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Abandoning the public interest By Ulli Diemer
The time: 3:15 pm in the Central European Time Zone, 9:15 am in North America’s Eastern Time Zone. Time to play outside if you’re a child. Time to relax if you’re an adult, do some housework, have a cup of coffee or a nice cold glass of water. Time, if you live in the small Canadian town of Walkerton, Ontario, to walk down Durham Street to join your neighbours and look at the surging Saugeen River, which has flooded its banks after unusually heavy rains the previous day and night. The local park, a couple of adjacent streets, and several unlucky cars, are underwater, but, since everyone is safe, the property damage doesn’t seem too tragic. Time, if you live on the Tollensstraat in the Dutch town of Enschede, to stop what you’re doing and watch the fire engines race by, headed for the paper factory down the street where, it seems, a fire has broken out. Time, just enough time, to grab the children and run back into the house when two explosions at the burning factory rattle windows and send debris hurtling skyward. Five short minutes later, time runs out. The supposed paper factory is actually S.E.Fireworks, and at 3:30 pm, 100 tonnes of explosives ignite in a third and devastating explosion. In the Tollensstraat, not one house is left standing. In the surrounding working-class neighbourhood of Mekkelholt, 400 houses are utterly destroyed and another 1,000 are damaged. At least 20 people lie dead, more than 900 others are injured. In the days that follow, disbelief and shock give way to anger and a demand for answers. S. E. Fireworks, it turns out, has been operating for years in open violation of the most basic safety procedures, yet government inspectors routinely rubber-stamped operating permits, while local authorities and emergency services were not even informed that a fireworks company had been allowed to set up operations in the middle of a residential neighbourhood. The Dutch government, it appears, has been criminally negligent.
In Walkerton too, in the days and weeks that follow, there is anger and a demand for answers. Residents learn that the Ontario provincial government, responsible for drinking water safety in the province, has deliberately dismantled vital parts of the public health infrastructure in the name of cutting "red tape". The government, it turns out, has knowingly ignored repeated warnings from its own experts and agencies that its ill-considered cutbacks in environmental and health protection are jeopardizing public health. Committed to a "free market" agenda of "downsizing government", it has laid the groundwork for a disaster by cutting inspection staff, shutting down testing labs, and eliminating reporting and enforcement procedures. The Enschede and Walkerton tragedies are ominous portents -- deadly instances of a frightening trend in the advanced industrial nations. Governments are abdicating or "downsizing" even those regulatory and protective functions essential for ensuring public safety, or abandoning them to unaccountable private interests. The results can be tragic.
In Turkey, the death toll in the August 1999 earthquake is far higher than it need have been because many buildings supposedly constructed to withstand an earthquake turn out to have been built in violation of building standards. Civic officials are revealed to have colluded with contractors to certify substandard buildings. There is outrage, but to little effect. A year later, no one has been charged, and some of the contractors whose shoddy buildings collapsed win contracts to build replacements. In Belgium, huge quantities of food, including chickens, eggs, dairy products, pork, beef, and baked goods, are discovered to be contaminated with dioxin and PCBs in the summer of 1999. The chemicals had been mixed with animal fat, the fat then put into feed for livestock -- a still-routine practice in modern farming, despite the public furor over mad cow disease, linked to cattle fed on meat byproducts. Upon learning of the contamination, Belgian authorities keep it secret for four weeks before informing the public. An official accounts for the delay by explaining the government wanted to conduct additional tests to confirm the results before subjecting producers to the hardship of having to destroy their products. Later in the summer, Belgium moves to raise permissible levels of dioxins in food, arguing that previous standards were too stringent and therefore too onerous for producers. The tactic of lowering health standards rather than make potentially expensive changes to meet them is popular with industry lobby groups. And increasingly governments are choosing to accommodate industry demands, even if it exposes the public to greater risks. In the United States, new legislation regulating pesticides was revealed -- after it was passed -- to have been written by an industry lobby group working behind the scenes. The new law, an almost word-for-word copy of the lobby group’s submission to friendly legislators, makes it more difficult for regulators to restrict existing pesticides, and makes it easier for companies to bring new chemicals to market. Whereas before it was necessary to provide evidence that a pesticide was safe for use, the new legislation reverses the onus of proof. A new pesticide can now be put on the market unless government regulators can provide conclusive evidence it is not safe. Since pesticide-linked illnesses can take years to become evident, the dangers of this approach are clear.
