if it were accomplished through an industry consortium. Oil spills are so uncommon that it is inefficient to demand that each company be independently prepared to handle every contingency. Obama can be held accountable for management of the clean up, but, hey, we are dealing with government and government is inherently inefficient.

We should accept that life involves risk, and not expect government to remove the risks. So find a way to prevent blowouts like the BP one, and get on with drilling.

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