No, this was no April Fool’s Joke, said the out­raged Louisiana Attor­ney Gen­eral Buddy Cald­well. Transocean, which owned and oper­ated the doomed Deep­wa­ter Hori­zon rig, put out fil­ings April 1, stat­ing that it had actu­ally had its “best year in safety per­for­mance” and was reward­ing its exec­u­tives with bonuses. Never mind those pic­tures of vis­cous Gulf water and oil-slimed wildlife. Only after The Daily Show with Jon Stew­art, among oth­ers, evis­cer­ated Transocean did the com­pany announce that the safety bonuses would instead go to fam­i­lies of the work­ers who died in the rig explo­sion. Lest you think this is a full mea culpa, Forbes’ Jeff McMa­hon points out that 5 exec­u­tives will still get $650,000, bonus money that is not attached to safety goals.

Surely with­out the hue and cry these exec­u­tives would have got­ten away with it. Their attempt to snatch per­sonal gain from the jaws of epic defeat is just the lat­est assault on com­mon sense by the “1 per­cent”, as econ­o­mist and Nobel lau­re­ate Joseph Stiglitz describes America’s super-elite in a new Van­ity Fair piece called “Of the 1%, By the 1%, For the 1%.”

He exam­ines the roots behind the vast increase in income inequal­ity in recent decades. It is surely no coin­ci­dence that dur­ing this same period, a new breed of power bro­ker has emerged, play­ers who shape pub­lic pol­icy to fit their own, not fully dis­closed, pri­vate agen­das while pur­port­edly work­ing in the pub­lic inter­est. These unreg­is­tered agents of influ­ence evade reg­is­tra­tion and over­sight: Janine calls them shadow lob­by­ists. And when their pol­icy influ­ence leads to real-world trauma for the other 99 per­cent, these power bro­kers don’t gen­er­ally slink into obscu­rity. They con­tinue demand­ing high-profile rewards, and often get­ting them.

Stiglitz describes well the inter­twin­ing of state and pri­vate power, a key theme in Janine’s Shadow Elite:

The per­sonal and the polit­i­cal are today in per­fect align­ment. Vir­tu­ally all U.S. sen­a­tors, and most…[House] representatives…are mem­bers of the top 1 percent.…are kept in office by money from the top 1 per­cent, and know that if they serve the top 1 per­cent well they will be rewarded by the top 1 per­cent when they leave office. By and large, the key executive-branch pol­i­cy­mak­ers on trade and eco­nomic pol­icy also come from the top 1 per­cent. When phar­ma­ceu­ti­cal com­pa­nies receive a trillion-dollar gift–through leg­is­la­tion pro­hibit­ing the government…from bar­gain­ing over price–it should not come as cause for wonder.…Given the power of the top 1 per­cent, this is the way you would expect the sys­tem to work.

Stiglitz points out that a sys­tem gamed to ben­e­fit only that 1 per­cent is des­tined to sink us all, even­tu­ally, because it means Amer­ica is squan­der­ing its pro­duc­tiv­ity, effi­ciency, and much-needed infra­struc­ture dol­lars. We would go a step fur­ther and say that this sys­tem, of, by, and for the 1 per­cent, is what paved the way for some of the great­est dis­as­ters of the new cen­tury. The BP-Transocean Oil Spill and the Wall Street col­lapse might never have hap­pened with­out the pro­mo­tion by shadow lob­by­ists of loose reg­u­la­tion and/or weak enforce­ment that ben­e­fited them­selves and their elite brethen. Japan might not be fac­ing a nuclear cri­sis, were it not for the fact that the very old reac­tors at the Fukushima Dai­ichi plant got an exten­sion to keep oper­at­ing despite safety con­cerns. That deci­sion was a byprod­uct, crit­ics say, of Japan’s own gamed sys­tem known as amaku­dari, or “descent from heaven”, a long­stand­ing, wide­spread prac­tice in which Japan­ese senior bureau­crats retire to high-profile posi­tions in the pri­vate and pub­lic sec­tors.
A string of smaller, but still ter­ri­ble dis­as­ters can be traced to weak reg­u­la­tion and/or spotty enforce­ment: the half-billion eggs that had to be recalled last year; a 2009 plane crash that killed 50 peo­ple, which Front­line traced back to the “cozy” rela­tion­ship between the FAA and car­ri­ers, allow­ing some of them to oper­ate flights despite safety vio­la­tions; and sev­eral mine dis­as­ters that have killed dozens in recent years. A Wash­ing­ton Post analy­sis found that more than 200 for­mer con­gres­sional staffers, reg­u­la­tors and retired law­mak­ers work for the min­ing indus­try as lob­by­ists, senior exec­u­tives, or con­sul­tants. Those last two roles make it pos­si­ble for top power bro­kers to shadow lobby — they go unreg­is­tered sim­ply by evad­ing for­mal reg­is­tra­tion and refus­ing the accept the title of lob­by­ist, even if lob­by­ing is essen­tially what they are doing.

So what does all this have to do with bonuses? A sig­na­ture fea­ture of the shadow lob­by­ist era is not just a manip­u­la­tion of pub­lic pol­icy, but also an embrace of “fail­ing upward”. No mat­ter the track record, the elite 1 per­cent seek more of the same. Transocean exec­u­tives thought they deserved rich bonuses, as did their unabashed, deeply enti­tled peers on Wall Street, despite their stag­ger­ing failures.

The CEO of mine oper­a­tor Massey, who retired a few months back, is due to get a reported 12 mil­lion dol­lars, a year after Massey’s Upper Big Branch mine exploded, killing dozens. And then there’s egg pro­ducer Jack DeCoster, who’s been called “Teflon Chicken Don.” For years DeCoster has fought var­i­ous work­place safety and envi­ron­men­tal vio­la­tions. Yet here’s what one lawyer who sued DeCoster’s com­pany said about him, to Tri­bune reporter Andrew Zajac: “He gets fined and things hap­pen to him, but he comes back. He always bounces back.”

The insu­la­tion from fail­ure is galling, to be sure, but it’s much more than that. It is both an out­rage and a clear and present dan­ger. If exec­u­tives and stealth power bro­kers face no reper­cus­sions for mak­ing risky bets or push­ing the lim­its on safety to save a buck or work­ing the sys­tem to their advan­tage no mat­ter the con­se­quences, what incen­tive do they have to act more respon­si­bly in the future?

This week, at least, Transocean’s attempt to rebrand its fail­ure and reward its exec­u­tives was stopped in its tracks by pub­lic sham­ing, most effec­tively by Jon Stew­art. He sug­gested that if you fol­low Transocean’s sta­tis­ti­cal “logic” on their 2010 safety record, then 1937 was actu­ally a ban­ner year for the com­pany that made … the Hin­den­burg. Even for the most brazen of the 1 per­cent, that is one brand name no one wants to their name next to. For a change, those try­ing to fail upwards got a much-needed come-down.

By Linda Keenan and Janine Wedel

Pub­lished in The Huff­in­g­ton Post, April 7, 2011.