Release the Kraken!

“Release the Kraken!”  That has to be the greatest line in the cheesiest movie ever made.  Zeus (Liam Neeson in a tin foil suit) has had it up to here with mortal man and orders the release of the beast which bursts out of a foaming sea to trash the landscape and squash the people until Perseus (a demi-god and our hero) arrives to save the day by confronting the monster with the head of Medusa.

Wow!  A marauding CG Kraken is hugely entertaining to a movie audience, however an unleashed real life Kraken is downright dangerous.

Last week I made the not so subtle point that corporations, like fictional beasts, are legally programmed to do one thing—act in the best interests of their owners.  I argued that the privatization of public services would end badly because a corporation’s objective is based on self interest while the government’s objective is to serve the public interest.  The only thing that keeps a corporation in check are the laws and regulations which bind it to the ocean floor (so to speak).  These laws and regulations are designed to prevent a corporation from harming society, including its own employees, and the environment while it goes about the business of making money.

If the purpose of all these health, safety and environmental regs* is to protect us and the environment then why the hue and cry for more deregulation?  Given the regulators’ spectacular lack of success shouldn’t we be clamouring for more regulation not less?

Not as far as the corporations are concerned.  They say they are good corporate citizens with a vested interest protecting the public interest but they’d prefer to do it by themselves without any government oversight.  They’re convinced that the market can do a better job—“bad” companies will go out of business while “good” companies will thrive and grow.

The problem with this argument is that allowing a corporation to voluntarily be “good” is like asking the fox to guard the hen house—it’s a conflict of interest.  The corporate law that requires a corporation to act in the best interests of its shareholders means it must filter all decisions through a cost/benefit analysis in order to determine the “appropriate” balance between the public interest and maximizing profits.

How does this work in real life?  Take the 1979 Chevrolet Malibu case**.  On Christmas Day 1993, a mother and her 4 children were horribly burned when a drunk driver slammed into the back of their car and it burst into flames.  It turned out that in 1972 GM redesigned the Malibu and moved the gas tank 9 inches closer to the rear bumper in order to save $6.19 per car.  What is even more horrifying is the cost/benefit analysis pegged the expected number of fatalities at 500/year and factored in $200,000 in legal damages/fatality.  GM decided that a profit of $6.19/car times 41 million cars was worth it.

The GM cost/benefit analysis was done in 1972.  Are corporations better stewards of the public good today?  Hardly.  Consider the infamous “Three Little Pigs” cost/benefit analysis memo prepared by BP in 2002.  The analysis was used to determine how much money BP should spend on worker accommodation at the aging Texas City refinery site.  The analysis used cutesy fairy tale language:  explosion frequency translated into “the big bad wolf will blow the house down”, consequences turned into “the piggy is gobbled” and maximum justifiable spend was what the piggy would spend to “save its bacon”.  Callous and insensitive language which came to light after the 2005 explosion which killed 15 workers and injured 170 others.

Did the market punish BP so that its behaviour improved?  No.  Eight years later BP sailed straight into the Deepwater disaster in the Gulf of Mexico.  Eleven workers were killed, hundreds of people lost their livelihoods, the environment was irreparably damaged—and BP’s profits for Q1 2011 dropped by 2% from an expected $5.7 billion to $5.4 billion.

OK maybe the problem isn’t too much regulation but too much duplicative regulation that creates inefficiency and unnecessary costs.  Time marches on, regulations get stale, new ones are passed which overlap with or contradict old ones.  Fair point, but the fact that regulations need to be overhauled does not mean they need to be scrapped entirely or their enforcement turned over to the very entities trying to escape oversight in the first place.

Right, so this is where the government needs to step up and protect the public interest.  Or to put it in movie language: check on the Kraken and ensure that it is still tightly tethered to the ocean floor.  Unfortunately that’s not happening.

Corporations have slowly but surely loosened the regulatory bonds over the last four decades.  Their first level of attack is the electoral process.

Anyone who’s worked for an American company knows the joy of receiving an invitation to the CEO’s house to meet the congressman who happens to see eye to eye with the corporation on critical health, safety and environmental issues.  Such invitations are not BYOB but rather BYOC (bring your own chequebook).  It’s usually a career limiting move to pass on this opportunity.  The result is obvious, politicians who benefit from the support of industry take care of industry.

The second level of attack is the multi-pronged “educational” approach waged by industry associations, industry funded think tanks and lobbyists who spend considerable time and money educating the government on complex industry issues.  Government bureaucracies are generally understaffed and underqualified and as such need all the help they can get.  Unfortunately industry’s perspective is not always balanced with that of NGOs or citizen advocacy groups who do not have the same level of resources and access to the politicians and bureaucrats.

