Do you know that share or compete game we all played in kindergarten? The one where you stand across from your partner and you touch your hands together, my left to your right and your left to my right. And the teacher says you have 30 seconds to score as many points as possible. And a point is scored by pushing your partner’s hand to his or her shoulder. Then the teacher says go. Some kids finish with 3 or 4 points and others have 25. What was the difference? The competitive kids pushed against each other and it became a strength contest. Others (the good kids) realized that by cooperating they could score many points. I relax and you push, then you relax and I push. Our hands bounce back and forth like metronomes and we rack up the points. I saw a lovely example of this the other day.
I was at a big meeting between two villages, the government and a few NGOs. SDF was there to mediate the conflict. The lowland people are upset that the Hmong people who live high in the hills have been expanding their agricultural production and using more water. So less water makes it downstream. The conversation at the meeting got pretty heated at one point. I thought I was gonna see fists fly. But things calmed down and by the end of the day everyone was drinking whiskey together. I spent a lot of time reading and working on a crossword from the Bangkok Post. It was during lunch that I was trying to figure out what a good solution to the problem would be. I was interrupted by a skinny guy who was finished with his lunch. He walked over by me and scraped clean his bowl of rice and chicken curry onto the ground. Just then two dogs ran from out of the bushes to eat the food. They got there at the same time and drew back their lips to show their teeth. There was fierce growling and they began to circle the food. They were scrappy dogs and each one clearly had some experience fighting for food. Just then the white and tan one lunged at the black one and bit its neck. They unleashed their fury and began rolling and biting and clawing at each other. As this was going on a smaller dog snuck out from around a nearby building and walked up to the food and ate it. As it was licking the ground to get the last of the rice and curry the other two dogs stopped and noticed. The two fighting dogs just walked away as if nothing had happened. I wondered at that moment if they had feelings and if they were feeling foolish. Did they know that it was their unchecked competitive nature that had cost them each the food? Did they see the error of their ways? I tried to imagine the same dogs in the future running up to a pile of food and instead of growling, just separating the pile in half with a paw and sharing. But that seemed ridiculous. I thought to myself, how great it is that humans can share.
I now turn my attention to the human world. My exceedingly unapologetic and intelligent friend, Gabe Rubin, made a statement in October that has stayed with me all this time. He said that the activities of oil companies are logical and understandable given the capitalist system in which they function. He said it is reasonable for oil companies to buy false controversy on GCC and suppress its public acceptance. He said that there should be no expectation for oil companies to pursue greening advances or to develop alternative fuels. Gabe says that companies are risk averse. They have one way they make money and any other action has uncertainty. Therefore they resist change. They do not invest unless a positive outcome can be proven by past similar action. So of course Exxon wants to maintain the status quo concept that burning oil causes no harm. Exxon looks into the ground and sees trillions of dollars of profit just sitting there. All it has to do is hire lobbyists and buy politicians to change policy and open vast national protected areas up to drilling. That, and hope it doesn’t get caught breaking laws that prohibit business relationships with states that sponsor terror. It’s been doing it all since the 70s, so it will just keep on going. And the last thing it wants to do is invest 5% of profits in developing new products and technologies for which there is massive global demand.
Gabe speaks about the difficulties of being an oil company. When an underdeveloped country, like Niger, needs help extracting and processing its oil, it calls Exxon. Exxon buys oil rights from Niger. That means that Exxon does all the work and moves all the oil and gets most of the money, but it has to pay a little to Niger for the rights to do this. And all Niger has to do is collect the checks and silence the citizens who protest (often Exxon helps with the silencing). But Exxon learns that they only have a limited amount of time to profit from this business relationship. After several years Niger will think it has enough money and know how to run the operation itself. Niger tries to kick Exxon out, Exxon says, “Hey we have a contract to do this for 99 years.” Niger shows up with guns and Exxon has to run. Maybe Exxon even has to abandon some of its equipment. This is a bad thing. It is bad for Exxon, for Niger and for the world. I’d like to discuss the search for a solution.
First, this situation is rough on Exxon. It loses anticipated revenue and equipment. The effects of this situation in Niger are awful. Niger lacks expertise and it tries to run the oil operation on the cheap. There are spills and explosions and people are getting caught in the drill rig and torn to pieces. The environment and the locals get shit on. And the Niger oil is being turned into Niger money but it still isn’t helping Niger people. It is buying Bentleys for the top five politicians in the country. Corruption and governance get worse. But at least there is more oil on the market for China and the US to burn. That will slow price increases as a result of consumption going up and supply going down for about 4 months. Oh no, but that’s a bad thing too. It will delay the price increases the world economy needs in order to finally make the shift to green energy sources. But all that’s nothing, the worst part of the Niger Exxon falling out is the effect it has on the future.
