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Long-Term Matters: Value corrosion

Imagine ISIS had poisoned a US city, causing almost certain permanent damage to innocent infants and children. Can you imagine the likely domestic and international repercussions?

The lead poisoning of citizens in Flint, Michigan, is likely on this scale. But the causes are systemic and self-imposed. It is an archetypal preventable surprise, an event that takes people by surprise despite prior indications.  

The crisis in Flint is linked to six factors. There was a narrow conception of risk and an ideological focus on finances, with managers empowered to cut costs with no consideratration for their social impact. The institutionalised disregard for externalities is highlighted by the fact the victims were both black and poor. 

Contrast this with Flint officials accepting General Motors’ switch to another water source because of the corrosive effects of Flint’s water supply on its manufacturing activities in the town, which connects with another factor – organisations’ inability to learn. Those identifying the problem were attacked and marginalised. A lapse of leadership led to a failure of regulators to do their duty. 

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Flint is not the only city where lead and other water poisoning is a serious problem. What will the larger outcome be? Arguments for more deregulation and privatisation of water supplies miss the point that quality stewardship of public goods matters. Effective public institutions work better at providing water because the private sector maximises profits instead of optimising public benefit. 

Alleged legal accountability of corporations is no panacea, given the way corporate elites have avoided personal responsibility for major social costs (such as Valdez, Bhopal and the GFC). Progressive or conservative, it seems obvious that allegiance to unfettered profit incentives is inconsistent with desired public health outcomes. Flint’s disastrous attempt to enforce austerity targets failed to recognise the benefits of responsible public stewardship. 

The state of infrastructure in the US is frightening and suggests a failure of both policy, and intent. An attractive long-term solution for inadequate infrastructure is providing better investment incentives. Those responsible for great wealth – pensions funds and very high net worth individuals – should invest in domestic infrastructure, provided they can expect a reasonable return. Government can do much in this regard. Policy is paramount for aligning incentives and outcomes in a sensible manner.

An important lesson from Flint’s preventable surprise is the need for better institutional governance. This requires that systemic checks and balances are used as intended and whistleblowers empowered, not ignored or censured as appears to have been the case in Flint. 

The Attorney’s Office for Eastern Michigan, the US Environmental Protection Agency (EPA) and others are conducting an investigation to understand the facts and assess causes. In the meantime, it appears that at least one or more officials at the EPA may have proposed Flint take measures to prevent lead lines and plumbing connections from leaching into drinking water. EPA internal memos in June, released to the public in November, may suggest that whistleblowers were ignored. 

But if the EPA knew public health was being jeopardised by the State of Michigan’s insistence that the EPA’s recommendations need not be followed, why did the EPA not publicise its concerns? Complacency and hiding behind internal ‘process’ suggest a lack of effective governance at local, state, and federal institutions. How regulators come to be toothless is a key question that has relevance to other debates such as fracking.

Dr Raj Thamotheram is CEO of Preventable Surprises and a visiting fellow at the Smith School, Oxford University. Thomas O. Murtha, a senior adviser to Preventable Surprises, is an experienced investment professional and lectures at Columbia University’s Earth Institute

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