Gambling in our name
As though the havoc wreaked by the Eyjafjallajökull volcano last month were not enough to convince us, two more disastrous events have since unfolded that demonstrate precisely how vulnerable we in the West have allowed ourselves to become.
But, whereas the volcanic eruption in Iceland was an entirely natural occurrence, spontaneous and unpredictable, the financial collapse in Greece and the massive oil spill emanating from the wrecked oil rig, the Deepwater Horizon, are human catastrophes – the results of very human failures.
These two awful events, though unrelated, do have parallels. Most significant among these is the fact that both have been caused, ultimately, by the greed of a group of people – bankers in one case, an oil company in the other – who have benefited enormously from taking massive risks. And in both cases, when disaster has struck, the real price has been paid by others.
In the same week that BP announced a 135 per cent rise in profits on the previous year, an explosion within the Deepwater Horizon, operating in the Gulf of Mexico, caused the rig to catch fire and then to sink. Eleven crew members are missing, presumed dead; thousands of barrels of oil have been pumped into the ocean, and the populations of Louisiana and the Gulf coast are preparing themselves for a slick that will most likely devastate the wildlife of the region and destroy the recreational and commercial fishing industries as well. From here in Shetland, it is impossible not to think back to those first hours and days, in January 1993, after the M.V. Braer grounded at Garths Ness. On that occasion, Shetland was lucky (if “lucky” is the right word), but things could have been very different.
There is no doubt that BP, who leased the rig, will pay dearly for this event. In order to rescue their reputation they will have to invest huge sums in the cleanup, and in other reparations. But so will the government. And the people who live in these areas could very well suffer a loss that can never be repaid.
Deepwater Horizon, of course, was not just any oil rig. It was rig designed, as its name implies, for offshore work, and late last year it drilled the deepest oil well in history. There are increased risks with this kind of operation, but these are risks which, today, the industry is prepared to take. Oil is becoming harder to find, and much less accessible than it has been in the past; but as long as the money keeps coming in, the companies will keep trying to get it out.
Despite the great risks involved in deep water drilling, industry regulators in the United States did not enforce the use of remote controlled shut-off switches, which could, potentially, have prevented a spill such as this. These switches are widely used on North Sea rigs and are mandatory in Norway and Brazil. U.S. regulators, under pressure from the industry, decided not to enforce their use, in part because they were considered too expensive.
Back in Europe, Greek citizens this month find themselves facing a financial mess on a scarcely imaginable scale. An agreed bailout of £95bn may just save the country from complete economic collapse, but the effect of the “austerity measures” that have been demanded will be extraordinarily harsh. In Greece, as in Louisiana, those who will suffer are not those who are to blame.
The global financial crisis was the result of enormous greed within the banking industry, combined with under-regulation of the industry by governments. It was a system in which the spoils of that greed were enjoyed by a few, while the risks were being shared by us all. It is hard to think of any justification for such a system, but it is this system that we have since paid out billions to rescue.
We are, it seems, particularly poor at weighing potential profits up against their associated dangers. Governments have generally been, and remain, prepared to accept immense threats to our environment, our health and our economy, so long as the returns have been high enough. But we who bear these risks have not been asked whether we accept all of the gambles that are made in our name. Perhaps it is time that we were asked.