Thursday, June 17, 2010

Welcome to the United States of Dystopia

Modern medicine is killing America.

Not the way you think. Thanks to modern medicine, more infants live to be adults. And more adults live longer lives -- into their 90s -- with fewer serious health problems. Diseases and conditions that used to be fatal are rarities now.

And there's every reason to believe this blessing will only continue. For one thing, Western civilization is built on the idea that life, itself, is a good. Nobody's throwing that overboard.

And there's the rub. The longer people live, the more money they spend, and is spent on them. Forgetting for the nonce about Social Security, spending that extra money means that pension and health care plans need to make more and more to cover those expenses -- for longer and longer.

But since both employees and their employers can only contribute so much today, that means those plans have to demand the companies they invest in do better and better, quarter by quarter; one down quarter and the investor is off to a company that may do better for a few quarters.

And since it all runs down hill, that means more and more pressure on expenses; lower expenses meaning better profits.

Business expenses, though -- raw materials, real estate costs, utilities -- tend to be inflexible, because in the corporate world, you're talking tough negotiations between relative equals.

So where do you cut? Employment, of course. That's not an equal negotiation. And luckily for employers, modern technology means the worker bees can be expected to work harder and harder, producing more with less.

And they'd better smile when they're doing that, because there's a line behind them who want their job. So technology means that a company needs fewer and fewer employees, with shrinking prospects of pay raises, to produce the same amount of product.

Another place to cut? Employment benefits -- health care, especially. The recent health care bill will never change this, because health care costs will always be higher for older people than younger ones, older people being sicker people, just in the nature of things.

And meanwhile, more kids are finishing school and looking for work every day, competing for fewer and fewer career jobs, and willing to do more and more of what it takes to get them--including offering perfect credentials and a willingness to work for nothing, just to get in the door. All paid for by the parents. Interns, they call them.

This is why the world in which an average American willing to work can expect steady, stable employment, paying a good income, is becoming a thing of the past. Employers have to do better and better or else; and as I said, it all rolls downhill.

Meanwhile, technology is eliminating entire industries, not to mention careers in them, that used to be considered part of the landscape -- consider what's happened to journalism and journalism jobs, for instance. So the old idea of getting your degree, getting on the escalator at the bottom, and getting off at the top, is gone with the wind.

Today, however good they think they are, your typical American can expect to have three careers in their working life. That's usually spun as a great adventure, a chance to kick out the jambs, explore new aspects of yourself, and, generally, continue to grow.

The problem is that when you start a new career, you start at the bottom again. And since you're likely to do that two or three times, you never have a chance to make a good living, or build any equity -- you're running as fast as you can just to stay in place.

Meanwhile, if you're any kind of parent, you need to give your kids at least a fighting chance to have a career in which they can make enough money to live what's become an increasingly expensive, "normal" life.

This can start as early as three, with a good pre-school program, and wind its hideously expensive way through graduate school. Then, three-to-five years of an internship, living in New York, or Chicago, or Washington, making virtually no money, and needing an allowance until they're 30 or so.

After that, if they're lucky, they'll get hired. If they're not hired, they have to start over--though the fact they didn't make the first cut won't do them any favors.

But sooner or later -- hopefully -- they can begin making a living, and start paying off the enormous debts they've taken on as the price of admission to a life that, as recently as the 1980s, was considered the birthright of every American.

We're not even discussing the debts their parents built up along the way. They've got their own problems, the truth of American life today being that if you're not able to retire by 55, you'd better hope you're not laid off, or your company isn't merged, moved, driven into Chapter 11 or sold to a private equity group.

If this happens, it's just tough. You may never get back inside, because the above considerations of technology, productivity, competition for jobs, the social aspects of the workplace, and employment costs are going to kick in. It's nothing personal. But your salad days are over.

In other words, in the world we're building today, your typical American lucky enough to have a professional career will only have about 25 or 30 years to put together enough to live on until they're as old as 90. The rest are just out of luck, buddy.

