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Oil Spills and Greece's Ills

Here's a classic environmentalist song by Joni Mitchell. (She wrote it, not the Counting Crows.)

At times like these, I am reminded of why I am neither a devoted liberal nor a staunch conservative. Two of the biggest stories of the last few weeks have been the oil spill off of the Gulf Coast and the debt crisis in Greece. And while I do not pretend to be a person who fully understands the causes of these crises, I do recognize that each political faction, if it plays its cards right, can use one of these events as ammunition for pushing its views.

Liberal environmentalists would seem to have things easy these days. In order to demonstrate just how dangerous offshore oil drilling, weak business regulations, and an economy dependent on fossil fuels can be, all that they have to do is point people to the TV screen. The sobering fact is that the worst may be yet to come. Oil is still gushing in from under the ocean, British Petroleum’s various strategies for containing the spill keep failing, and we don’t know exactly what the impact will be when, where, or if the oil slick reaches the shore. Personally, I do not have a lot of faith in BP’s ability to “fix” this problem. They have had a string of recent disasters that many attribute to their tendency to cut costs whenever possible. I also question their willingness to pay reparations to those who will ultimately be harmed by this catastrophe. A disaster like this cannot simply be measured in financial terms anyway, and the environmental damage in some cases may be irreversible.

President Obama has said in the past that our economy needs to wean itself off of fossil fuels. Conveniently enough, when the spill occurred, Congress was revisiting once again the energy reform bill that has been languishing in Washington. If he is the liberal that many claim him to be, then he should be jumping all over this opportunity. Unfortunately for him, this spill has mostly created problems. Shortly before the spill, he officially supported for the first time the expansion of offshore oil drilling. Needless to say, this was not the greatest timing in the world. It is also in his interest to minimize the extent of the disaster. He does not, after all, want this to be his version of Hurricane Katrina. The fact that this oil spill was the result of oil industry incompetence while the Katrina fiasco was a combination of natural disaster and government incompetence will not stop Obama’s opponents from trying to pin this thing on him. It’s an effective way for the “drill, baby, drill” people to divert attention away from their own culpability.

Finally, President Obama has some big political battles ahead in dealing with financial regulation, immigration reform, and the budget deficit. And as anyone not blinded by political ideology has realized, President Obama is first and foremost a pragmatist. He wants to get things done, and he is willing to make compromises with powerful interests to do so. (See his proposal for expanded oil drilling and the health care bill, among other things.) In this partisan political climate, does he want to take on the oil sector with all of its economic and political clout? Ultimately, it may be public opinion that is the most important factor. And if public reactions to past oil spills can be used as a guide, then we are unlikely to see major changes to prevent future environmental catastrophes and to lessen our continuing dependence on fossil fuels. We tend to have a short memory, and many Americans have accepted occasional environmental disasters as an inevitable part of producing and distributing a resource that makes our lifestyle possible.

Conservatives would be wise to divert public attention to Greece, a country that has become the poster child for inefficient, bloated, overstretched government. As Greece teetered toward bankruptcy, there was a fear that a financial panic could result that would be reminiscent of Lehman Brothers’ collapse a couple of years ago. Only in this case, the problem was public debt instead of stupid private banks. If Greece defaulted, investors would take a hit, and people might wonder which country would be the next to go: Portugal? Spain? Italy? Investors would then be afraid to loan money to these countries, which would drive interest rates up and might precipitate their collapse.

Greece, as part of the eurozone, could not attempt to solve its problems by cranking out more currency. Also, as part of the eurozone, Greece’s problem became Europe’s problem. If eurozone countries could no longer make good on debts valued in euros, what might the impact be on this multinational currency? Apparently, the European Union decided not to find out, so they put together a one trillion dollar package to bail out Greece and other debt-ridden nations. But will this be enough, and will countries with big deficits be able to implement painful budget cuts and tax increases without causing massive public unrest? Street protests in Greece indicate that citizens used to public sector jobs, benefits, and services might not take this lying down.

The lessons for the United States seem obvious. Our ratio of debt to GDP is not much better than that of Greece, and it is only going to get worse if we continue on the current track. Will the United States be teetering on the brink of bankruptcy in a few years? Are Americans ready to make the painful sacrifices necessary to get the budget mess in order? In the United States, the Federal Reserve has dealt with our recent financial crisis by pumping currency into the economy, but at some point, this type of policy will lead to inflation and higher interest rates. In my home state of California, the parallels to Greece seem particularly clear. As a state without its own currency, California is obligated to pay its bills. But as everyone in this country knows, California is an annual budgetary basket case. Conservatives would point to this bastion of liberalism as the ultimate example of what happens when you have a bloated, inefficient government that scares businesses away with high taxes and excessive regulations. The public sector, particularly when it is filled with employees receiving excessive salaries and benefits, cannot indefinitely be propped up by the private sector. Real economic growth comes from the private sector, not government handouts.

Of course, in California, as in Greece, some will argue that the problem is not a system of government provided services. Instead, we are in trouble because of the corrupt, incompetent people who currently run the system. If we could just get better politicians, then things would improve. Of course, you could also make the same type of argument for the recent oil spill. The problem is not our fossil fuel based economy. In any industry, there are going to be people who occasionally mess up. Banning all oil drilling, like gutting the public sector, would be going too far. Unfortunately, this type of thinking can divert attention away from systemic problems and keep people focused on defending their ideology and trying to win elections.

Ultimately, politics is all about spin. Both sides want to make sure that their version of events becomes the more widely accepted “truth.” And the most important part of this game is making sure that the majority focuses on the event or issue that most naturally supports your ideology. Environmentalists want us talking about oil spills, and conservatives want us focused on budget messes in Greece and California. If you want to get a good sense of the political pulse of Americans these days, listen closely to see which stories people choose to notice.

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