Posts Tagged ‘corruption’

Competition is good! Is this necessarily so in all cases? Certainly, no competition is a bad thing – state control, or monopolies are inefficient, and reward the few at the expense of the many.

So if no competition is bad, and competition is good, then it only stands to reason that more competition can only be better. It provides consumers with more choice, and forces the producers to up their game. This then is the classic non-sequitor, the Noble Lie supporting our cult – the Cult of Capitalism!

The greater the competition, the greater the pressure! In the beginning, producers work better, and smarter to beat the competition. The problem starts when they run out of ways to improve their competitiveness, but the pressure within the system keeps growing. What happens next?

Sooner or later, out of sheer necessity some of the competitors start bending, or even breaking the rules. If these few are successful in avoiding detection, the others will be compelled to follow suit if they wish to avoid falling behind. Ultimately, the situation arises where the player in the game is left with a simple choice – break the rules and risk the penalty, or stick to the straight and narrow, and go under.

Now let’s turn to the BP oil spill in the Gulf. This is very likely what lay behind the scenario that led to the disaster. The drilling company was ordered to increase capacity. Wishing to remain in business, they complied. The person at British Petroleum demanding the increase was no doubt under similar pressure, and this would then carry all the way up the line to the top. In the pressure driven environment the ultimatum presented to all those in positions of authority is: do what it takes, or we will find someone else who will.

This paying forward of pressure cannot go on interminably. Sooner or later it comes up against an immovable object – in this case Mother Nature herself. Singling out one of the links in the chain, and attempting to attribute blame to it is a complete waste of time. Once the decision to deep sea drill was made, an irreversible chain of events was set in motion that could have but one final outcome- disaster. We cannot know which rig will be the one to fail, or when it will fail, but that some rig somewhere will cause a catastrophic failure is almost guaranteed.

We can improve technology, tighten regulations, but so long as the pressure keeps building and building we can only expect more of the same. What was deemed as an acceptable risk turned out to be unacceptable? How many other similar decisions have been made, where risks are high, corruption is systemic, under highly specialized conditions is involved just waiting to explode?

Over the last month two events have dominated the economic news: the Gulf oil spill caused by the mechanical failure on a British Petroleum offshore drilling rig, and the insolvency of the Greek Federal government. It seems on both sides of the Atlantic we’re beset with scandal and crisis.

Starting with the oil spill – the drill was operating in extremely deep water which places enormous pressure on equipment which in turn greatly increases risk. A further complication is that should anything go awry remedial action is difficult and uncertain. Under such conditions one would anticipate that the equipment would be over- engineered by a safe margin, in order to compensate for the risk.

No such luck! Instead, it turns out we have quite the opposite. A critical piece of equipment specifically designed to prevent such disasters, which is required by regulation in other parts of the globe, is not mandatory in American waters. Next we find out that should there be a calamity, according to some other government regulation, British Petroleum is only on the hook for $75 million.

This is all particularly confusing in light of the statements made by the young CEO on TV (presented in open collar and rolled up sleeves in a general office setting as the background), earnestly assuring us that despite the fact that the accident was not their fault, they intend to foot the bill.

Turning to the Greek situation – on television we see graphic pictures of rioting in the streets in response to the austerity measures demanded by the European Union. This was to be its penance for defaulting on their debt. In return they were promised $1trillion in additional financing. The editorial message to the world conveyed being that the Greek populace has been living well beyond their means, and is now behaving badly when called to task.

The news presents this as a crisis unfairly thrown in the laps of the financial mandarins in Europe. However, it is certainly no secret that living a relatively comfortable existence, and avoiding paying taxes has become something of a social contract in Greece. In light of this, the so called crisis was nothing short of inevitable. Also, the crowd’s reaction came as a surprise to no one, in the same way that the ultimate conclusion of the crisis – after much debate, wringing of hands, and gnashing of teeth, the Greeks got their money – was equally predictable.

All over the world financial markets react to the news about these two events by shooting up and down with each sound byte that comes over the news-wire. This distracts us from the underlying reality- that our systems are completely permeated, subsumed in fact, by corruption. Words such as ‘sustainability’, a big part of British Petroleum’s PR over the last decade, and ‘austerity measures’, a favorite of the EU Bankers, have become nothing more than meaningless verbiage.

In the meantime, the pressure keeps building and building. British Petroleum’s spill continues to gush out toxic crude, the Greeks carry on with their lifestyle till the new money runs out, and in the end nothing will change. Sooner or later the public will lose interest in these calamities, only to be titillated by the next one that comes along. It would seem that all of us are so preoccupied with just surviving today; we don’t have the psychological capacity to even engage with the singularity towards which we are accelerating.