MIT Faculty Newsletter  
Vol. XXIII No. 4
March / April 2011
Protecting Education in America
The Contributions of Institutions Such As
MIT to a Knowledge-Based Economy
Reinventing and Sustaining the
Faculty of the Future
Departmental Discussions of Diversity
and Inclusion
Practical Considerations for the Involvement of Graduate Students in MIT’s International Engagements
The Roadmap to the Future of MIT’s
Student Information System
Free Market Apocalypse: Safeguarding the World from Large Disasters
About DSpace@MIT
Disappointed in NRC Rankings Prominence
MIT 3rd in World University Rankings
U.S. News & World Report:
Top 10 Graduate Engineering Schools
U.S. News & World Report:
Top 10 Graduate Business Schools
Printable Version

Free Market Apocalypse:
Safeguarding the World from Large Disasters

Ernst G. Frankel

While free market economies thrive and basic capitalism works well, it does require effective regulation to police or curtail corruption, self-serving, and harm to people and society. Recent major calamities such as the BP Gulf of Mexico oil spill, the northern Japan nuclear reactor problems, and others show that we must limit the role of private enterprise in managing major disasters that may harm society, public interests, and the world at large. Common interests and safety are too often in conflict with interests of private business.

Profit and asset value maximization are often in direct conflict with public interest and safety, as noted most recently in the BP Horizon oil spill and the northern Japan earthquake- and tsunami-triggered nuclear reactor disaster.

In both cases, government agencies deferred to the owners to correct faults, assure safety, and – even after failure – left the owners with the responsibility to correct the problems and ameliorate the consequences. The respective governments apparently assumed that the owners/investors would want to do their best and have public safety and interest foremost in mind. Yet in both cases, the public was greatly disappointed as owners put their financial and liability interests first and dealt with the problems in a way that would minimize their own potential costs and exposure.

In these cases, as well as other similar accidents or disasters, potential threats were forewarned long before the respective accidents, yet little or no corrective actions were taken. These and other physical disasters follow a hierarchy of financial or economic disasters, such as the sub-prime mortgages, student loan fraud, and various other financial or financing schemes which not only brought the U.S. but much of the world’s economies to their knees. Most were triggered by greed, lack of regulation and oversight, outright corruption or political self-interests, and self-serving objectives.

For example, BP refused to collect the bulk of the oil spilled out at the site and instead preferred to hide it by sinking it below the surface through use of millions of gallons of poisonous dispersants, though much of the spilled oil still ended up on beaches or in coastal power plant cooling systems. The surplus oil continues to exist as a huge oil and dispersant subsurface and poisonous cloud which is expected to kill and harm sea life for decades to come.

The owners of the Japanese nuclear power plants acted similarly, and instead of immediately taking dramatic affirmative action to seal off and insulate the damaged power plants by encapsulating them under a heap of sand and concrete and burying them for good under an insulating mound of dense material – which would have ameliorated the spread of radioactivity and let it cool over many years – they tried various halfway measures designed to reduce radiation and dangers of explosions, without developing a long-range plan or solution. So far all the work has consisted of stopgap measures, which generally only exposed other problems.

In order to rectify these continuing unacceptable actions, there is an urgent need for the establishment of a super national disaster management agency with authority to take drastic measures to protect humankind and the planet, rather than narrow financial and nationalistic interests.

Most importantly, unbiased academic experts should always be consulted, and perhaps even a global council of academic experts should be created to advise the disaster response authority in developing and imposing safeguards and solutions which are truly in the interests of humankind and the future of the world. Large-scale disasters (natural or manmade) increasingly negatively affect humankind and the world at large, and cannot be assigned to or managed by local, often biased, authorities.

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