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  • The Destruction Continues

    Posted by David Foster on June 12th, 2010 (All posts by )

    I’ve never been a fan of the company called BP. For one thing, I thought their slogan, “Beyond Petroleum,” was political pandering of a very low sort, and also disrespectful to their own employees, the vast majority of whom were and are engaged in petroleum-related activities.

    But regardless of my feelings about this corporation, I am increasingly appalled at the lynch-mob spirit behind the attacks on it by the Obama admninistration…in particular, the strident demands, while the crisis is not yet resolved, for increasingly vast sums of money in compensation for the damages caused. (See this, for example)

    In the United States, we have an established mechanism for establishing damages in situations like this. It is called the court system, and it involves things like laws, precedents, contracts among the companies involved (and BP was not the only company involved here), and this little thing called evidence. For all of this, Obama seems to want to substitute something like a civil version of the constitutionally-prohibited bills of attainder, though in this case driven exclusively by the executive (him) rather than involving legislative process.

    Those who think that this is okay, given BP’s bad performance in this matter, would do well to consider the words of Sir Thomas More in the play A Man for All Seasons:

    Thomas More (to his son-in-law): What would you do, son Roper? Cut a great road through the law to get at the devil?

    Roper: Yes! I’d cut down every law in England to do that.

    More: Oh? And when the last law was down and the devil turned ’round on you, where would you hide…the laws all being flat? This country is planted thick with laws coast to coast, man’s laws, not God’s, and if you cut them down, …do you really think you could stand upright in the winds that would blow then? Yes, I would give the devil the benefit of law for my own safety.

    Some of the time and energy that Obama and members of his administration have spent in demonizing BP would have been better served in pursuing practical measures to control and limit the damage from this incident. The handling of both the offer of help from the Dutch, and the offer of oil-containment booms from a Maine company, point to serious administrative chaos and incompetence. As a lawyer, Obama should be aware that there is a “duty to mitigate damages,” not to just sit back and let the worst happen and then claim maximumn compensation.

    Obama’s demonization of BP is also having a negative impact on this country’s relationship with the UK. Many British citizens own BP stock, directly or indirectly, and Obama’s previous actions toward Britain…the return of the Churchill bust, the insulting gifts, the lack of support in the Falklands matter…have already convinced many Britons that Obama is prejudiced against their country. The stridency of the attacks on BP (which he refers to as “British Petroleum,” even though that has not been the company’s name for some time now) cannot but confirm this belief.

    But it is the undercutting of the American legal system that concerns me the most. Yesterday, Bill Waddell wrote about the factors involved in a company’s success or lack thereof. He cites the book Dynamic Manufacturing, by Wheelwright and Clark:

    One of their central ideas was that the business can be viewed as a combination of structure and infrastructure. Structure is the physical, tangible part – machines, buildings, material handling and computers. Infrastructure is the soft part that is hard to see – systems, measurements, how numbers are put together and how decisions get made – in other words, management. It includes things like the organizational structure, accounting and measurement systems, supply chain management processes, capital investment decision criteria and quality management.

    They had a great insight in pointing out that no company succeeds in the long haul on the basis of structure. By definition it is physical, and can be made or bought by anyone. You are not going to outperform the competition with anything you buy like a machine or a new computer. If it is that good, they can and eventually will buy one just like yours.

    The key to success lies in the infrastructure of the business – how you manage it. And even if you use similar logic, the management will be a reflection of the collective wisdom, knowledge, experience and values of the management team. It will be as unique as fingerprints.

    (I’m not fond of the word “infrastructure” in this context, as it generally implies something much more tangible, but don’t have a better idea at the moment.) These ideas can be applied at the level of a society as well as at the level of an individual company. A big part of America’s success has been a legal infrastructure which was stable, predicable, and reasonably nonintrusive. This infrastructure has already been grievously harmed by the Democrats’ encouragement of rabid levels of litigation, combined with regulatory micromanagement–Obama’s lynch-mob approach to damage assessment threatens to do it additional grievous harm.

     

    14 Responses to “The Destruction Continues”

    1. David Foster Says:

      Rudy Giuliani: I wrote a book on leadership and I would say if I wrote another one, I would use this as an illustration of the exact opposite of leadership

    2. Michael Kennedy Says:

      They are also lying about the six month moratorium in ways that a high school student would decline.

