To regulate or not to regulate? The explosion on still another rig in the Gulf is bound to unleash another round of debate—and intensify the existing debate—over whether we need to regulate oil drilling. But the very existence of this debate points to an even more disturbing catastrophe; the fact that Americans, their leaders, and the press that is supposed to keep them honest, are oblivious about how either business or republican statecraft work.
Private businesses are supposed to generate revenue for their shareholders. Now we can debate about whether BP’s Board behaved responsibly toward their shareholders when they knowingly allowed the Deepwater Horizon’s owners to seek and receive no-inspect rights to build and run the rig. Maybe the shareholders should talk to BP about their lack of oversight. However, there is nothing in American law that will compel BP’s Board to behave more responsibly. And, indeed, had the Deepwater Horizon not blown, shareholders would today be praising the Board’s decision not to be burdened by the costs of overregulation. And nine-nine percent of the time the Board would be right to bypass government regulation and oversight. Businesses are value-maximizing machines and they will take advantage of every opportunity they get to enjoy this right. Of course, it is their prerogative to invite regulation and oversight. But that will always be a private decision.
In a republic, however, the people always retain the right to limit private choices in order to promote the general welfare of the republic (its in the US Constitution). That is to say, republics can decide to do for private enterprises what shareholders would never choose to do on their own. These limits are precisely what public law—as distinguished from privilege (i.e “private law”)—is all about. Back in the 18th and 19th centuries, lots of communities decided to throw out privilege and elected to give priority to public over private law. They wrote and approved constitutions that placed this priority into law.
So, why are we even having this debate? Of course, the public can (and should) regulate private industry, including the oil industry. That is the essence of the republican form of government. So, let us instead say out loud what this debate is really about. It is about whether we want to continue to be a Republic.
I’m sorry. Who are the true patriots in this debate?