David Brooks Sees Complacency Where He Should See Corruption

In his column "Drilling for Certainty," David Brooks writes a very traditionally Brooks column: He identifies a real and interesting problem, completely misses its important causes, and fails to provide any sort of solution.

I would be the first to agree with all his premises in the column: Human beings are indeed very bad at risk assessment, risk assessment does get more difficult as the world becomes more complicated, and poor risk assessment can lead to disasters on the scale of the Deepwater Horizon oil spill. However, if the ever-increasing complexity of the world is a problem, we have to either find a solution or forsake technology.



Mr. Brooks would seem to prefer the former, but he does not want too much of the solution to come from Washington. In his most recent column, "The Oil Plume", Mr. Brooks extols the virtues of moderation: "We want regulation to be strong enough to reduce risk but not so strong as to stifle innovation." In classic David Brooks fashion, he appears to believe that slapping BP on the wrist, telling them to think a little more rationally, and advising them on the writings of Edmund Burke will be sufficient to prevent such disasters in the future.

Mr. Brooks, however, misses a critical point. Major crises are not caused just by complacency; malfeasance is usually just as responsible. The financial crisis, for example, was not caused by poor risk assessment; it occurred because major banks did not need to care about risk assessment. The financial system was "heads-I-win-tails-you-lose": All of the upside would go to the banks, while any risk was absorbed by taxpayers. The disturbing reports recently about how regulators at the Minerals Management Service have allowed oil companies to literally regulate themselves have a similar flavor: When oil companies make money, corporate executives get rich, and if something goes wrong, most of the harm falls on the residents of the Gulf Coast. Heads I win, tails you lose.

The problem in this country doesn't fit in Brooks's paradigm of "under-regulation versus over-regulation" of industry; the problem is ineffective regulation. All the regulation in the world will not protect against corporate malfeasance if nothing is done to change basic incentive structures. And the reason that current regulation is ineffective is that Congresspeople are bought and paid for by the industries they regulate. Financial markets will never be regulated properly when prominent members of Congress throw fundraisers on Wall Street. Energy companies will never be regulated properly when prominent members of Congress are elected with oil money.

One can make the objection that there has always been corruption in politics, but the response to this objection is where Brooks's actually touches upon an important truth. In a more complex world, corruption of our public officials is much more dangerous because the industries they regulate can wreak much more havoc on the world. This is the lesson of the financial crisis and of Deepwater Horizon. As long as the state of campaign finance is what it is, catastrophes of this magnitude are going to keep happening. There should be no greater priority for this country than ending the corruption embedded in our system of campaign finance. Without real change on this front, any regulation of large industries will be ineffective, and we will continue to face disasters of the scale of Deepwater Horizon for years to come.