This process creates a feedback loop—politicians respond to industry pressure and largesse, they repeal “offensive” regulations and/or cut staff, government inspections and certification processes slow down, industry complains and offers to take the whole mess off our hands.

Then comes the ultimate irony—the regulatory bonds snap, the Kraken chews up the landscape, destroys lives, makes class action lawyers rich and the public demands someone’s head on a plate (where is that wretched Zeus when you need him).   The government dutifully responds by enacting regulations to assure the public that this horrible situation will never happen again.  And it doesn’t, until the next time.

Wouldn’t it make more sense not to release the Kraken in the first place?

*The prohibitions against insider trading, market manipulation, corruption and fraud are another topic for another day. 

**The Corporation, by Joel Bakan, pp 61-65.

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6 Responses to Release the Kraken!

  1. Rose Marie MacKenzie says:

    I am finding that anything that has to do with government runs in a non-ending traffic circle. My neighbourhood has, in the past five years, become condos which is fine with me but after attending “pubic meetings” before the condo went up I heard numerous discussions about how these condo would not effect street parking. Each condo would supply parking to their owners and they did. The problem is that not all the owners want to park underground. Some vehicles are too big, some owners have 2 cars and some just don’t want to be in the underground at night. All good reasons.

    So they park on the street and the last guy to park is sitting right at the corner. The law says you must be 10 feet from a corner which is about 1 car length. Each morning I come to the corner where there is a car, sometime a huge truck, parked right up to the corner. This is the vehicle, who parked in front of the last legal parked car because there was no street parking. Each morning I creep up to that corner, in my small car, and attempt to sneak out into traffic that is now going over the speed limit to catch the “vehicle activated” traffic light at the end of the road. Now, you ask where am I, well the answer is almost run over trying to see if traffic is coming.

    My problem. This issue is covered by Bylaws. I called only to be told they don’t start work until 8:30am so by the time they get there the cars are gone as we all go to work at 6:30am. They suggested Engineering. I called them and was told they could put in a request for “signage” but that is enforced by Bylaws so I am back to the same problem. They suggested I go to Community Policing and talk to them as the RCMP work 24/7 and can write tickets and have cars towed anytime. I went to Community Policing only to find out they work 8:30am to 4:30pm, Monday to Friday, exactly when I am at work. So, my best option is to be hit by a car and as I have rheumatoid arthritis and am a cancer survivor would have a really good chance at suing the pants off the City but where does that leave me, in medical care traffic circle. I have gone from one traffic circle to the next.

    Our government does not work for the people, private corporations do not work for the people, everyone seems to have an agenda and it does not appear to be helping the public. I need you to release the Kraken.

  2. Here’s my worry. If I release the Kraken, it (being the corporation that built the condos) will let everyone park anywhere they want and that will just make things worse. Instead, what we need is Medusa’s head which we will point at the politicians and bureaucrats if they continue to refuse to enforce their own by-laws.

    All kidding aside your story is the perfect example of why people get fed up with the government. What’s the point of having a by-law if the only guy who can enforce it doesn’t get to work until 8:30. The government could help it’s own cause by working the same hours as the rest of us. In Calgary we had a similar issue with snow removal. It wasn’t until Mayor Bronconnier was over an hour late for work that he decided it was time to get the snowplows out BEFORE everyone had to go to work not afterward.

    Thanks for your comment Rose Marie…it was insightful as always!

  3. Carlos Beca says:

    Interesting comment by Rose. That seems to be the progressive line most of us follow to Radicalism. Rose is obviously tired of the same old garbage dialectics of Government versus private. I reached that phase a while back and then suddenly I realized I was no longer tired of it and I seemed to know what I now believe in. Yes I am a radical now and I came to understand very clearly what Thomas Khun meant by paradigm shift. Societies reach the tipping point and then something really happens. It is called revolution and for the most part it means violence, total social collapse and an overall feeling of insecurity and total lack of control. This is now happening in the Arab World and has happened previously in the so called ‘First World’ and is no doubts an on-going process. I thought that in democratic nations, these would be almost impossible to happen as people learn that passing the torch during elections is to their advantage and a slow change to the objectives of the majority. Well, I was wrong. Democracies have become plutocracies and the torch is no longer moving. This is what is now happening in most democratic countries and Canada is not an exception. Our system is now controlled by lobbyists paid by large corporations or interests. Politicians no longer understand the concept of public interest and the commons. The military, police services and the courts for the most part serve these interests. We have just witnessed in the last few years, obvious violations of workers rights with the introduction of back to work legislation even before there are any strikes. Protest are now police training camps on new strategies to control crowds. Harper does not even understand difference of opinions and workers rights. He does not have to follow a constitution because his ideology is above any of that garbage. Afterall what can be better than neo-conservatism?
    Anyone that believes that private profit making can exist at the same time as public interest is dreaming or trying to believe that gravity does not exist. I elect my government to defend my ineterests and if that is not happening I want that government destroyed. The system is completely rigged and I now am part of the fastest growing group of people in the developed world – radicals. Those who know that all the changes that are implemented are basically to calm us down and allow the sucking to last just a little longer. We have reached the point where less that 1% of the population controls 40% of the resources and it is still not enough. Believe me, it will never be enough. Humans are the most powerful predators on the planet, that is why we are destroying it.

