Cash Rules Everything Around Me

I've written before that it's very important for America to learn to count past "one, two, many".  Case in point: BP's $25,000,000 fine for DPing Alaska's North Slope back in 2006.  From the New York Times:

BP will pay $25 million in civil fines to settle charges arising from two spills from its network of pipelines in Alaska in 2006 and from a willful failure to comply with a government order to properly maintain the pipelines to prevent corrosion, federal officials announced on Tuesday.

The fine is the largest per-barrel assessment ever levied against an oil company in a spill case and represents a new blow to BP’s corporate treasury and reputation.

The aggressive approach of federal prosecutors in this case could portend huge fines and penalties from BP’s much larger spill in the Gulf of Mexico last year.

I will eat my own arm if $25,000,000 dollars "represents a new blow to BP's corporate treasury and reputation".  BP's 2010 revenue was $309,000,000,000.  $25,000,000 represents 1/12360 (0.008%) of BP's 2010 revenue.

To put this figure in terms the average person can understand, the median annual household income in the United States in 2010 was just under $50,000.  0.008% of $50,000 is four dollars.  BP paying a $25,000,000 fine is like you or me paying four dollars.  (For comparison purposes, a typical bounced check fee represents a six to ten times greater economic burden on the individual than a $25,000,000 fine represents for BP.)  Surely a $25,000,000 fine is not "a new blow to BPs corporate treasury"; hence, I do not have to eat my own arm.  

(As for BPs reputation, I doubt it could get any worse, but I also doubt that this matters; people generally need gasoline, and BP exercises significant control over supply.  Even if a high percentage of consumers decide to boycott BP gas stations, the gasoline still has to come from BP wells and the company would have little difficulty finding a buyer.)

More math: BP is being fined $25,000,000 for dumping approximately 5,000 barrels of crude oil onto the arctic tundra and into a lake.  One barrel of crude oil equals forty-two gallons.  Therefore, 5,000 barrels of crude oil equals 210,000 gallons.  One gallon of crude oil weighs six to eight pounds.  This is important since many states administer littering penalties based on weight.  210,000 gallons of crude oil weighs approximately 1,470,000 pounds.  A $25,000,000 fine for 1,470,000 pounds is equal to seventeen dollars per pound.  BP has 80,000 employees.  A $25,000,000 fine also represents $312 per employee.

Alaska's littering laws are fairly squishy, so let's compare the "new blow to BPs corporate treasury" of seventeen dollars per pound to the penalties citizens might receive for the same offense in some other states.  The phrase "Don't Mess With Texas" derives from a public awareness campaign associated with new, stricter anti-littering law in that oil-saturated state on the BP-spill-ravaged Gulf of Mexico.  Under Texas law, littering over five pounds carries a fine up to $3,000.  

We're sorry.If 80,000 people walked out their front doors in Texas and each of them dumped eighteen pounds of crude oil onto the pavement, they would each be fined up to $3,000.  If 80,000 people did the same in Alaska and called themselves "BP", they would be fined $312 each and then the New York Times would characterize this fine as an unprecedented attack on business.  Incorporation seems to carry a 90% discount over being an average citizen.

Texas's penalties for littering are mild compared to those of Arizona, fellow Gulf state Florida, and Maryland.  In Arizona, littering more than 300 pounds is a felony with up to one year imprisonment.  In Florida, the penalty for littering more than 500 pounds of material is up to five years imprisonment and a $5,000 fine.  Maryland is even stricter than Florida: up to five years imprisonment and a $30,000 fine for littering more than 500 pounds.  Factoring in immediate lost wages for the median household (and this is a certain underestimate since neither wages lost because no one wants to hire an ex-convict nor interest payments on hypothetical investments are counted; plus the average BP employee almost certainly makes more than the median annual household income), typical penalties for littering in Arizona, Florida, and Maryland represent economic burdens of $50,000, $255,000, and $280,000 per person respectively.

For its Alaska North Slope spill, were BP held fairly accountable to Arizona law, the company would have received a fine of not $25,000,000 but $245,000,000.  In Florida, BP would have been charged $750,000,000; and in Maryland, BP would have had to pay $823,000,000.  These three numbers are ten, thirty, and thirty-three times BP's $25,000,000 slap on the wrist for its Alaska spill.

BPs 2006 spill in the Alaskan tundra was 5,000 barrels.  The company's much bigger Deepwater Horizon spill in the Gulf of Mexico in the summer of 2010 released almost 5,000,000 barrels - one thousand times more than the company spilled in Alaska.  The economic and ecological impact of the Deepwater Horizon spill has been catastrophic and unmeasurable.  If BP is found grossly negligent, the company could be fined $25,000,000,000 in keeping with the precedent now set by the North Slope spill (in accordance with the Clean Air Act).  But even this potential largest fine in history is less than what BP takes in in one month.

For the sake of fairness and for the well-being of all, corporations should at least be held to the same standards we have devised for citizens.  Every time a corporation does anything bad in this country - such as put lead in toys, give people cancer, or destroy an entire ecosystem - our government issues "huge fines and penalties" which are so wildly beyond what most people could ever hope to make in a lifetime as to compel the proverbial townspeople with torches and pitchforks to go home to the bread and circuses of Snooki's new book and Jacob Lusk's elimination from American Idol.  

On the scale of corporate revenues, these incomprehensively large fines amount to a wink, a secret handshake, and a firm yet gentle pat on the ass from government to big business; and they are one of the most pernicious obstacles to a free and healthy society.