I'm curious what Jonathan thinks of this. Citgo and Exxon have the same liability as BP, the same regulations and laws. It seems to me this has nothing to do with tort law or whatever else you want to finger, and everything to do with reckless, criminal disregard for basic safety. Tort law doesn't make these problems go away. You don't take murder and rape laws off the book and just let tort law sort it out. Why? Because compensation for crime doesn't decriminalize the act, nor does it provide a license to commit these acts so long as they're compensated."BP's safety violations far outstrip its fellow oil companies. According to the Center for Public Integrity, in the last three years, BP refineries in Ohio and Texas have accounted for 97 percent of the "egregious, willful" violations handed out by the Occupational Safety and Health Administration (OSHA).
The violations are determined when an employer demonstrated either an intentional disregard for the requirements of the [law], or showed plain indifference to employee safety and health."
OSHA statistics show BP ran up 760 "egregious, willful" safety violations, while Sunoco and Conoco-Phillips each had eight, Citgo had two and Exxon had one comparable citation."
I was thinking about the property rights issue more too. How can this really solve a spill in the Gulf? How would property rights be divided up? Would everyone in the world get their own little segment of the ocean? The point is we enjoy and utilize these resources in common. A public beach that everybody shares is qualitatively different from 3 square feet of beach assigned to each person. Commodifying the beach like that by assigning private property rights (1.) devalues it, and (2.) completely misses the point that we collectively enjoy the beach in its entirety - not a small section of it. We want certain things to be common property, and the seas are common property in this sense. We make rules so that we can all have the opportunity to extract resources from common property, sail on it, swim in it, etc. We make rules so that those activities can go on smoothly. How does giving BP property rights to the Gulf solve any of that? That's like saying "it's easy to solve the grafiti problem - just give property rights to the grafiti artists". It's nonsensical.
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Which is not to say that there is anything wrong with private beaches - particularly larger ones.
ReplyDeleteThe point is, if you have an existing public beach and you privatize it you're either going to divy it up in a way that will destroy value for everyone or you're going to give it to one person and destroy value for everyone else. Either way, you're ignoring the role of collectively held property.
And of course there are tragedy of the commons problems with collectively held property, but as we know from the recent Nobel laureates and from lots of other work, there are rule-making strategies for addressing this as a collective.
Well, it could be that BP has far more or far larger refineries than the other companies; the snippet doesn't tell you much.
ReplyDelete"Tort law doesn't make these problems go away."
Nor does regulation apparently. Torts vs. regulation is a false dichotomy and a rather dry and sterile debate for me.
For me the problem is crony capitalism, not capitalism or property rights or anything like that. Note that the Obama administration's response to this is to shift the crony capitalism to a different set of industries - or at least that is what they are saying in public.
I don't intend it to be a torts/regulation dichotomy. I've agreed with some of Jonathan's points about liability. I just wouldn't expect as much out of it as he seems to.
ReplyDeleteRegulation is a tough thing to talk about too. People treat it as monolithic - as if there can be "more" or "less" regulation. You see this when people just list titles in the federal code to show how regulated we are, or when they look at regulatory budgets to show how regulated we are. It's all relatively meaningless, because the number of regulatory codes and the budgets of regulatory agencies tell us nothing about how regulations qualitatively affect the market or whether they're binding.
So sure, "nor does regulation apparently", but a more accurate way to say that would be "nor does the regulatory apparatus we had in place, apparently". If the regulation we had in place was weak, nominal, and targeted towards the wrong things then pointing out its failure doesn't demonstrate that some other regulatory regime wouldn't work.
This doesn't particularly interest me either. The sheer disparity in the accidents were just shocking to me (I highly doubt BP has that many more rigs or refineries than Exxon - not enough to make up that gap). The private property idea was my bigger interest in writing this. I think a lot of people trivialize property by catechizing it the way they do.
Sorry, I haven't read the discussion you had with Johnathan.
ReplyDelete"It's all relatively meaningless, because the number of regulatory codes and the budgets of regulatory agencies tell us nothing about how regulations qualitatively affect the market or whether they're binding."
Regulation theater seems to be a common - and probably at times appropriate - response to a lot of crises, public demands, etc.
"If the regulation we had in place was weak, nominal, and targeted towards the wrong things then pointing out its failure doesn't demonstrate that some other regulatory regime wouldn't work."
Well, outside of a few areas, namely environmental and road safety regulation, according to a variety of literature reviews I've read over the years there little or no evidence that regulation has some sort of positive effect in the nation's life. Since we've been regulating industries for a while now it could be that the regulatory models we have just aren't effective from an "on the ground" perspective, but are very effective for the various political, etc. actors involved.
