Is the perfect the enemy of the good? New recommendations emerging from the Deepwater Horizon explosion
Using a marketing technique common to film and books, the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling has released a preview chapter. The full report is forthcoming next week.
It’s a good read: strong narrative, short paragraphs, declarative sentences. Crucial details are reported as in a better-than-average feature story.
In the preview chapter the Commission concludes:
The well blew out because a number of separate risk factors, oversights, and outright mistakes combined to overwhelm the safeguards meant to prevent just such an event from happening. But most of the mistakes and oversights at Macondo can be traced back to a single overarching failure—a failure of management. Better management by BP, Halliburton, and Transocean would almost certainly have prevented the blowout by improving the ability of individuals involved to identify the risks they faced, and to properly evaluate, communicate, and address them. A blowout in deepwater was not a statistical inevitability.
Retrospectively, this is no doubt accurate. The report does a commendable job setting-out specific decision points, what decisions were made, and the consequences of those decisions. With compelling evidence and narrative, the report goes on to conclude:
Corporations understandably encourage cost-saving and efficiency. But given the dangers of deepwater drilling, companies involved must have in place strict policies requiring rigorous analysis and proof that less-costly alternatives are in fact equally safe. If BP had any such policies in place, it does not appear that its Macondo team adhered to them. Unless companies create and enforce such policies, there is simply too great a risk that financial pressures will systematically bias decisionmaking in favor of time- and costsavings. It is also critical that companies implement and maintain a pervasive top-down safety culture… that reward employees and contractors who take action when there is a safety concern even though such action costs the company time and money.
The Commission also criticizes failures of government regulation. The Minerals Management Service (MMS) of the Department of the Interior is treated almost as a public sector analogue of the private sector’s failure of management.
MMS’s cursory review of the temporary abandonment procedure mirrors BP’s apparent lack of controls governing certain key engineering decisions. Like BP, MMS focused its engineering review on the initial well design, and paid far less attention to key decisions regarding procedures during the drilling of the well. Also like BP, MMS did not assess the full set of risks presented by the temporary abandonment procedure. The limited scope of the regulations is partly to blame. But MMS did not supplement the regulations with the training or the processes that would have provided its permitting official with the guidance and knowledge to make an adequate determination of the procedure’s safety.
I look forward to reading next week’s full report. The preview chapter suggests a well-crafted document that should contribute to greater understanding of this particular event and, perhaps, a range of risks.
I will be especially interested if the full report avoids aspirations to Nirvana. Will it deal with the world as it is, not as we might hope and imagine? The preview chapter suggests some temptation to deny dukkha. If so, the Commission would not be alone.
Over forty years ago the distinguished UCLA economist Harold Demsetz offered, “The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing ‘imperfect’ institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements.” (“Information and Efficiency: Another Viewpoint,” Journal of Law and Economics, April 1969)
While I am writing this (on Thursday afternoon) the new House of Representatives is listening to the Constitution being read in its entirety. The brilliance of the Constitution, it seems to me, is its embrace of human imperfection. The goal of the Founders was not perfection, but the Good.
In my experience Voltaire was correct, Le mieux est l’ennemi du bien.