None of this is any news to anybody who works for a living. But almost nobody thinks about -- or really wants to know -- where this is taking us as a nation. Because forgetting the question of what to do with millions of perfectly able people forced out of what they'd considered secure careers and dumped into an unwelcoming jobs market, you've got to ask yourself; if those hideous expenses are what it takes just to give your kid a shot at a professional career so they can afford an increasingly expensive "normal " life, whose kids are going to get those professional careers?

Rich kids, that's who. And without picking on kids who were born into rich families through no fault of their own, going forward, all this boils down to an America with fewer and fewer career jobs parceled out to more and more people with better and better backgrounds, while more and more people have to make do with less and less.

It leads, in fact, to an America with a handful of people living what we now consider a "normal" life in gated communities with armed guards, and millions of people cast out of the corporate world and left to shift for themselves; a sort of sci-fi dystopia right out of RoboCop.

Politically, this is firewood stacked under the whole idea of America -- a place where you're judged by what you can do, and not who your grandparents were. And the worst part? This has nothing to do with left/right politics -- it's about modern medicine and arithmetic.

So far, I haven't heard many people talking about this, although there are a few, crying in the wilderness. But it's certainly a conversation worth having, and certainly, we need to find ourselves a solution that allows most Americans to live like, well, Americans.

This will have to be a conversation that avoids comfortable bromides about the can-do American spirit, the greatness of the American People, or sneering at people "who won't take jobs they think are beneath them". We have to acknowledge the problem, find common ground, focus on practical solutions -- and make them happen.

If we don't, it will all go up in flames, eventually. That's what happens when you've got a few people with everything, and millions with nothing to lose.

So the question is: Do you love America?

Ex-Oilman Trace Adkins on Obama: 'He's Hamstrung'

Trace Adkins may be best known for his cowboy-style country music crooning, but in his first in-depth interview about the BP oil spill, this former oil rig roughneck and derrickman reveals he's unhappy with BP's "company man" mentality and the media's portrayal of his former profession. And he insists the president, despite his rhetoric, is powerless.

"He's hamstrung now," Adkins says. Without opening leases on the continental shelf and drilling for oil in "depths that are more manageable," he says companies are forced to drill in deeper water where the risks are exponentially greater.

But he believes the actions that led to the Deepwater Horizon well disaster are not the fault of the federal Minerals Management Service (MMS). While President Obama named a new head of MMS today after firing the previous leader for not adequately monitoring rigs, Adkins paints a different picture of the agency. "As far as the coziness with MMS...when that orange helicopter landed on the heliport, everybody's butt puckered... [MMS] had complete free reign."

So what's Adkins' solution? "There's nothing we're going to do to stop it," he says. "They don't want to come out and say 'well there's really nothing we can do about it'. They can't say that, but I can. "

We caught up with Adkins on his 64-acre farm in Tennessee.

Q: What is the advice you have?

Lift the moratorium on drilling, first of all. I don't know how many tens of thousands of wells we drill in the Gulf of Mexico. But how many times have you heard about this happening? I think that is a pretty good track record, and the chances of it happening again are even less now because they're going to learn from this and this is not going to happen again. I'm not going to say never. Chances are going to be slim.

The President was going to open up some of those leases on the continental shelf, in water that we absolutely know how to do it, in depths that are more manageable. And he should go ahead and do that, but he's hamstrung now. But he should.

As far as any advice about the well, it's gonna have to sand itself up. It's going to have to bridge over is what we call it; at some point bring enough material into bore that it will clog itself up and it will stop. Could take some time. That's what's going to stop it. There's nothing we're going to do to stop it. Nobody will tell anybody that, but I'll tell 'em. They don't want to come out and say 'well there's really nothing we can do about it'. They can't say that, but I can.

Q: What about a nuclear explosion?

God, what a bad idea. No, it's not a solution. You have an open hole going into a reservoir that is under high pressure. And if you create enough of an explosion that you cover it up with a bunch of material, it will just be a few months and that pressure is going to find its way out of there and seep through all of that material. If that's what they're trying to accomplish by blowing it up and creating a pile of rubble; I don't know what they expect to accomplish by something like that.