"...I highly doubt BP has that many more rigs or refineries than Exxon - not enough to make up that gap..."
Having done a bit more reading on the subject I have found that their safety record was one reason why they have new management as of three years ago.
Property rights in fish: http://www.youtube.com/watch?v=MI80VVpTGkQ&feature=player_embedded
ReplyDeleteYa - that's a great example. I think the important thing to remember is that nobody thinks that fish is something that makes sense to own in common. It's different from the ocean or the beach in that way. You owning a fraction of a specificied fish catch is fine in a way that you owning a square mile section of the Gulf of Mexico and not being allowed to complain about the treatment of the rest of it doesn't.
ReplyDeleteWhat's interesting is that government is still making a determination here - the point is that markets alone can't target a prioritarian or corner solution because market are fundamentally utilitarian. Of course government doesn't have to target a solution - communities of fishermen can do the same thing.
I'm not quite sure why there aren't equally innovative ways of dealing with beaches, tracts of the ocean sea floor, mineral rights in the oceans, etc.
ReplyDeleteInteresting chart: http://en.wikipedia.org/wiki/File:Tide_legal_use.gif
Who said there aren't equally innovative ways of dealing with beaches, the ocean, etc.? that's precisely my point - I'm saying that the two old, tried and true methods: private property and state command and control - both have some major blindspots when it comes to collective goods like this and there need to be more innovative ways to recognize that in a very real way this is collective property. That's not to say, of course, that private beaches are bad or anything. The fact that private property works doesn't mean there isn't a role for public ownership as well. Take schools for example - it's not like the predictable success of private and charter schools implies that there is no role for public education. Thinking that it does emerges out of an inappropriate juxtaposition of private and public, individual and collective, and market and state.
ReplyDeleteAre Daniel and dkuehn the same person?
ReplyDelete"Who said there aren't equally innovative ways of dealing with beaches, the ocean, etc.? that's precisely my point..."
For me at least, that point was not getting across.
"Take schools for example - it's not like the predictable success of private and charter schools implies that there is no role for public education."
Since you bring it up, I consider government operated schools (as opposed to government funded schools) to be a very bad idea at this point; we are unfortunately somewhat trapped in that model right now.
Haha - yes, sorry for the confusion. I started blogging with my work email, but sometimes log in with my gmail account (or am already logged in so it goes to my google account by default). At some point I need to switch my blogging to gmail so it's all consistent - we are one and the same.
ReplyDeleteRE: "Since you bring it up, I consider government operated schools (as opposed to government funded schools) to be a very bad idea at this point; we are unfortunately somewhat trapped in that model right now."
I'm not education expert, but I think one major concern on this is that so many compounded problems influence the state of public education. I went to a fantastic government operated school - for both high school and college (and this is an interesting question - if there is something so obviously wrong with publicly operated education, why are our public universities the envy of the world?). Part of the reason why my high school experience was so good is that I was lucky enough (and it was ENTIRELY luck of birth from my perspective) to live in an area with an extremely robust tax base and lots of educated residents supplying the public schools with very strong teachers. There are considerably more factors involved in the success of a school than private vs. public operation, which is precisely why I don't think appealing to the government in and of itself or to private operation in and of itself for the solution to any problem is particularly "innovative" or insightful. If it were just a matter of public vs. private operation we would have cracked this nut long ago. A lot more goes into educational success than that.
Not to force this conversation down this rabbit hole, but...
ReplyDelete"...if there is something so obviously wrong with publicly operated education, why are our public universities the envy of the world?"
(1) Well, there is strong private university presence to keep the public universities honest.
(2) Public universities can be and generally are somewhat selective.
(3) Public universities can and generally compete for undergraduate and graduate students.
Have you seen the documentary "The Cartel?"
No rabbit hole - those are all great justifications and along the lines of what I was thinking for the comparative state of our primary and secondary vs. post-secondary institutions. The point is, none of those reasons have anything to do with public vs. private operation and everything to do with the idiosyncrasies of the level of education, the situation, and the mission (ie - educating selectively vs. universally).
ReplyDeleteI'm curious what you're thinking of in terms of (1.)... I don't know what "keeping them honest" would consist of, and I also wonder exactly what they're competing over. Neither public nor most private schools are for-profit institutions.
