February 25, 2014: Potential Economic Innovation

All corporations are in the business of making money. Regardless of the product or idea marketed to the public, the number one priority for big businesses is to maximize profit margins for shareholders and executives. While this ethical repercussions of this truth are open to debate, the real problem with these corporations is the free reign they have over the market and economy, and the seeming lack of control the government has over them, especially regarding regulations. Due to the lack of government regulations, these corporations are often left operating until they “regulate” themselves, which generally happens when a highly preventable catastrophe occurs due to negligence on the part of the corporation.

The biggest example of this in recent times is the BP oil spill in 2010 off the coast of the Gulf of Mexico that caused 11 deaths and 4.9 million barrels of oil to be spilled in the gulf (akadijan, 2014), while having a huge impact on both the environment and the economy as a result of multiple oversights in catastrophe prevention as well as the general ineffectiveness of regulations in the oil drilling industry. The direct cost of the spill was estimated to be in the range of $37-$90 billion dollars including cleanup2, however the cost the spill had on the environment, as well as markets dependent on the sea life in the gulf are estimated to be even greater. Had BP been more tightly scrutinized over the construction and operations of the oil rig, however, this disaster could have easily been minimized or even altogether preventable.

Corporate taxes generate around 11% of the federal government’s income in a fiscal year (National Priorities Project). Therein lies the conflict of interest: The same body charged with regulating these large corporations and potentially stymieing profits also happens to benefit from letting these corporations cut corners in safety protocols and allowing them to increase profits in any way possible, no matter the environmental or economic cost that will inevitable come down the road. The government needs to take the moral high ground and decide to clamp down on large corporations to heed regulations and laws more strictly, at the cost of losing money.

The unchecked freedom that corporations exercise, while championed by some capitalists who wish for a completely free market, can lead to disasters as corporations grow bolder and more brazen in their disregard for safety regulations in search of a higher profit margin. One would hope that the environment and the stability of the economy for the common people is more important than profit margins for owners and shareholders, however it appears there is no room for morality in either the government or the corporate world.

References

akadjian. “25 Images of Markets ‘Regulating Themselves’.” DailyKos. Kos Media, LLC, 3 Feb. 2014. Web. 24 Feb. 2014.

Hoffman, Carl. “Investigative Report: How the BP Oil Rig Blowout Happened.” Popular Mechanics. Popular Mechanics, 2 Sept. 2010. Web. 25 Feb. 2014.

National Priorities Project. “Federal Revenue: Where Does the Money Come From: Federal Budget 101.” National Priorities Project. National Priorities, n.d. Web. 24 Feb. 2014.