Q: What's your advice to BP?

Pay for your mess. That's' all they can do. They're going to have to pay for the mess and probably change their name. They've pretty much soiled BP at this point.

Q: Will the oil stop at some point?

Yeah, it will. It's not like an artesian well. It's not going to continue in perpetuity. If it did, we wouldn't have the oil crisis we have today. Every well we ever drilled would still be producing and we wouldn't have anything to worry about. But they do deplete. It will stop.

Q: Do you watch the coverage of the BP oil spill?

I've been keeping up with it, sure.

Q: Did your time on the oil rig make you feel closer to the story?

Yeah, sure. As a matter of fact, I was asked by the folks at Transocean [drilling contractor]...to record a video for them [that] addressed that audience there at the memorial service [May 25th]. I was proud to be asked to do that and glad to do it. It's a brotherhood out there. It's a very dangerous occupation. We all knew that and we all looked out for one another. It was a team- type atmosphere out there. You were looking out for one another. Always.

One of the things I've been a little dismayed by is that some of the coverage seems to try to make it look like some of those guys out there are reckless, irresponsible yahoos. And nothing could be farther from truth.

And as far as the coziness with MMS, I'm here to tell you when that orange helicopter landed on the heliport, everybody's butt puckered. There was no coziness. When MMS landed on the rig, everybody got really uptight. They'd come unannounced, they'd get off helicopters and start walking. They wouldn't even tell anybody what they were looking for, where they were going to go or what they were going to do. They had complete free rein. And you had to be ready any time for them to land. And we always were.

I worked on a drilling rig and derrick for 6 years- three years as a roughneck --and was promoted three years as a derrickman- assistant driller. I don't know how many wells we drilled, but we ain't never drilled a well in over 200 feet of water. So the blowout preventer was always above water. It was on the riser pipe - it was standing up below the rig floor. We maintained it, serviced it, function- tested it every week. More regularly if we thought we needed to. And that's what failed on the Deepwater Horizon well - was the blowout preventer. When a blowout preventer fails in just under 5000 feet of water: Game over. There's nothing you can do about it. The reality is that they haven't been able to secure the rights to drill where they know how to do it. So they've been forced out into deep water and the risks get exponentially greater and this is what this you end up with.

Q: Do you feel for families of the victims?

Only in last couple days have I being hearing stuff about some of shortcuts the BP company man was making out on the rig and some of the things that I heard that he demanded of Transocean. I know I worked for some tool pushers [rig managers] when I was offshore who would have looked at that company man and told him to' go to hell- 'it's going to be the end my crew and I'm not going to do it'. But for some reason they did what the company man wanted them to do. I trusted my life a lot quicker to that old tube pusher who had been drilling wells for 30 years than I did to that company man who just graduated from college.

Q: Why did you quit?

I wanted to try [singing]. In '91, things were getting a little tough in the oil field and Global Marine was starting to lay some people off. I talked to my wife and said, 'hey, you know, I think I'm going to take a voluntary layoff and let's go to Nashville and see what we can do' and that's what we did.

Trace Adkins grew up near Shreveport , La. He spent six years in the late '80s as a roughneck and derrickman for Global Marine on an oil rig in the Gulf before launching his music career. He'll be on tour with Toby Keith beginning June 19th in Holmdel, NJ. He releases a new CD 'Cowboy's Back in Town' August 24th.

Oil Spill Compensation -- Not So Fast: It's Not Just BP at Risk!

The proliferation of headlines pertaining to various demands from all levels of government on BP for payment of various costs resulting from the Gulf oil spill - e.g. lost sales and state income tax revenue and salaries for laid off oil service workers, and perhaps lost revenues for tourism dependent firms - has major implications for our economy and legal system. It is certainly viscerally appealing for all concerned to hold out their hands to BP, which has almost certainly done something giving rise to civil liability. At the least, everyone, even BP, agrees that it is liable for direct clean up costs. It is also making voluntary payments to many impacted persons.