Exxon isn’t dumb. This sort of thing happens enough times that it starts to build this situation into its business plans. That means that when Congo calls Exxon, Exxon is prepared. It negotiates a contract that really gouges Congo. It gets environmental and safety exemptions so less equipment is needed and there is less operational overhead. But when the spills start flowing and people leave work looking like ground beef Congo gets pissed. So the Congo army shows up and shows Exxon the door. Turns out that Exxon trying to cover its ass actually makes the cycle more likely occur. And the negative consequences increase with each iteration of the cycle. Next time Exxon is gonna hire a local militia to buy some extra time before the soldiers come knocking. That means when Exxon gets the boot there are angry poor people running around with assault rifles. The time after that Exxon will bribe politicians in an effort to buy more time. But that just installs a robust self reinforcing system of corruption throughout the entire government – see Nigeria. Everywhere Exxon goes it leaves a larger and larger scar.
This is because it is risk averse, like all companies. They won’t try something new. They are just adapting old methods using new information. And no one can stop Exxon from doing this. The US government is basically an extension of Exxon (maybe it’s the other way around) and the UN can’t influence the behavior of companies. The shareholders are rolling around naked in cash, the media is more interested in crotch shots of Britney, science for fact is up against science for hire and the worst thing the average citizen can think of when you say Exxon is “Valdez,” which was 17 years ago. And Gabe Rubin is going around preaching acceptance based on the corporate risk aversion clause. So I sat fuck it, throw it out the window. I propose a new tack. We’ll call it innovation. Of course I’d prefer for the era of oil to be ending but I’m not naïve. So if this is the system we’ve got for a long time still, we are gonna need so switch the flight path. Acknowledge that it is possible to be so risk averse that you avoid improvements and revenue generating opportunities. Risk averse sounds a lot like ‘stay the course,’ and we know how well that does.
What if, instead of a conflict based adversarial approach, Exxon pursued a harmonious cooperative one? The next time Exxon goes to build a relationship with an oil rich technology poor nation I’d like to see Exxon bring in some third parties. A couple NGOs, some nice small neutral European governments, a few UN agencies and deliberative bodies, people from the IMF and WB, a group of people attached to those fancy international courts and institutions of justice, maybe several consulting firms and definitely a bunch of local citizen’s groups. What’s the point of all these groups trying to represent all these interests if they never come together to work on a single project. There are 1000s of NGOs all working in their own disconnected bubbles. And beyond that pretty building on the East side of Manhattan at 42nd street and hundreds of ignored resolutions I’m not sure what the UN does that justifies the billions of dollars that it spends. The global infrastructure is there, it just hasn’t been put to good use yet. There’s power, money, awareness and influence aplenty, all just sitting around. Let’s put it all together, Captain Planet style, and see some action.
Everyone will work up a happy agreement (HA). The purpose of the HA will be justice and to incentivize stability in the relationship, not animosity. We’ll call it ‘sustainable profitable development.’ Sustainability isn’t just for the enviro Nazis anymore. It can benefit governments and businesses too. The economy doesn’t like uncertainty. If stability facilitates a healthy economic environment then there is money in all kinds of hippie causes. Conflict resolution and natural disaster reduction, food security and biodiversity, clean water and medical care, and maybe even nuclear non-proliferation. I’m beginning to see the wisdom in the idea of my old friend from Wesleyan, Alison Binkowski. When last we spoke, Alison’s biggest goal in life is to build an effective international diplomatic entity modeled on the UN that is for-profit. Bring all the stakeholders to table, account for and value their various interests, incorporate information from many sources, and then everyone gets a cut of the resulting windfall. The HA could be the first project of Alison’s UN.
The HA will stipulate that Exxon gets lots of time to be the exclusive Mr. Oil in the country. The HA will establish a more than fair payment schedule to the country by Exxon. The HA will lay out conditions for optimum environmental goodness and safety. In addition, the HA will mandate that local people will benefit. Not just jobs and infrastructure improvements; that’s corporate doublespeak for, “only that which will benefit us.” I mean compensating the neighborhood when the townies are wearing grass skirts and eating dirt and the new guy in town brings 5 drill rigs capable of going 3 miles below the earth’s surface and 100 oil derricks. It shouldn’t be that hard and it should be done. The US government does it when it expands a highway or builds a landfill. Don’t tell me that it shouldn’t be done overseas with private firms just because there have shareholders. The HA will be a big document and when everyone agrees and signs it, it will be a watershed moment. This change will represent Exxon investing in a country’s future prosperity and in the end it will benefit Exxon too. Exxon will set a glorious example for companies all over the world. It will serve all involved parties and it will be secured, certified and supported by international organizations and institutions. Everybody benefits. And best of all, no more business as usual. Thousands of smart people and pompous pricks and money whores graduate from business schools every year and it took me to figure this out? I just had to look out at the world of corporate conduct and ask, are we people or are we dogs?