What we are losing as a result are not only specific protective and regulatory mechanisms, important as they are, but the understanding of why they exist, why they were created in the first place. The hard-won experiences of the past, the disasters that our ancestors learned from at great cost, are disappearing down the memory hole. Allen Kennedy, in The End of Shareholder Value, argues that large corporations have undergone a major change in the last two decades, largely abandoning traditional strategies of long-term corporate growth in favour of maximizing immediate returns. Executives whose main form of remuneration is now their stock option, not their salary, and whose shareholders are also looking for quick and large gains on the stock market, are now concerned above all with maximizing revenues in the very short term. To that end, even the corporation’s own long-term interests are commonly sacrificed. Kennedy cites examples of large companies selling off assets and slashing research and development in order to make stock prices go up. The model for getting rich is now the high-tech start-up, whose Initial Public Offerings (IPOs) put fortunes into the pockets of their founders, although the company may never produce a profit or even bring a product to market. Kennedy quotes one top CEO, who brushes aside questions about the short-sightedness of his approach with the comment "Why... should I care? I’ll be long gone before anyone finds out." At the same time, governments, infused with the same free-market ideology, have made it an article of faith that the private sector is the most efficient provider of most products and services, and that, if a service absolutely has to be provided by the public sector, it should be modelled on the private sector model or provided in partnership with the private sector. Social-democratic and "third way" politicians share this unquestioning faith in the private sector and its ways with their conservative rivals. The result, all too often, is that responsibility for ensuring public safety is left in the hands of companies who are in a grave conflict of interest: the less they spend on infrastructure, maintenance, safety equipment, and staff, the higher their profits. The potential cost of this conflict of interest was revealed by the inquiry into the Paddington train disaster in England, in which 31 people died when a train went through a red signal. Thames Trains, the privatized company which owned the fatal train, had made a decision the previous year not to equip its entire fleet with automatic train protection (ATP) systems which stop trains that pass through red signals and which could have prevented the crash. The decision was taken despite the occurrence of a similar rail crash in Southall in 1997, and despite repeated incidents in which trains were passing through red lights, narrowly avoiding collisions. Thames Trains considered the £5.26 million cost of the system too expensive -- yet the company paid a £4.23 million dividend to shareholders in the year it decided not to proceed with ATP, and another £3.25 million dividend the following year. Another dramatic warning of where this approach can lead struck Auckland, New Zealand, in early 1998. The main cables supplying electrical power to downtown Auckland failed, and the central business district was left totally without power. Efforts to get the system running again failed: it took 66 days for power to be restored. Normal life ground to a halt: residential and office buildings had to be evacuated. A subsequent enquiry showed that the privatized power company had neglected basic infrastructure and slashed maintenance staff. Under public ownership the electrical utility had maintained additional cables to serve as standbys in case of a failure in the main cables. The privatized company had eliminated this backup capacity as a needless cost. The same narrow logic came to light in the Ford Pinto exploding fuel tank scandal of the 1970s. Internal Ford documents showed that Ford executives had cold-bloodedly weighed the costs of recalling cars and fixing fuel tanks ($11 per vehicle) against the costs of settling lawsuits from individuals killed or injured in a fuel tank explosion (an affordable average of $67,000 US for a burn injury, $200,000 US for a death) and concluded it would be cheaper to settle the insurance claims and let the fuel tanks go on exploding. Investigators are now questioning whether similar calculations may have played a role in the failure to deal energetically with the tread separation problems reported on Ford Explorers with Firestone tires. More than 150 deaths in various countries have been linked to tread separations on these tires. According to exposes by investigative journalists, Ford and Firestone failed to inform regulatory authorities in the United States that a problem existed, even though they had already ordered the recall of problem tires in Saudi Arabia and Venezuela, and were engaged in settling lawsuits from victims and families of those killed or injured in the crashes. As a condition of settling lawsuits with victims, Ford and Firestone demanded that evidence revealed during the cases be kept confidential. Had the defect become public knowledge earlier, there is no doubt lives would have been saved.
Industrial societies learned, over the course of decades, that private interests can not be trusted to safeguard the public interest when it conflicts with their self-interest. It was a hard lesson, learned at the cost of many lives, but the result was that gradually, piece by piece, country by country, a public infrastructure of regulations and agencies and procedures was brought into being to protect public health and safety. That infrastructure is now being undermined, not only from without, but from within government itself. We may be forced to relearn the bitter lessons that our ancestors learned, to our cost.
Aussi disponible en français: Abandonner
l'intérêt publique. See also Ulli Diemer's article on the Walkerton water contamination disaster. Ulli Diemer is a freelance writer.
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