Tuesday, August 16, 2011

Post No. 172a: Why Dumping on Royal Dutch Shell is a Bunch of B.S.


Royal Dutch Shell sprung a leak in the North Sea recently. Once again, a tsunami of criticism has evolved. While we did not come to the defense of British Petroleum (BP) and TransOcean last year in connection with their problems in the Gulf of Mexico, we noted that....

© 2010 and 2011, the Institute for Applied Common Sense

Yesterday, C-Span aired Tuesday’s Senate hearings in connection with the Gulf of Mexico oil “spill,” which is still spilling.

It was interesting to watch the corporate representatives, including the CEO of BP America, perform mental and legal gymnastics in responding to the questions. The world watched as Senators, on both sides of the aisle, posed questions reflecting their incredulousness that this “disaster” even occurred.

While we were impressed with the tap dancing on the part of the spokespeople, we were more impressed with the political savvy of the Senators. President Obama was justifiably incensed at the multi-lateral finger pointing going on, but, we submit, for all the wrong reasons.

We’re willing to bet, and even invest some money in the derivative ultimately crafted, that in the years to come (be it 10, 50, or 100), (1) “accidents” of this type will continue to occur, (2) the companies involved will be no more prepared to deal with them and their consequences, and (3) Senators investigating future accidents will continue to fake their incredulousness that such “accidents” still occur.

Many things in life have less to do with people or the humans who happen to exist at any given point in time, and more to do with the structure or organization within which they function.

We here in America, for a variety of psychological, historical, legal, and systemic reasons, have a “perverted” sense of “corporate responsibility.”

First of all there really is no such thing as “corporate responsibility.” In America, if a corporation screws up, it’s generally going to pay. Being a responsible corporation or a good corporate citizen is only pursued to enhance the bottom line. The consequences of the screw up are generally based on the particular screw up, and even punitive damages can’t be avoided by a “good corporation.”

Second, those Senators asking questions are pretty savvy. They are well aware that a corporation is a legal fiction. They also know (although you might have difficulty believing it considering the way they run the government) that in conducting business, the goal of that entity is to generate profits and try to stay afloat.

Third, and most important, every corporate decision is made in an effort to maximize profits, and is theoretically an educated and calculated guess. However, the reality is that some of the guesses are going to be wrong. Corporate management knows, and the Senators should know, this dirty little secret.

The rest of society apparently does not.

And so we dump on corporations when there is a screw-up, accuse them of mismanagement and devious, under-handed activity, and then slap our jaws and open our mouths with our eyes all bugged (like the kid on “Home Alone”), when the 27th screw-up occurs.

A corporate entity does not have a mind or a conscience similar to that of a human.

Repeat: A corporate entity does not have a mind or a conscience similar to that of a human.

Even though humans run corporations, corporations are separate and apart from humans, somewhere between a human and an inanimate object.

Whereas a human will occasionally make a judgment call against his or her personal interests in pursuit of other goals (like unprotected sex with a stranger), rarely will a corporate entity do so because it is not really its money. It's not even the money of the folks managing the company, at least in the case of a publicly traded corporation.

It is the money and interests of others, the shareholders, which are at risk, not that of the decision makers.

It makes for a unique dynamic.

As a result, fines, penalties, and lawsuits (which are quantifiable and really only about money, not lives) have to be figured into the economic mix as necessary evils.

An entity may try to minimize them, or even delay them if possible, but they know that they are always just around the corner. Corporate management recognizes this for what it is.

They keep this in mind when they're engaged, and then walk away from it and try to live a human life.

Speeches, press conferences, hearings, investigations, fines, and lawsuits, are all perversions designed to distract us from really getting to the root of the matter. Talk about irresponsibility.

If you really want to know what’s going on, talk to the bean counters. It’s all about probabilities and risk management. It’s not about humans, wild life, or the environment.

It’s about time that we recognize that, and then get on with the business of trying to reduce, not eliminate, such “accidents” from happening in the future.

Corporations are not human. They can't be. It's an inherent conflict of interest.

If they don’t make enough in the way of profits, they will not have any put away for a rainy day, or to respond to the fickle changes in consumer tastes.

