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Saturday, March 5, 2011

The BP Oil-Rig Explosion: Did the U.S. Government Over-Reach?

A month into the BP oil spill in the Gulf of Mexico, some commentators began to wonder out loud whether the US Government ought to take over for BP in stemming the leak. As frustrated as those commentators were at BP–after all, the oil company had shirked safety procedures and lied about having the technology to manage such a spill–they had to admit that the US Government did not have the technical expertise to divert or shut off the oil.  For better or worse, we had to rely on BP in capping the leaks.

Having to rely on the culprit to solve the problem and clean up the mess sounds a bit like how the financial crisis of 2008 was managed.  In other words, we have managed to become dependent on firms such as Goldman Sachs and BP even where they are the culprits.  To be sure, government is an authority or umpire in society, not a producer.  To treat government as a business evinces a category mistake of sorts. Were it to operate as a producer, there would be a conflict of interest in its governmental capacity because it would be inclined to favor itself even as its umpire function requires having an even hand. It is also a cateogory mistake to treat a business as having a governmental capacity.  Hence, we don’t want the banking or oil lobby running Congress.

Rather than become an oil company, the executive branch of the US Government ought to concentrate on better organizing itself in its umpire capacity. In particular, the Department of Homeland Security (i.e., the Coast Guard), the Energy Dept, and the Interior Department each had a ball in play as the oil spill unfolded. Hence the umpire could not speak with one voice, as the US President must rely on someone to handle the day to day umpiring.  We couldn’t very well have the President living on the Lousiana coast as the oil leaked.  Having too many cooks in the kitchen makes for confusion. The relevance of the Interior Department alone is debatable, as the spill did not take place in the interior. Even so, the administrators were falling over each other in positioning themselves. Advocating that the government take over from BP would only multiply the harmful effects from the confusion that is immanent in the branch’s structure.  I would even contend, moreover, that the US President should concentrate on governmental domains in which the several states cannot act (even if some won’t!), rather than wading into every problem.

In short, the US Government can’t do it all, hence it shouldn’t try. Where it is the only umpire in town, such as out in the Gulf, it should concentrate on being a good umpire. This includes not only simplifying its own organization (in the exec branch), but also keeping itself from being unduly influenced by business so it can be an effective umpire.  Allowing Wall Street to have influence over the writing of financial regulation (or oil companies in MMS) not only compromises the government’s umpire function, it also permits sordid companies to exist, and thus to potentially be relied upon in stopping the leaks whether in the financial world or in the Gulf.  The US Government ought to concentrate its power so it can be a viable umpire, rather than allowing itself to become a confused sieve.