Thursday, June 24, 2010

Business as Usual

So did you hear about the judge who stopped the oil drilling moratorium? You did. Did you hear he owned stock in Transocean? Well you might think that would be the end of that: a major embarrassment for the judge for not recusing himself, but likely to end there. Turns out the answer is no, the judge refused to stay his order, something that may (note: I am not a lawyer) expose him to ethics charges (if my reading of this case is correct, and assuming he still owns Transocean stock.)

Whatever the case is about that aspect of legal wrangling, one thing we can say about the actual logic underlying his legal logic: it’s patently wrong. Let’s examine it, shall we? His stated basis for the claim is that a moratorium on offshore drilling would cause “irreparable harm.” This seems silly: if you can drill today—guess what? You can probably drill tomorrow. That oil’s been underground for millions of years now and surely it can wait several months to years more. He claims that the economic damage to not drilling would be irreparable (i.e. the jobs and such) is true, were it not for the economic aid flowing into the region flowing in as a consequence.

But it’s this paragraph that I think displays a misguided attitude towards risk:
"If some drilling equipment parts are flawed, is it rational to say all are?" he asked. "Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavy-handed, and rather overbearing."
But the point of the moratorium isn’t that all of the offshore drilling is flawed, but that some of the set probably are. And given the difficulties associated with the deep offshore drilling of the type B.P. was engaged it, and given the fact that oil companies seemingly have no idea how to stop a gusher once it’s started, it’s very clear that the risk represented by merely one oil well failure is of a completely different tenor than the risk posed by these other examples.

Feldman’s decision is yet another example of elite capture. Feldman is a judge based in Louisiana, and he, like the politicians of the region, seem to be eager to resume business as usual. There’s nothing this behavior resembles more than that of our financial crisis, wherein elites seem eager to go back exactly as before. And why not? Business was good, right? Ultimately, the key is to make bad morals bad business.

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