  4. Carlos…looks like you’ve been thinking about these issues for a while. As a lawyer I place a great deal of trust in the rule of law. But the rule of law only works if those making the laws truly have the public’s best interests at heart. My worry is that the government forgets this fundamental principle and is swept along with the arguments of corporations who of course have their own agenda. One thing that is heartening though is that the public is becoming more vocal about the problems and is using citizen action groups, NGOs and the media to bring concerns to light.

    A recent example: In the US, activism in Pennsylvania and New York against fracking to access shale gas has resulted in the industry finally acknowledging that more regulation and disclosure of the chemicals used in frac fluid is necessary if industry expects to be allowed to proceed with its shale-based natural gas exploration strategy.

    Maybe it’s wishful thinking but I’m hopeful that the public’s renewed focus on these issues will result in the election of men and women who will protect our interests and once again earn our trust.

  5. Carlos Beca says:

    Susan you are right that I have been thinking and reading on social issues for a long time. In fact for as long as I remember. Unfortunately my life experience does not take me to your hopeful vision of a possibility of a much different future. This issue alone could be a long and interesting discussion but I want to stay with what we have been talking about.

    Of course you are absolutely right that there are positive examples of activism that has resulted in more and better regulation, in this case of fracking, but I have to remind you that in many of those cases, the abuses continue and the people involved sometimes give up and move rather than having to battle monstrous powerful companies with unlimited resources. There are no doubts that some cases are victories indeed but only after many people have their lives seriously damaged. Governments instead of looking at these situations and defend the public interest, in most cases just sides to who pays for them to get elected. You being a lawyer, I am sure you know exactly the wars I am talking about. Also, in a lot of cases people are pushed into situations that are truly barbaric. In Canada, we are fortunate that we still have a chance to at least try. In most of the world, what is happening is purely criminal. On Sunday, on the Sunday Edition (CBC), there was a short story about the behaviour of Canadian companies in Guatemala. It it is to say the least mind boggling but not surprising as unfortunately we now seem to have been trained by other multinationals on how to deal with the native populations a little worse than how we deal with our own.

    As a lawyer I am sure you have your own opinion of the justice system in Canada, but you also know, that a great majority of Canadians does not think too positively about it. In fact, many people do not even believe we have a justice system. Our political system elects majorities with 39% of the vote and the success of elections is in many ways dependent on how much money candidates can get. Life is fast and complex and most people read what they are fed. With few exceptions those news are generated by powerful interest groups that clearly side with the elites. Even our Universities are now basically in the hands of those who have the money for research which of course have changed considerably the freedom of expression of their professors and researchers. For some people of course, these are all very positive developments, but I am not in that group. I maybe wrong, but if one does not belong to that exclusive group of 1% that basically own and control most of our resources , one does not agree that what is happening to our country and the world in general is positive. Now the question is do I believe that this situation will change by the democratic means we have? No, that I have no doubts. Without some radical changes, we will not be able to get out of the vortex we got ourselves in. There is nothing in life that makes a certainty to reverse a bad situation. We see that everyday in examples around the world and believing that Canada is an exception for whatever reasons is to say the least very naive.

    This is of course my personal opinion and I am very open to listen and discuss any different opinion, this is why I got very curious about your blog. I see you answering and discussing with people that take the time to comment on your very interesting and smart postings. I just want to be part of that group and hope that my contribution is of some value for all of those involved.

    Thank you for reading my posting.

  6. Carlos, thank you for sharing your perspective…as you noted at the very end of your comment, this is a place where we can listen and discuss different points of view in an open and respectful manner. You’ve brought an important perspective to the dialogue. Please feel free to continue to contribute whenever the spirit moves you.

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