However, the efforts which are being pursued at the federal and state levels are at best superfluous, and at worst, seriously detrimental to the economy. There already exists an elaborate body of tort (and perhaps contract) law governing the liability of one who has wrongfully caused harm to another. In general, this body of law limits recoverable damages to what should have reasonably been foreseeable to the wrongdoer at the time of their wrongful act. Those with legal training will recognize and recall the infamous Palsgraf case involving a chain reaction of events on a train - premature movement, people falling, fireworks erupting, objects falling, etc. - which guides us today, and makes clear that the rule of damages which is applied in tort law is not a simple 'but for" standard, but one which limits damages to a much greater extent by defining a "zone of exposure." A moment's reflection indicates that doing otherwise would inhibit economic activity by exposing actors in all fields to vast and unpredictable claims - out of proportion to potential benefits - if anything were to go wrong. While far from perfect, this system has served us reasonably well as our economy has developed.

Adding to the din are administration demands for the creation of an escrow fund to pay for claims against BP. We already have ample mechanisms for those who feel that they are aggrieved by BP to pursue such claims, and for courts to order the creation of security for claims ultimately found to be valid, if they feel that the defendant may not be able to satisfy such claims at that time. Many such claims - individual and class - are already pending. If claims which are currently being made are covered by existing law, the new initiatives are unnecessary. If they are not already covered, and I think many of them, such as claims for lost tax revenue, are not, cooler heads need to seriously consider the macroeconomic effect of the proposed legal changes. It is also essential to look at the constitutionality of the proposed efforts, as many of those which involve forcing BP to make payments without adjudication of liability involve Fifth Amendment Due Process issues.

Whatever the legalities, the last thing we should be doing now is discouraging business activity. Yet, if we expand exposure where a venture - in the oil industry or elsewhere - encounters problems, we will, by definition, discourage the formation, continuation or investment in such ventures, by decreasing the expected return. This will reduce employment. Policy makers need to seek a delicate balance between holding businesses responsible for the damage they genuinely cause and holding them responsible for everything remotely attributable to them. This is why we have a foreseeability standard.

Telling BP that it must make up for sales and income tax revenue which it is not paying because of its focus on clean up activity, seems appealing, but tells other firms, large and small, that even if they do not perform well, for whatever reason, they may be called upon to bolster a government fisc as if they had done so. Nothing would limit such demands to situations where the poor performance results from an environmental disaster. Similarly, requiring payments of lost wages and profits to those in the area following an environmental incident may be just a precursor to such a requirement following a strike, material shortage, fire or natural disaster. It is also an open invitation to fraud, as it will be difficult to determine who would have been fired or laid off or gone out of business in any case, and who would have done well absent the events complained of. While it is unclear whether any pending "suggestions" such as the escrow fund involve resolving claims outside the legal process, if this is the case, the potential for fraud grows exponentially.

Many people lose a good deal of money from the innocent and wrongful actions of other private actors, but as a society, we can not and do not seek to provide an all encompassing safety net through the private sector. The current experience of Europe, which has sought to do so, and undermined its economy to a greater extent than the US, as indicated by the growing sovereign default fears, should be instructive.

Many understandably see the $75 million cap on economic damages - not clean up costs - from oil spills which is contained in current federal law as the triumph of Big Oil and its lobbyists. This may be true, but it is also an important balancing mechanism between risk and reward which encourages the development and preservation of oil production which is critical to meeting our energy and employment needs. Perhaps such a cap should be raised or the definition of recoverable items broadened in light of today's circumstances, but it should not be eliminated to allow open ended recoveries of all conceivable losses.

It may be hard to believe in light of the catastrophic losses from the current oil spill, but there is considerably more at stake for our economy than for the Gulf Coast region. Treating BP as a guarantor of all Gulf Coast losses simply because this may be financially possible, will make clear to the rest of the business world that they may be next when it is politically expedient and will inhibit efforts to reduce unemployment. Our policy makers need to heed not only the sound of the mob clamoring for "justice," and "fairness," but also the more muted sound of reason.