One of the many causes of the the BP oil disaster is the failure of the oil industry regulators who failed to enforce existing regulations.
The President said in his recent speech on the BP crisis:
One place we have already begun to take action is at the agency in charge of regulating drilling and issuing permits, known as the Minerals Management Service. Over the last decade, this agency has become emblematic of a failed philosophy that views all regulation with hostility – a philosophy that says corporations should be allowed to play by their own rules and police themselves. At this agency, industry insiders were put in charge of industry oversight. Oil companies showered regulators with gifts and favors, and were essentially allowed to conduct their own safety inspections and write their own regulations.
Notice the words ” Over the last decade”. Part political speech to point the finger at the old regime of course, but also honest about reality. My concern is what other agencies or bureaus are also lax; what other industry is controlling its own regulation? Are we to see dams breaking, more food poisoning, toxic designer drugs, and so forth. We already see problems with Americas crumbling infrastructure like bridges starting to fall apart and local resources failing or mismanaging repairs. We also see bad accounting, like millions of dollars of equipment disappearing in the middle east.
The President also said:
When Ken Salazar became my Secretary of the Interior, one of his very first acts was to clean up the worst of the corruption at this agency. But it’s now clear that the problems there ran much deeper, and the pace of reform was just too slow. And so Secretary Salazar and I are bringing in new leadership at the agency – Michael Bromwich, who was a tough federal prosecutor and Inspector General. His charge over the next few months is to build an organization that acts as the oil industry’s watchdog – not its partner.
But why is it “.. now clear that the problems there ran much deeper….”? So we need a disaster to make things clear? Maybe this instead should be a wakeup call that Government and private regulation efforts need to be quality controlled, maybe we need an uber regulator, an Inspector General with real power, and we need transparency. Most importantly we need that seldom used word back into business: ethical. We need sustainable but ethical capitalism.
I’m hoping in the near term we don’t have another intensification of the current recession due to credit card meltdown and we don’t have a environmental disaster due to genetically modified food and agricultural products. Both of these are also “regulated”.