They are competing over prestige and other like "goods." And yeah, there is "profit" involved; just not the way we normally think of it - you know, adding to the endowment, or funding for a complex of new buildings, and that sort of thing. For example, both the federal government and many private funders of research match research grant money with money for building maintenance and renovation; that creates a powerful incentive to pursue useful research, and the professors and graduate students that produce that research (and of course this also trickles down to the undergraduate population - making the university more competitive from that perspective). As far as I can tell these sorts of mechanisms just don't exist in the primary and secondary public schools.
ReplyDeleteAnyway, I think you can be selective and universal in secondary and primary education; it just takes a little imagination and a lot of effort.
How is maintaining an endowment or investing in the campus profit? How is conducting competitive research profit? Are we redefining all goals that people seek "profit"? I've always thought of profit as being the income earned from the excess of revenue over costs that is earned by owners of a business. None of the things you mention seem to fall under that.
ReplyDeleteWhen a firm you own renovates a building or builds its capital base, do you call that a profit? No - that's a cost.
ReplyDeleteI am not an economist, so I may not use words the same way an economist does. Anyway, you can use a different word if you want to, but they are competing over goods both physical and non-physical.
ReplyDeleteThey are competing over funds for renovation. Again, maybe it isn't profit in way that economists use the term; but it is something that is spurring competition in the area of research.
This raises a question ... what are primary and secondary schools competing over? Are they competing over students? That doesn't appear to be the case, and that is likely a pretty big problem.
I'm not sure they're necessarily "competing" over anything. They are attempting to fulfill a mission, not to compete against other people for some scarce prize or goal.
ReplyDeleteI think this is true to a certain extent of primary and secondary schools too. Yes, the competition over grant funding and students is important - particularly at the graduate level. But a large amount of their work is focused towards a mission, not competition for a scarce or contested resource.
I think they are competing; and doing so vigorously. I'm really only familiar with hard science funding, but here is an example. Universities go all out to attract the "best professors" they can attract because those professors bring in grants and other funding to use for their research (and here "the best" is synonymous with the ability to attract grant funding); that funding gets matching grants for renovation or it attracts new funding. This all adds to the university's prestige, its physical size, the sorts of amenities it can offer students, etc.
ReplyDeleteYou can talk about a university's mission and the like all you want to, but I think that is in large measure so much window dressing.
Definitely - I guess we have to just compartmentalize this a little I think.
ReplyDeleteWhat is a university's goal? To create and disseminate knowledge. At the level of the university, that is the mission and it's not particularly amenable to competition - indeed, in many cases it's amenable to a great deal of cooperation.
How do they achieve this goal - this mission? Well, they have to compete in a labor market that is extremely competitive. They have to enter equipment and facility markets that are less competitive, but can still be quite costly. They have to compete for grant money.
I'm not trying to say that the pursuit of this mission is antithetical to competition or that these institutions don't engage in competition. In fact at several points now I've affirmed what you've been saying about the competition that unversities do engage in, haven't I?
My point is this - private firms compete for profits. Profits are scarce and fleeting and you have to fight with others for them. To do that, you engage in a variety of markets - capital markets, labor markets, debt markets, equipment markets, commodity markets, etc. - and then ultimately you bring all that together and then you compete in your product market to try and earn a profit.
Non-profits are very different. They compete in the capital markets, the labor markets, the equipment markets, etc. just like for-profit companies do, but often once they've gotten all their inputs from competition in those markets, their OUTPUTS (like knowledge production and dissemination) aren't particularly competitive. You have to fight for a profit. Academics pass around their papers for free.
Not competing for scarce resources doesn't mean you don't work your ass off towards a goal - and it also doesn't mean that you never engage markets to reach that goal. But the goals of for-profits and non-profits are fundamentally different, and ultimately I think private non-profits and public institutions share more in common in some cases than private non-profits and private for-profits do. All three (1. private for profits, 2. private non-profits, and 3. government) compete in all kinds of markets for the best labor, for equipment, and for capital. What they do with all that is very, very different.
My last comment is that I do not think this is a bad system though I may have come off that way; I think it is a generally good one; indeed it is something of a virtuous circle. I just don't see anything like that in primary or secondary education.
ReplyDeleteOk, this is really my last comment:
ReplyDelete"Academics pass around their papers for free."
Sort of. Academics pass them around for "free" as a means to gain something from it (and universities encourage them to do that). I look at it being like the newspaper business ... newspapers sell their product for well under its actual value to attract advertisers. Academics - at least of the hard science variety - pass out their papers for free to attract funding. To me that looks like the pursuit of profit or whatever term you want to use for it.