And as they pass through St. Peter’s bankruptcy gates, we’ll accuse them of mismanagement and sleeping at the switch.

And that ain’t no BS.

9 comments:

  1. Another educated expression of common sense. 'Love of money is the root of all evil? Wrong! 'Money is the root of all evil'. Not 'cash', not 'profit' not 'earnings' related to production of useful things and services, but money when it falls under the control of corporations and individuals allowed to profit uncontrollably purely from its movement from one place to another.

    Of course, profit has to be taxed, and the money thus diverted has to be controlled by people who did not earn it. If this is hard to do let these people be paid over the top. Let the flow of money be transparent - now for the first time in human history technology can make it possible.

    Get rich by enriching the world with useful products and services, educate the young to respect this richness, not envy it. Make it natural that talent is rewarded, and that lack of talent is NOT punished or disrespected.

    It's not racket science.

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  2. Welcome back CorfuBob. We missed you and your insightful contributions.

    We have a post in the hopper which you should enjoy.

    Some would argue that the root of all evil is the hording by the few of the resources and wealth which should be more fairly distributed. Implicit in that argument is the lack of respect for we minions at the bottom who toil and sweat. Oops, that sounds like Marxism. And no one wants to be accused of that; except perhaps the Chinese.

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  3. Not sure if this is appropriate to the post or to the sentiments expressed by Bob but among the observations I made during my career (using that term quite loosely) was that those who had jobs with the hardest physical labor involved were always paid the least.

    I also maintain the root of all evil is good intentions.

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  4. Very nice blog.

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  5. Lalithambalvijayakumar:

    Thanks for paying us a visit. You're welcome any time and we do not moderate comments here. People are free to express what they feel.

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  6. Welcome back, Bob; I have been away for a while myself.

    ‘Spector,

    A wealth transfer is a wealth transfer, whether it is perpetrated by government for purposes of redistribution of wealth, or the serial rip-off of the American people by Chinese Communists and their corporate American cohorts, by the oil industry or by the unions. No one has clean hands in this great piñata fiesta wherein We, the People are the candy-filled target dangling above by a string, naked and vulnerable.

    Once wealth is confiscated from one class of people whose opportunity to subsequently earn it back is seriously impaired in the course of the grab fest, our society as a whole suffers. Recognizing this fact is not in the least Marxist. Rather, it illustrates that a tipping point will eventually be reached whereby there will be no wealth left at the bottom to feed the shark-men (public or private sector) at the top.

    What will they then do with a nation of homeless, dependent former producers? Sell us into slavery? Send us off to be reconstituted into Soylent Green? If we have no money to give them, then they will be forced to exploit us for some other gain – what will it be? Is it just possible that it will that point at which the wheels run off their money train as well?

    As far as goes Royal Dutch Shell, BP et al: the oil industry has been robbing us for so long that consumers no longer care what any government entity does to them, regarding environmental mishaps or anything else. Never mind that the government is essentially in cahoots with the rip-off; never mind that Big Oil simply jacks their prices further and force us to pay more to sustain the shareholders’ interests; the appearance to those at the bottom of the food chain is that of “comeuppance for the little guy” even though it is by no means the reality. And who the hell can really blame them?

    The Independent Cuss

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  7. Douglas? Roots come first. Good intentions lead to evil? Do neutral and evil intentions lead to good? Good people want to create a fair society where even simple-minded and sick people are rewarded with respect and enough to live on. Such good people may even want to do something about it - they will have to start with good intentions. Many will fail - do you equate failed intentions with evil? I know you don't.

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  8. Cuss? " there will be no wealth left at the bottom to feed the shark-men (public or private sector) at the top. " The shark-men will always have enough to feed themselves and their greed, but surely you do not expect them to stop blaming the poor for their mistakes? They will 'create' a few jobs (not so many that workers are not under pressure) and start all over again. In the meanwhile they have installed criminals at the Fed to print money as needed.

    Not to worry - the Chinese still love you and won't let America the Great slide into riot and civil war. Again.

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  9. Douglas, CorfuBob and Independent Cuss: We simply can't wait to hear from your regarding Post No. 173, Pigs Get Fat; Hogs Get Slaughtered.

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