Ken Rogoff—the Cassandra of the financial markets crisis—insinuates a moral lesson from a another technical disaster without, however, actually defining one.
“If ever there were a wake-up call for Western society to rethink its dependence on ever-accelerating technological innovation for ever-expanding fuel consumption, surely the BP oil spill should be it. Even China, with its ‘boom now, deal with the environment later’ strategy should be taking a hard look at the Gulf of Mexico.” Extract from The BP Oil Spill’s Lessons for Regulation — Project Syndicate
That word “rethink” is the disappointment in Rogoff’s article: it’s placard-waving and handwringing, not analysis. It’s a doorway for ‘dread’ rather than prudence to enter public policy, bringing innovation to a halt in the name of ‘precaution’.
Curiously, Rogoff sees this at the start of his article where he acknowledges that dread unnecessarily halted nuclear power development in the United States, and many other places, for thirty years after the Three Mile Islabnd disaster caused a ‘rethink’.
The lesson that Governments should learn from disasters such as the Gulf of Mexico oil spill is only common sense: learn from this and try to prevent a repetition of the problem, probably by regulation (threat of sanction). In principle it would be possible to internalize some identified risks in the price of e.g. a license to drill but, as Rogoff acknowledges government advisors are not much good at striking the right price for a particular venture.
Indulging the rhetoric of blame (‘witch hunts’) after a disaster easily obscures the benefit we get from a risky enterprise such as off-shore oil/gas drilling. The forensic objective should be to iearn from the disaster—rather than simply to apportion blame—because learning is essential to growth (and welfare) while ‘justice’ is not, however much we might wish it were otherwise.