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Politics Foreign Affairs Culture Fellows Program

What Shakedown?

Reihan: Shakedowns of this kind have a long and undistinguished history. And let’s acknowledge that they aren’t partisan, or even American, in nature. Republican presidents have engaged in similar tactics, like the so-called “voluntary restraint agreement” the Reagan administration reached with Japanese automobile exporters. During the westward expansion of the United States, the federal government […]

Reihan:

Shakedowns of this kind have a long and undistinguished history. And let’s acknowledge that they aren’t partisan, or even American, in nature. Republican presidents have engaged in similar tactics, like the so-called “voluntary restraint agreement” the Reagan administration reached with Japanese automobile exporters. During the westward expansion of the United States, the federal government “negotiated” with sovereign Indian nations in a similar spirit. European powers engaged in a truly extraordinary shakedown of China during the 19th century, forcing a then-vulnerable empire to accept the spread of opium and surrender treaty ports like Hong Kong. Resentment of the West lingers still.

This seems a bit overstated. Dave Weigel reported earlier this week that some Republican members of Congress, including Louisiana’s Joseph Cao, had been pushing for BP to establish the fund weeks ago. BP voluntarily decided to establish the fund, and then after the fact Obama took some credit for the establishment of the fund. I don’t quite see how this is comparable to the disparity and abuse of power in the Opium Wars, the forced relocations of whole nations or communal riots in Ahmedabad. For that matter, I missed the part in all of this where “a stronger party, ignoring the conventions of a good-faith negotiation, all but forces a weaker party to bend to its will.”

It appears that the corporation responsible for the spill is attempting to take responsibility for the consequences of its negligence, and it doesn’t appear that much coercion was involved. I can understand that Reihan does not want to encourage a spirit of vindictiveness, and he probably doesn’t want to encourage anti-corporate populism that this spill has been fueling (if you’ll pardon the expression), but anything less than some gesture from BP like this one would have ensured that both would have become much stronger. I haven’t heard such tone-deaf arguments from the right since the Republican leadership was rallying around the financial industry to defeat a financial regulation bill that made major financial firms responsible for covering liquidation costs of failing firms. Back then we heard about how it was a fund for “endless bailouts,” and today we hear that this fund is a shakedown. There are other similarities between the two cases, except that in this case many people on the right are trying to be more pro-corporate than the corporation under scrutiny. Even if it this weren’t politically insane given the public’s mood, it would still be wrong on the merits.

I can much more readily imagine how people whose industries, beaches and wetlands are being wrecked every day by this spill might see the fund as an insulting attempt to buy sympathy and to try to ward off more significant payouts later on. When it comes to disparities of power, one could do worse than looking at the disparity between BP and the Gulf coast residents whose lands and livelihoods are being destroyed by the results of BP’s failures. It is only proper that these people are compensated for losses they incurred through no fault of their own.

Attacking the creation of this fund as somehow disreputable or comparable to grave, violent crimes not only shows a staggering disconnect with the views of most Americans, but it also hints at a bizarre favoritism for the interests of the economically powerful over people of modest and limited means. It is a favoritism that seems to have nothing to do with legitimate concerns about excessive or distorting government regulation or principled objections to unnecessary state interference in the marketplace. What exactly is the threat to orderly society here? This is not a case of a mob wielding torches and laying waste to BP’s corporate offices. It is not even a case of demagogic politicians imposing draconian penalties on the company.

What is worse is that Reihan is trying to advance this terrible argument by claiming that it is a matter of speaking up for the unsympathetic victim of injustice and inhumanity. Sometimes the despised are despised for good reason. That doesn’t mean that we abandon good judgment and reason and give in to ruthlessness, much less violence, but it does mean that we don’t complain that a culprit is being unfairly crucified when he offers to pay for his disastrous mistake.

Update: Reihan replies in the comments below, and elsewhere he says that he has changed his mind.

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