What We Won't Hear at the BP Hearings

Watching today's oil spill hearings in Washington with Tony Hayward, the CEO of BP, raises some questions for me which members of Congress are frankly not willing to ask themselves. Two come to mind between Hayward's answers that he "cannot recall" or decisions he "was not privy to." In the rush to score political points with anxious constituents back home, I tend to wonder if Congressmen will possess the courage to inquire as to the effects of the spill far beyond the coastline and, more importantly, about how corporate size has led to a lack of accountability. Can capitalism as we know it survive in an age of global corporations?

Although the scenes here in Alabama largely focus on the oil collecting on the Gulf, the effects of the spill will be far-reaching in the state. State Superintendent Joe Morton stated back on June 10 that the declines in tourism revenue will impact the Education Trust Fund of Alabama. As tourism has declined by as much as 50% at places like orange beach, some of the taxes which are collected to pay for the fund will also decline. This means that local governments and state governments will be strapped for cash as restaurants, tour boat businesses, hotels, fishermen, and other locally owned enterprises either temporarily close or go out of business. For these individuals, the loss is a travesty, but it is also a travesty for the entire state.

I cannot help but wonder if BP will be committed to truly cleaning up this spill in terms of the financial damage caused throughout the Gulf Coast. Perhaps BP will honor it's commitment of $20 billion to the Gulf Coast, and perhaps BP will manage to stay in business and avoid bankruptcy long enough to honor those commitments. However, I wonder if BP is aware of the local and state governments which will be suffering to provide services during these difficult times on the coast.

However, the bigger question here is the question of regulation and the size of the corporation. Many in Congress may not be aware, but the age of multinational conglomerates who provide many essential goods and services to a worldwide consumer base has created corporations which in 2008 we called 'too big to fail.' The BP crisis demonstrates that they are also, in many senses, 'too big to regulate.'

Capitalism in the traditional conservative sense is based on consumer choice. A business can offer products, and a consumer can decide whether or not to purchase said product based on a series of criteria. When capitalism was smaller, government regulation was far less needed because individuals held corporations accountable. As David Brooks once noted in a column, half a century ago the leading banker in a Tennessee town would have lived in that city instead of far off, in New York, Charlotte, or Atlanta. The same is true of Alabama towns--residents knew the store owners and the producers of products. By contrast, the owners and manufacturers knew their consumers personally--their children went to school with them, and they went to church together. They knew then that in the face of crisis the residents would hold them accountable because they, too, were parts of the community.

Those days are long gone. Today's corporate leaders live far away from the communities they utilize to produce resources, and the size of these corporations makes it virtually impossible for consumers to hold them accountable themselves. Consider the people currently boycotting BP gas. Although this boycott hurts the local franchisees who are only tangentially connected to BP, it does little to undermine BP as a company which owns a vast array of networks such as CASTROL, ARCO Alumnium, and many other companies which produce a wide array of products. As corporations have grown bigger, it has become impossible for consumers to keep corporations accountable. Additionally, corporate leaders only maintain accountability to shareholders who are far removed from communities like the Gulf Coast.

What is the answer? Increasingly the answer has been obtrusive amounts of federal regulation which have been rather ineffective at actually solving problems. Yes, there is a massive federal bureaucracy which we have come to know as the Minerals and Mining Service, but I seriously doubt that even under new leadership this regulatory agency can manage to oversee such massive corporations. Even if they can, the answer seems to be in a government structure so large and so obtrusive that smaller, innovative firms would be crushed by the size of the federal rulebook. It's a sad and unfortunate state of affairs which bears little resemblance to the America we once enjoyed, based on freedom and consumer choice.

Thus, the BP oil spill teaches us two lessons about Federalism, that oldest of American principles. Today when a disaster occurs, it crushes state and local governments which are already struggling for their survival. As conservatives, we should care about local governments because they provide citizens the most direct control over their own lives, instead of exporting that control to a distant place like Washington. It also demonstrates that the size of modern corporations has created a conundrum. Consumers can no longer hold the corporations accountable, and the task now lies with federal regulators. This, too, has consequences. Congressmen may not ask these questions, but Americans should consider them, because in many ways, the future of the nation hangs in the balance.