In Wealth of Nations,
Adam Smith argues that the aggregation of the preferences of consumers and
producers for a given good is in the public interest for the product or
service. Often overlooked is Smith’s Theory
of Moral Sentiments, in which the famous economist wraps a moral sentiment
around the individual preferences, hence hopefully constraining them, albeit
voluntarily. Herein lies the rub, for it is shaky to assume that a preference
that seeks to maximize itself will voluntarily restrain itself when it rubs up
against an ethical limit that is felt. Such a moral constraint is like a
semi-permeable membrane in that the sentiment naturally triggered when a person
comes on an unethical situation or person can be ignored or acted on.
To be sure, a sentiment, such as that which a person
naturally feels when he or she learns of an innocent person being killed, can
be written into law and applied as a new regulation; the individual preferences
otherwise triggering the sentiment of disapprobation would thus be constrained
involuntarily from doing so. It follows that if a private actor, such as a
company’s management, with a preference (which is inherently self-maximizing)
can emasculate a restraining regulation without any concern for people’s moral
sentiments, then we are back to trusting in voluntary restraint—only now that actor
has political power rather than merely being one of many participants in a
competitive market. I contend that trusting in the regulated to regulate its
regulator is unethical not least because of the underlying conflict of
interest.
To illustrate the problem, I discuss the influence of
certain energy companies on certain attorneys general in some of the American
States. In late 2014, The New York Times reported that Oklahoma Attorney
General Scott Pruitt wrote a critical letter to the U.S. Environmental
Protection Agency. In particular, he claims that the regulators were grossly overestimating
the amount of air pollution caused by companies drilling new natural gas wells
in Oklahoma.[1]
The public good is salient here because methane, a gas having ten-times the
greenhouse effect of carbon, had been shown by independent tests to be leaking
from natural gas wells and urban pipe systems.[2]
So the public interest in keeping global warming to within
limits palatable to human survival may have been put at risk were Pruitt wrong
in his charge. That the letter had actually been written by lawyers for Devon
Energy, one of Oklahoma’s biggest oil and gas companies—the attorney general’s
staff copied it onto government stationery with only a few word changes and
Pruitt signed it as if it was his own—raises serious doubts as to Pruitt’s
claim of overstatement. That is to say,
a government may have been colluding
with a private vested interest in a regulation at the expense of the public
interest.
An email exchange from October 2011 between attorneys
general and large energy producers “offers a hint of the unprecedented,
secretive alliance . . . to push back against the Obama regulatory agenda,”
according to The New York Times.[3]
The newspaper had “reported previously how individual attorneys general have
shut down investigations, changed policies or agreed to more corporate-friendly
settlement terms after intervention by lobbyists and lawyers, many of whom are
also campaign benefactors.”[4]
Shutting down investigations is particularly suspect, as it cannot be said that
concluding them would run counter to the public good. Moreover, for the
regulated to also be campaign benefactors places both the regulated and the
regulators and attorneys general in conflicts of interest.
For the energy companies, their roles as the regulated and
benefactors conflict because the temptation to obligate regulators and
attorneys general to remove a certain regulation goes against being regulated,
which implies that government regulation is a viable rather than voluntary
constraint. I submit that it is unethical for a society (via its government)
merely to allow the regulated to have the other role because of the latent lure
of the temptation to obligate government officials to remove unpleasant
regulations that are nonetheless in the public interest.
For government officials, taking the campaign contributions
from companies whose regulations the officials can relax or expunge creates a
conflict of interest between acting on a private interest’s behalf at the
expense of the public interest and protecting the public good through
non-voluntary constraints on private interests. According to The New York
Times, attorney generals “in at least a dozen are working with energy companies
and other corporate interests, which in turn are providing them with record
amounts of money for their political campaigns, including at least $16 million”
in 2014.[5]
Also in that year, the U.S. president, Barak Obama, admitted publicly that
the federal elected-representatives must take the huge contributions in order
to compete in elections “and that obligates us.”[6]
We can fill out the president’s point by adding that the large contributions,
such as the $1 million from Goldman Sachs to Obama ’08, obligates elected
representatives to put particular private interests over the public interest
even though being a law-maker or enforcer-of-law carries with it the duty to
protect the public interest from otherwise maximizing private interests.
If enough parts of a ship are allowed to go their own way at
the expense of the ship itself, steering a steady course and maintaining speed
are impeded. Similarly, if powerful private interests in a republic are allowed
to obviate measures that restrict them so the republic may remain viable over
the long term, then the whole will weaken as if leaking energy. Put another
way, prick enough tiny holes in a flat balloon and inflating it will not last
very long. Even though a particular pin-prick does not deflate the whole over
time, a system enabling such hole-making enables enough tiny holes that a slow
deflation becomes a mathematical certainty.
[1]
Eric Lipton, “Energy and Regulators on One Team,” The New York Times, December 7, 2014.
[2]
The E.P.A. had taken the industry’s own “estimate” of 1 percent as the leakage
rate, whereas independent tests showed leak rates up to 18 percent. Cities
tested include Washington, D.C., Denver, and Los Angeles.
[3]
Lipton, “Energy and Regulators.”
[4]
Ibid.
[5]
Ibid.
[6]
Barak Obama at a news conference in late 2014.