      The seven experts who advised President Obama on how to deal with offshore drilling safety after the Deepwater Horizon explosion are accusing his administration of misrepresenting their views to make it appear that they supported a six-month drilling moratorium — something they actually oppose.

      The experts, recommended by the National Academy of Engineering, say Interior Secretary Ken Salazar modified their report last month, after they signed it, to include two paragraphs calling for the moratorium on existing drilling and new permits.

      Salazar is caught lying and Browner tries to change the story in a clumsy manner. They really a clownish bunch.

      Unfortunately, they are running the country at the moment.

    3. Andrew_M_Garland Says:

      We are already living in a tyranny, if Obama can say “I will do the following”, that action is not supported by law, and his own party will not stand against him.

      A tyranny is not just one willful man, but a large faction that says the law and constitution does not matter. If the populace is so stupid as to support or endure this lawlessness, then we have an established tyranny.

      This is asymmetrical warfare. The Democrats flout the law, then say “under the law, you can’t do anything except vote us out”. The desire for law and order among most people is used as a shield against any action to stop the lawbreaking of that group.

      Obama’s and the Democrat’s actions are not just allowing more destruction by oil in the Gulf. They are weakening the rule of law, or possibly are revealing that the law in our great country is a thin tissue, long hiding the arbitrary power of the government and the tyranny of Congress.

      It will be interesting to see if the productive people of the U.S. will be made slaves to onerous taxes and distributionist policies because they respect “the law”. Or, will they conclude that “the law” is an instrument of oppression when it is wielded by people who selectively break it.

    4. dearieme Says:

      “I’m not fond of the word “infrastructure” in this context, as it generally implies something much more tangible, but don’t have a better idea at the moment”: how about “infraculture”?

    5. tyouth Says:

      “….legal infrastructure which was stable, predicable, and reasonably nonintrusive. This infrastructure has already been grievously harmed….

      Mr. Fosters post and Mr. Garland’s comment give voice, I think, to the most grievous example of intrusion and unhealthy corruption of what had been the American system; namely the TARP and bailouts. In arguing that business entities are “too big to fail” (a spurious argument since government intervention could have come in other ways than in ways that amount to favoritism, cronyism or vote/political rewards) this administration has not allowed legal remedies to operate and healthier institutions and mores come to the fore. In this example of corruption the recipients of the largess survive and become amenable to anything Big Brother has in mind. This sort of thing seems incredibly corrosive in a population already becoming very cynical about it’s leaders and fellow citizens.

    6. John Foster Says:

      The Chrysler bankruptcy illustrates the current “Chicago way” in running roughshod over the law, i.e., forcing a preference for union members over bond holders.

    7. tehag Says:

      “Many British citizens own BP stock, directly or indirectly”

      So what? BP should be prosecuted (not demonized–note I’m agreeing with this post) regardless of who owns it. If British citizens suffer through the decline in value of the corporation, that’s too bad–they should have bought stock in a different company, apparently one government-owned: that way profits can be enforced by law and all responsibility evaded.

    8. david foster Says:

      Tehag…there’s a difference between extracting proper compensation from a company and using the soapbox of an elected official to drive it into the ground. Attacks like Obama’s can cause not only immediate fall in stock price but withdrawal of bank credit, difficulty in selling bonds, and reluctance of suppliers to do business with a company other than on a cash basis, leading in extreme cases to the failure of a company that would not otherwise failed.

      Also, Brits have detected a pattern of anti-British bigotry in many of Obama’s statements and actions.

    9. Eddie Says:

      My understanding is their aggressive acquisitions and investment in solar energy and natural gas were informing their effort to project themselves as “Beyond Petroleum” at a time when many of their competitors were dithering on natural gas and solar (BP has some very large natural gas holdings). Still, it was pathetic political pandering.

      As far as their stock value and public perception, the company has been caught lying nearly as much as Obama. They misled the federal and state governments for weeks about what was actually happening, not to mention the general public. They have been exposed by their industry peers on this and other facets of their dishonesty. The government’s attacks on it (rooted mostly in the paralyzing fear that tens of billions of dollars will have to be spent by taxpayers to clean up BP’s mess and that the taxpayers will blame Obama for it) have less to do with the stock issues than with the realization by the market that BP is run by exceedingly poor leadership who cut corners on everything from having an adequate response plan to industry-wide dogma about safety regs. That’s not the mark of a company that should stay in business very long, with or without government pressure.

