Reflections on the BP Oil Disaster

The issue before the nation is the BP oil disaster.  I do not watch television news but obtain snippets while in public places like my gym.  I suspect the key issue behind the spill and its handling has not been discussed. That is BP's incompetence, which reflects the Progressive economic system's decline.  BP is not a free market, competitive institution.  Rather, it is a product of government subsidy and protection.  The government subsidization that has given power to an incompetent management like BP's arises from Progressivism's regulation and subsidization of big business; its emphasis on interpersonal skills and looks in employee selection; its emphasis on the ability to "get along" rather than to get the job done; and its emphasis on paper credentials like college degrees rather than performance. 

There is a competency gap in American society.  It originates from the lack of competitiveness of American business, that in turn arises from the protections government affords business in a variety of ways but especially through the Federal Reserve Bank's subsidization of interest rates and the imposition of regulation and income tax on small producers. The succor that the state provides to big businesses inhibits the innovation that characterized the gold standard-based capitalist economy of the post-bellum nineteenth century.  Progressivism, a radical form of Whig elitism, claimed that it was establishing government as a stabilizer of the economy and a countervailing power to favor justice.  In fact, the economy has become less stable and less just following Progressivism's advent in the 1890s.  The economic policies of Progressivism created racially divided inner cities.  It smashed the competitive spirit of small business.  It served to transfer wealth to university-supplied economic elites. 

One of Progressivism's most important effects was the replacement of inner-directedness or individualism by other-directedness or stylish conformity and "keeping up with the Joneses". This effect took place in several stages.  It was not an effect that the Progressives or their New Deal successors anticipated.  It occurred as follows. Progressivism created protections for business. It also advocated increasing efficiency for business and for a time encouraged implementation of efficiency through the ideas of Frederick Winslow Taylor, whose book Principles of Scientific Management  outlines one, not the only one but one, approach to managing work well.  But Taylor's and other management theories, such as Elton Mayo's 1930s human relations school and, in the 1950s, Frederick Herzberg's two factor theory of motivation (the idea that you motivate workers through opportunity for achievement), were never widely adopted.  Nor have the chief insights of human resource management that also arose in the Progressive era been adopted as widely as they should.  Thus, the scale of business increased while the competency of business did not keep pace.   For example, General Motors was a dynamo of innovation beginning in the early 20th century, just following the introduction of Progressivism.  As Progressive ideas circulated, GM became a bastion of conformity; of yes-man-ism; of groupthink.  It blamed its organizational problems on labor unions.  Meanwhile, Toyota implemented lean manufacturing and total quality management concepts in the 1950s. It literally took GM fifty years to catch up, if it has caught up.

In the 1950s, books advocating other-directed interpersonal skills like How to Win Friends and Influence People became staples of business success.  The emphasis was not on how to make work more efficient, which was Frederick Winslow Taylor's interest, but in how to get along; how to make people like you; how to fit in.  This reflected the sociologist David Reisman's observation that other-directedness was replacing  inner-directedness in urban centers dominated by university graduates.

Not that achievement orientation had ever completely disappeared.  But in the centrally planned, Federal Reserve-subsidized sectors of the economy, the world of large corporations and Wall Street, conformity became paramount, as did paper credentials.  In New York City parents began to vie to get their children into the best nursery schools so that they could get into the best private schools and then into the best Ivy League colleges so that they would present a good package to Goldman Sachs or JP Morgan, and in turn prove that they were the most eligible for public bailing out.  The idea that the most competent employee ought to rise to the top had died long before.  All that mattered was conformity to elite norms.  American business was no longer the powerhouse of innovation it had been until 1950.

This brings us to BP.  I can picture the management of BP: educated at elite schools; tall in height; masculine or feminine; good looking; well dressed; capable of holding their own with the best groomed elite of Wall Street.  Have these men and women been selected because they are the best engineers; the best managers; or the best planners?  Or have they been selected because they conform to the social standards of the economic elite; they fit in, are physically attractive and so ought, in the vision of Wall Street's analysts, to run businesses.

Progressivism has destroyed America's future.  Now, its incompetence is destroying the environment.   A just economy would require all firms to bear the costs of the externalities that they generate.