Friday, November 16, 2012

Post No. 182b: Why Dumping on BP is a Bunch of BS


Earlier this morning, news media outlets reported that BP (aka British Petroleum) has agreed to massive fines in connection with its April 2010 Deepwater Horizon explosion. The resultant oil spill had a dramatic effect on those areas surrounding the Gulf of Mexico. We generated this article shortly after the accident. Criminal charges are still being pursued against various individuals associated with the human, economic, and environmental damages flowing from the incident.


© 2010 and 2012, 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 in order 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 drop 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 be able 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. "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."

    That's odd...I am human and I must make a "profit" to live. I have inherent interests and I have a need to increase my income just to keep up with inflation. I also have to respond to the "fickle changes" in my peers tastes or lose them as friends. I also had to deal with the fickle changes in taste by my bosses when I was working.


    Truly odd... I must not be human.

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  2. OK I admit I'm biased. I often agree with the views of the Inspector (even if I haven't previously generated a similar thought). Same goes as to the pearls from
    the rest of the Institute crew. The comments and analysis on BP generated in Post # 182b are impressively right on point. The fundamental albeit
    conscious-free corporate perspective identified, or uncovered, there has been central to successful large and medium sized businesses since time began.

    One reason, I think there is often so much outrage among the business community about government activity in the antitrust arena is because it ignores, in part, the profit thesis.

    Even older, unfortunately, is the hypocrisy of most politicians.

    Keep up the good work!

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  3. Thanks much $Bill for paying us a visit. Your reference to the hypocrisy of most politicians made us laugh, since we just read a tweet from a follower, purportedly attributable to George Carlin:

    "By and large, language is a tool for concealing the truth." Considering the fact that historically most politicians have been lawyers, and lawyers are professional language practitioners....

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  4. It was interesting to me, as an englishman, to see how the rhetoric of U.S. politicians and media pundits emphasised BRITISH Petroleum.
    At the time, it seemed to be vital to point out it was a BRITISH corporation at fault, and to play down all the american participants in the disaster, as though U.S. oil companies have squeaky-clean records and would NEVER put the gulf at risk.
    No matter that we all know that big oil is supranational, and has few scruples. BP's partner in the venture, Anadarko, ran speedily in the opposite direction denying everything.
    It seems we forget the Exxon Valdez all too easily. Oil business is about making vast amounts of money. And not wasting too much of it on safety, and the occasional spill?

    Remember Ralph Nader? And how the auto industry figured it was cheaper to pay for a few deaths, than it was to admit a lethal fault and recall cars?

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  5. Thanks much Soubriquet for taking the time to digest our post and share your thoughts with us.


    You have an interesting perspective since you are British. We did not detect the spin to which you referred, although we can not deny its existence. We suspect that most Americans lump up most multi-national conglomerates in the same pigeonholes, whether they be based in the U.S. or elsewhere.


    What's interesting is that most critics of the media here refer to the "Mainstream Media" as having a liberal bias. If that is the case, then it would have behooved them to downplay the fact that this was a British company and instead suggest as much U.S. involvement as possible, in an effort to seek more regulation here in this country.


    We as a nation are very divided on this issue (as is the case with most issues over here). Go to the west coast and survey folks from California, Oregon, and Washington State, and you will find an entirely different point of view from those in land-locked states in the mid-west.


    Those opposed to the level of major oil company profits, the oil company lobby's influence on American politics, or their drilling in environmentally sensitive areas could probably care less about the country where the HQ is based. (Not to mention that fact that Amoco merged with BP some years ago.)


    One thing about America. We're generally an equal opportunity hater of whatever we hate. That's part of what comes with freedom.


    Perhaps we did not watch the media's coverage of this matter closely enough. Now that you have raised this issue, we will pay closer attention to seek if we can detect the spin you mentioned. Thanks for bringing it to our attention.

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  6. Clarification: During part of the period I refer to, I was in Houston Tx, I have friends who work in the oil industry, it was no surprise to them to see Washington and the press' spin on the situation. It was important to offload blame as much as possible onto corporate entities who could be characterised as 'not really american'.

