Not the End of the World

I like to read what Jerry Pournelle writes. I have a struggle in trying to Hyperlink to a specific story in his blog design. So in spite of the fact it will upset some people, I am going to reprint this verbatim with attribution. It's a great observation, worthy of repeat. The link is here, but the problem with Mr Pournelle's blog is it seems to de link often. So, read Jerry's wisdom. If the permalink thing on his format is ever figured out I'll use it.

It's an Oil Spill, Not the End of the World

Today is full of dismaying news. First, the hole isn't plugged. In fact, while President Obama was telling us that the maneuver to fill the pipe with driller's mud would have a 60% chance of plugging it, the operation had been called off, apparently by the people who have their boot on BP's neck. The government has given the Attorney General orders to make sure the boot stays in place. The effect of that on actually plugging the hole isn't known, nor is it known whether the AG will go to Louisiana, where I am sure more lawyers are needed.

Not that I am carrying any brief for BP. I don't know the whole story -- I doubt anyone does -- but all the evidence I have seen points to BP always taking the cheapest course even when the cost differences involved are a few million to tens of millions of dollars in operations that bring in billions. Of course managing economic risks is part of what capitalist ventures do. The problem here is that the consequences of failure are borne not merely by the capitalist venture, but by all of us. It's another case of thr rewards of success going to the private venture, while the cost of failure is borne by others. We've seen a lot of that in the past few years. Both the Creeps and the Nuts like that sort of "gamble."

We all know how the Creeps played with Credit Default Swaps and such. The Nuts do it a bit differently but the results are the same. The Nuts, for example, insisted on minimum wages for Samoa; that ran the cost of fish processing up, so a number of canneries closed their Samoan operations and moved to other places in Asia where there is no minimum wage. Now the Nuts are sending a few tens of millions to Samoa to bail out the collapsing economy. The economy wasn't in collapse until the fish processing plants closed eliminating one of the major job sources. Of course that's small potatoes compare with Fannie Mae and Freddie Mac injecting more and more money into the housing market, buying up bundles of junk mortgages and using those piles of junk bonds as security to borrow more public money to inject into the housing market. Meanwhile the Nuts insisted that we spread housing ownership around, meaning that finance companies should ought to make loans to nearly anyone who wanted in on the American Dream of housing ownership. Which of course led to the sob stories about the gardener with a $40,000 a year "stated" (i.e. not verified or even documented) income being able to "buy" a $450,000 house that, after the collapse of the bubble, turned out to be "worth" about $200,000; now the poor chap is being foreclosed and evicted. It's the end of his Dream. Etc.

Decoupling risk from consequences didn't work too well in keeping the economy going. How well has it worked with deepwater oil drilling?

Actually, a lot better than it did with the housing market. We've heard a lot about the terrible damage from the oil torrent, and it is certainly frightening; but it turns out not to be quite so big in the context of other oil spills. I first heard that this morning on the Rush Limbaugh show. Rush is seldom my primary source of information, but this morning he gave his source, Dr. Roy Spencer, whom we've recommended here in the past. Limbaugh shows Spencer's chart on his web page, and it's instructive. Yes, it's a disaster, but it's not large in comparison with previous -- even frequent -- disasters. This isn't the end of the world as we know it. The torrent has to be stopped, the oil has to be contained, the hole has to be plugged, and the longer that takes the worse it will be, but the Persian Gulf recovered from the world's worst oil spill (deliberate at that) and the Gulf of Mexico will recover from this one.

That doesn't excuse us from the obligation to learn more about containing these disasters, and my recommendation is that every oil pumping operation should be subject to a separation tax devoted to funding the creation of Civil Defense organizations, a recovery force of specialists, and research and development of recovery methods. I'm no great fan of bureaucracies, but sometimes they are necessary. Fire Departments are bureaucracies. Volunteer fire departments work in some places, private fire fighters have been advocated by strict libertarians, but I'm quite pleased with the Los Angeles Fire Department. I gather that New Yorkers are fond of the NYFD; and indeed mot places I go seem happy with the local fire departments. But that's another discussion about details: the most important thing needed for the future is to re-create Civil Defense, not just for oil spill containment but also hurricanes, earthquakes, twisters, etc.

We can be dismayed that the hole is not plugged (the Top Fill attempt apparently was stopped by the US government, perhaps for good reasons); but at least we know this isn't the worst disaster of the Gulf and isn't the end of the world as we know it.