World - Safety on the Cheap

Safety on the Cheap
Robert B. Reich

In the real world, corporations exist for one purpose, and one purpose only -- to make as much money as possible, which means cutting costs as much as possible.

General Electric marketed the Mark 1 boiling water reactors that were used in Japan's Fukushima Daiichi plant as cheaper to build than other reactors because they used a comparatively smaller and less expensive containment structure.

Yet American safety officials have long thought the smaller design more vulnerable to explosion and rupture in emergencies than competing designs. (By the way, the same design is used in 23 American nuclear reactors at 16 plants.)

In the mid-1980s, Harold Denton, then an official with the Nuclear Regulatory Commission, said Mark 1 reactors had a 90 percent probability of bursting should the fuel rods overheat and melt in an accident.

Sound familiar?

The national commission appointed to investigate the giant oil spill in the Gulf of Mexico last April recently concluded that BP failed to adequately supervise Halliburton Company's work on installing the well.

This was the case even though BP knew Halliburton lacked experience in testing cement to prevent blowouts and hadn't performed adequately before on a similar job. In short: Neither company bothered to spend the money to ensure adequate testing.

Nor did Massey Energy -- owner of the West Virginia coal mine that exploded last April, killing 29 miners -- spend the money needed to ensure its mines were safe. It had a history of safety violations but did nothing in response other than fighting or refusing to pay the fines.

And so on.

Don't get me wrong: No company can be expected to build a nuclear reactor, an oil well, a coal mine or anything else that's 100 percent safe under all circumstances. The costs would be prohibitive. It's unreasonable to expect corporations to totally guard against small chances of every potential accident.

Inevitably there's a trade-off. Reasonable precaution means spending as much on safety as the probability of a particular disaster occurring, multiplied by its likely harm to human beings and the environment if it does occur.

Here's the problem: Profit-making corporations have every incentive to underestimate these probabilities and lowball the likely harms. This is why it's necessary to have such things as government regulators, and why regulators need enough resources to enforce the regulations.

And it's why recent proposals in Congress to cut the budgets of agencies charged with protecting public safety are so wrong-headed. One such proposal would reduce funding for the tsunami warning system. Another would ban the Environmental Protection Agency from regulating air pollution, including cancer-causing contaminants.

It's also why regulators have to be independent of the industries they regulate. When there's a revolving door between regulatory agency and industry, officials are reluctant to bite the hands that will feed them.

In Japan, it's common for regulators to retire to better-paid jobs in the industries they're supposed to regulate, a practice known there as "amakudari."

If this also sounds familiar, it is. Remember the Department of the Interior's Minerals Management Service, whose officials were supposed to regulate offshore drilling and ended up in cushy jobs in oil companies? Remember the financial regulators who were supposed to oversee Wall Street before the Street melted down? Many of them are now collecting fat paychecks on the Street.

Finally, the tendency of corporations to understate the probabilities of public harms requires that limits be placed on corporate political power. The public cannot not be adequately protected as long as big corporations -- GE, BP, Halliburton, Massey and all others -- are allowed to bribe legislators with campaign donations and boondoggles.

Sadly, the Supreme Court has opened the floodgates to corporate money in politics. Its grotesque decision, Citizens United v. Federal Election Commission, is likely to put corporate profits before the safety of our people.

Public safety doesn't have to be wildly expensive. But regulators and regulatory agencies have to be independent and smart.

Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley and the author of the new book Aftershock: The Next Economy and America's Future.