    To have a chief exec who sounded clearly british was a godsend.

    The truth, as we know, is that so long as oil continues to be black gold, then permits will be granted to pull it out from wherever it can be found, no matter what the level of risk.

    Government, federal and state, is a profiteer too, so there's plenty of cash going around. Senators, congressmen, well, they want the jobs, the industries, that oil engenders.

    And America? More than any other place in the world, America is hooked on oil. Mainlining it. No appetite for rehab or a twelve-step programme.

    There in Texas, I stayed in an upmarket community. When the washer finishes washing, the clothes go in the dryer. Heated by electricity made from burned black oil. And the drier throws out heat into the house, but no matter, because the air kicks in and burns more oil to keep the house icy-cool.

    And outside? 110 degrees.

    I ask "Why don't you just hang it on a line out the back?" It would all be dry in ten minutes, smelling better than scented drier additives can make it, disinfected and purified by the sun's ultraviolet natural bactericide, soft, windblown, dry.

    "We aren't allowed, we'd get a fine from the home-owner's association, no washing in yards allowed".

    The true villain in the Deepwater Horizon is us.
    All of us who are gluttons for energy. Yesterday I poured a hundred pounds worth of diesel fuel into my tank. Deepwater is my fault.
    Deepwater is your fault.

    "We have met the enemy, and he is us." (pogo).

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  7. From our perspective Soubriquet, you are right on the money. We can not dispute anything that you said. What's more disturbing than our past conduct, is the inability of the American people to take responsibility for our past conduct. We blame elected officials for this and that related to energy, and argue about off shore drilling and pipelines. Jimmy Carter tried to wean Americans off of oil and he was made to be the bad guy.

    Thanks for your input. Please visit us often. The perspective of someone who has lived both in and out of the U.S. is particularly valuable.

    Just in case you missed this earlier post of ours, click here.

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  8. Further disambiguation. In part of my life, I am a combustion engineer. I do that professionally, but I'm also a potter. I know how to build a box of bricks that will heat a chamber to 2400 degrees fahrenheit, by burning oil, gas, wood, whatever. I've built them to run on drained sump oil from engines.

    Now, I had friends with green credentials who criticised me for burning stuff like that. Those green friends who think nothing of flying to Cancun for a holiday. My kiln, firing twelve cubic feet of ceramic items that will last, (so long as you don't drop 'em, in excess of four thousand years in usable condition), used as much oil in a firing as a 747, at cruise, burns in twelve seconds.


    All potters are concerned to be energy-efficient. Nobody wants to buy and split an extra half a ton of wood that a more efficient kiln wouldn't need.



    And I have a great interest in energy-efficient buildings. It's perfectly possible to build a house that would be warm in a minnesota winter, which uses virtually no energy for space-heating. And in the hotter states? old southern houses were build with wide porches to keep direct sun off the walls, double-skinned ventilating roofs, breezeways, dogtrots... We could, for almost no extra cost on the build, dramatically reduce the energy needs of our houses and commercial buildings.

    America seems unwilling to admit it has a problem. While in Houston last year, I recall a local news story about a family found dead in their house ' because the air unit had been stolen'.

    Think about it. The reason given is that they died because they had no air-con. But Texas was settled long before aircon was thought of. People live in the sahara without it.
    Death by lack of aircon? No. Death by poor design.

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  9. Sobriquet:

    We particularly liked your comments concerning the lack of air conditioning. Of course, many feel that the government should do something about the weather.

    After reading your comment, we weren't quite sure of how to respond, since we are in substantial agreement with you, at least with respect to the observable conduct of humans, be they live in the U.S. or elsewhere. While we acknowledge cultural and historical differences between citizens of different countries, we also look to see if there are organic or physiological explanations for what we do.

    Here's a link to a post from a couple of years ago, which is interesting, if you are into alternate explanations for stuff.

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