    10. Thomas Hazlewood Says:

      David Foster said, “Also, Brits have detected a pattern of anti-British bigotry in many of Obama’s statements and actions.”.

      I have detected a pattern of anti-American bigotry from the British for several decades! I have noticed that Jews have not fared well in the opinions of the British, either.
      Any concerns I might have once held over the loss of British goodwill were surrendered during the decades-long castigation of ‘Cowboy’ American policies, American intellectual prowess, capital punishment, etc.

      I trust the British, as allies, more than the rest of the Nato countries. However, it becomes clear that Britain has taken a far different path from the US in firmly linking its future to the EU. It need not be a messy divorce, but, it is obvious that a parting is in the offing.

    11. david foster Says:

      Christopher Caldwell, writing in the weekend Financial Times:

      “In 1968, of course, the Piper Alpha platform, operated by Occidental Petroleum, a US company, exploded in British waters due to poor safety precautions, killing 167 people. History leaves us no record of Margaret Thatcher urging her public to distrust American accents or to ignore the British constitution in the interest of vengeance against foreign corporations.”

      (The part about *accents* is in reference to a bigoted comment by Congressman Anthony Weiner, who said, “When ever you hear someone with a British accent talking about this on behalf of British Petroleum, they are not telling you the truth.”)

    12. Andrew_M_Garland Says:

      To Eddie 9:25,

      You write “BP has been caught lying nearly as much as Obama. They misled the federal and state governments for weeks about what was actually happening, not to mention the general public. They have been exposed by their industry peers on this and other facets of their dishonesty.”

      Would you give your sources? A lie requires knowing the truth and saying something else contradictory. It is easy to look back and see statements know known to be incorrect, but what makes them a lie?

    13. Eddie Says:

      Andrew,

      Do we start with their repeatedly asserted denial of oil plumes? The willful denial of safety shortcuts proven wrong by internal e-mails and survivors of the rig blast (1)? The fact that BP claims repeatedly it has one of the best safety records in the industry despite damning evidence to the contrary (even from the Texas City legal cases they lost and/or settled and fines they settled upon and then willfully failed to adhere to)? The perspective of industry peers that BP has been less forthcoming about claims that this was an “accident” that could not have been foreseen and that had little to do with their enacted policies has been rightly critical, best captured by this analysis of BP’s false claims by Terry Barr in the WSJ (Google “The Oil Disaster Is About Human, Not System, Failure”-Terry Barr).

      Or perhaps the most blatant lie BP pushed for weeks…. that they had planned for such catastrophes and knew what they were doing. They asserted this to the feds, the governors and the media/general public. Their models were all wrong, which they had to have known from the beginning (unless they were simply breathtakingly incompetent, which of course is a possibility), and yet they continued to move along as if nothing was the matter.

      There are dozens (perhaps hundreds) of well-written articles and op-ed pieces by journalists armed with facts and testimony and industry peers and experts laying into BP’s record and actions. Please enlighten yourself if you need to do so. You will find yourself either thinking they are incredibly incompetent in nearly every facet of this oil spill response or that they are lying about nearly every facet of their response and their original operating and management errors. I can admit to some degree of this disaster being laid at the feet of senior management incompetence but that said, at some point deception and dishonesty has to be pointed out in much of their actions given the contrary evidence that has emerged. So I lean much more towards lying rather than incompetence on most of this matter.

      Sure this doesn’t excuse Obama’s miscues or the regulatory gutting that unfolded during the Clinton and Bush Admins that brought us to this point. Nor the anti-British bashing (though the Brits seem rather touchy given their own dire conditions at home they brought upon themselves).

      (1)
      http://www.washingtonpost.com/wp-dyn/content/article/2010/06/07/AR2010060704826.html

    14. tyouth Says:

      It is ironic that one root cause of the oil spill dilema (the 50+ day leak and the blowout overall) is, I guess, that the work is a mile beneath the surface of the water rather than a few hundered feet. We’d rather not have views impeded by signs of industry. The popular, more or less groundless, fear of environmental pollution that near shore oil rigs engendered by their presence led governmental regulators and policy. Regulators essentially acceded to this irrationality and so allowed BP and others companies deep drilling where it is difficult to work and, apparently, impossible to fix things quickly when things do go wrong.