Our courts and legislatures are bought and paid for — the laws they’ve made with respect to oil spills prove it.

In March, I emphasized — not for the first time — the insanity of considering corporate and other business entities as rational actors of the sort many economists consider people to be. The problem is that corporate decisions are made by individuals and are therefore driven to benefit those individuals, not the corporations (and their shareholders).”

One reason corporations focus on short-term profits is that the individuals making the decisions for a company will often take the cash made in the short term out of the company (by paying special dividends, for example) and then sell there stock, evading the long-term loss. Even if they hold onto their stock, they may have taken so much cash out of the company before the stock crashes in value that they’ve profited mightily from their holdings regardless of the company’s failures.

But still another reason is the idiocy of the regulation that is in place, regulation that instead of imposing responsibility on the companies for problems they cause limits that responsibility.

10 days ago David Leonhardt wrote about the  perversity of the federal limitations on corporate liability for oil spills and how they made BP’s oil spill, in retrospect, no great surprise:

In a little-noticed provision in a 1990 law passed after the Exxon Valdez spill, Congress capped a spiller’s liability over and above cleanup costs at $75 million for a rig spill. Even if the economic damages — to tourism, fishing and the like — stretch into the billions, the responsible party is on the hook for only $75 million. (In this instance, BP has agreed to waive the cap for claims it deems legitimate.) Michael Greenstone, an M.I.T. economist who runs the Hamilton Project in Washington, says the law fundamentally distorts a company’s decision making. Without the cap, executives would have to weigh the possible revenue from a well against the cost of drilling there and the risk of damage. With the cap, they can largely ignore the potential damage beyond cleanup costs. So they end up drilling wells even in places where the damage can be horrific, like close to a shoreline. To put it another way, human frailty helped BP’s executives underestimate the chance of a low-probability, high-cost event. Federal law helped them underestimate the costs.

We shouldn’t be surprised, then, at BP’s pathetic safety record and the retrospective inevitability of the Gulf spill:

Years before the Deepwater Horizon rig blew, BP was developing a reputation as an oil company that took safety risks to save money. An explosion at a Texas refinery killed 15 workers in 2005, and federal regulators and a panel led by James A. Baker III, the former secretary of state, said that cost cutting was partly to blame. The next year, a corroded pipeline in Alaska poured oil into Prudhoe Bay. None other than Joe Barton, a Republican congressman from Texas and a global-warming skeptic, upbraided BP managers for their “seeming indifference to safety and environmental issues.”

BP was only acting rationally!

Unsurprisingly, the Supreme Court has teamed with Congress in being an accessory to the corporate rape of the country. Even if compensatory damages are capped, conceivably courts can impose punitive damages in civil lawsuits to deter particularly egregious conduct. And, indeed, courts reacted precisely that way to the Exxon Valdez oil spill — that is, until the Supreme Court stepped in. In 1994, a jury imposed $5 billion in punitive damages on ExxonMobil for the Exxon Valdez  oil spill. 12 years later an appellate court reduced that amount to $2.5 billion, half the original amount.

2 years later, in a 5-3 vote (Sam Alito recused himself from the case because he owned Exxon stock), the Supreme Court reduced the amount to $507.5 million, about 10% of the jury’s award. The Court ruled that punitive damages (intended to punish bad behavior, not to compensate a plaintiff for his losses caused by that behavior) cannot be greater than compensatory damages (which compensate victims for their economic losses). As reported at the time, the reduced amount represented “about 12 hours of revenue for [Exxon], which reported record profits of $40.6 billion in February.” Justice Souter, writing for the Court, explained that “a penalty should be reasonably predictable in its severity, so that even Justice Holmes’s ‘bad man’ can look ahead with some ability to know what the stakes are in choosing one course of action or another. See The Path of the Law, 10 Harv. L. Rev. 457, 459 (1897). Exxon Shipping Co. v. Baker (U.S. 2008)(hyperlink added).

Of course, one might argue pretty cogently that neither the Exxon Valdez spill nor the BP Gulf spill were conceivable in the minds of the people who made the decisions that resulted in disasters and that it is precisely that failure to conceive of, much less consider, those consequences that is what the courts should retain the power to punish.

Requiring licenses for artistic appropriation has nothing to with providing incentives to create.

I’ve been pretty passionate in this blog in expressing my belief that art that appropriates copyrighted work does not infringe the copyrighted work provided the new work stands sufficiently on its own as a creative work. To stand on its own in that way, the new work is one that isn’t attracting an audience merely because of its appropriation of the earlier work. The fact it uses the the copyrighted work to convey meaning through the use of symbols and allusions is no different than the way new, original art has always used the meaning culture attributes to earlier work. Art builds on art.

The counter-argument to my position is that artists need to make money to be able to create art, and if an appropriator can pay for a license, why shouldn’t he? First, merely asking for a license is not the same as obtaining one. Second, the most meaningful pieces of art in our culture are the most successful, and licenses for the use of those works are not likely to be within the financial means of most artists. Third, why should you have to ask for a license to make something new from something someone already has made money from (or as much as their work earned in the market)?

But now Malcolm Gladwell goes right to the heart of the most compelling argument copyright holders have against un-licensed appropriation — that the financial remuneration is an incentive necessary to the creation of art in the first place. Gladwell writes:

Dan Pink is best known for a number of really insightful business books, including “A Whole New Mind.” In “Drive,” he tackles the question of what motivates people to do innovative work, and his jumping-off point is the academic work done over the past few decades that consistently shows that financial rewards hinder creativity. These studies have been around for a while. But Pink follows through on their implications in a way that is provocative and fascinating. The way we structure organizations and innovation, after all, almost always assumes that the prospect of financial reward is the prime human motivator. We think that the more we pay people, the better results we’ll get. But what if that isn’t true? What the research shows, instead, is that the great wellspring of creativity is intrinsic motivation—that is, I do my best work for personal rewards (out of love or intellectual fulfillment) and not external motivation (money).

Maybe you don’t think much of this blog, but I’ve written it now for 18 months and haven’t seen a penny in return. The best writers I know scramble to make their livings through their writing, teaching, parlaying their writing into other creative projects, and whatever else can come their way. I’ve known artists my entire life. I’ve known a few who’ve had vast success, but they are a tiny, tiny minority. The artists I know won’t stop creating if they’re not paid for transformative appropriations of their works.

Article 1, Section 8 of the U.S. Constitution sets for the basis of Congressional power to create laws to protect copyright. It states:

The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries; . . . (emphasis added).

It does not state:

The Congress shall have the Power . . . To further the capacity of authors and inventors to extract any and all value that exists in their creations, by securing for a time in excess of the lifetimes of these Authors and Inventors the exclusive right to their respective writings and discoveries; . . .