Time for rational news

News item: Huge fire at Chemie-Pack

Where: Moerdijk

When: 5 January 2011

The Rational Actor Models states that actors make optimal decisions based on their beliefs about the world. Those beliefs are supported as well as possible by evidence and this evidence must be gained by an optimal investment in information gathering. Rational action as such does not lead to a specific goal as it is irrelevant if it is successful or not.  So let us look at the case at hand to see if this RAM can be applied.

For those of you who never heard of the massive incident that took place at Chemie-Pack I will give you a brief summary of events. In short the name of Chemie-pack covers it all as it was a Dutch company that mixed and packed chemicals. Since 1982 they have been present in Moerdijk, but in 2008 they were warned that they were violating rules as the employees were insufficiently trained to deal with chemical substances and furthermore Chemie Pack wasn’t working in a very structured way. In 2009 however they seemed to have solved these problems and the municipal government issued a new permit in 2010. On the 5^th of January 2011 a fire broke out, caused by an employee that was trying to unfreeze a pump next to dangerous chemicals with a gas burner, which had multiple disastrous consequences. Several storage tanks that were outdoor with substances that were not allowed to be stored in such a way outdoor, also caught fire and started leaking hazardous chemical substances and even exploded. This lead to an enormous fire and smoke development that moved over big parts of South Holland. Total damage was around 71 million euro of which big part was made up by cleaning the soil, but there were also additional costs as agricultural crops were lost, etc. As the fire department was unaware what sort of substances were stored on the terrain of Chemie-Pack they tried to extinguish the fire with water in order to reduce the risk of more explosions, but by doing so also polluting all the canals around the terrain. Critics said that a foam blanket would have been the better option, but in the first hours the fire was just too big and dangerous and more explosion were avoided by cooling tanks with water. The foam blanket was deployed in a later stage and proved successful. Later a long lawsuit followed between the state and Chemie-Pack as the second did not want to pay for excessive soil and water pollution caused by, according to them, wrongly fighting the fire. Another problem was that Moerdijk is a small municipality with a corresponding small fire department, however having such a large scale industrial area within their borders they should have had received more attention and finances from the so called Security Region (State and Provincial level). Court in the end ruled that the CEO of Chemie-Pack was responsible for the fire as they created the culture in which safety was not respected causing the employee to not follow up on safety standards by deploying a gas burner close to chemical substances. However final verdicts were lower than demanded by Public Ministry as the controlling bodies were not alert enough in noticing violation and announced their visits beforehand so the company could comply. 

So many things went wrong, but how can this all be rationally explained as in hindsight it all seems 

so obvious. First of all let’s go to Chemie-Pack breaking the rules by violating their permit. On many points they violated their permits multiple times, but each time after a check by the local government they reacted and conformed to the rules. However in 2010 no check was done, whilst this should have taken place. Also building and safety permits in some areas were contradicting each other leading to unclear situation.  Dangerous substances can be stored outdoor according to the building permit, whilst safety reports say this is not allowed. Building and environmental permits also contradict as it states that 60% of the terrain can consist of build-up area, but demands on the buildings and their fire resistance for instance contradict. So Chemie-Pack bought the ground and kept on expanding until they had no more space to expand. Each time they broke a permit and it gets uncovered by a control, they comply to the rules so that they get a new permit, but as this happens very often there are only short intervals during which the company actually operates in compliance with all the permits. As the different sets of rules and permits contradict each other in several areas, it creates uncertainty that was usually interpreted in the most convenient way for the company leading to dangerous situations. In some way it is like a kid who only obeys to the parents when they are watching and as soon as they take their eyes of him he takes more space than he was allowed to until he is corrected again. This leads to the government each time correcting the company and if the company complies a new permit cannot be rejected and is thus granted.

How does this fit in the RAM theory? There are three main actors, the municipality, Chemie-Pack and the Firefighting department of Moerdijk (which is also municipal).
Chemie-pack acted on their belief of how one should safely work with chemicals, but above all on how to create a workable situation in a forest of rules. Their business is not to be legal experts, but chemical packaging experts with economic survival (and gain) as their guiding principle and belief. The municipality is the actor who wants them to comply to the rules they set so they should instruct them is their belief. In order to do so one has to have a permit and follow its rules, which would be their optimal decision. If the permit is threatened to not be extended or renounced due to non-compliance of rules this situation has to be solved in order to comply again and this is exactly what Chemie-Pack did each time.
The municipality of Moerdijk principal beliefs are to provide a optimal conditions on various fronts for the inhabitants and companies within their borders. I will focus mainly on the fronts that are relevant in this case, so safety, jobs and homes. Chemie-Pack for them provided jobs that were harbour related and thus made use of the unique geographical quality of being located along one of the rivers of main economic importance. However safety is also of key importance and therefore permits are there in order to guarantee safety is covered. However as a small municipality with a big industrial sector there is a mismatch in size leading to capacity issues. The high complexity of combining building, safety and environmental rules into a harmonious framework goes beyond the legal capacity of the municipality. The optimal decision is to just put make companies comply to each set of rules separately. That these are sometimes contradicting is something that in the course of the process of granting and extending permits will be picked up and ironed out saving costs and time upfront and spreading them over a longer period of time as relevant issues will be selected along the route. That these relevant issues could come up in a disastrous way as it did in Chemie-Pack was not foreseen, but could have been as no check was done by the local government in 2010 for unknown reasons, therefore shifting some of the responsibility for the disaster to the municipality of Moerdijk in my opinion.
The fire fighting department of Moerdijk has a very simply goal and belief, to fight a fire in the best way possible with the least risks for its personal within a given budget. Their optimal decision would therefore be to comply with their belief, which they did as no fire fighters were injured in fighting the fire. They could however themselves either have asked for a bigger budget, but I have no documentation on if they did) or strengthened ties with the Security Region to assure themselves of sufficient knowledge and backup capacity if needed. 

Relating to the relatively small fire department, this can be justified by the small amount of inhabitants, but due its geographic locations along the river close to Rotterdam harbour area it is so tightly linked to Rotterdam leading to similar industrial activities on a large scale that you would not expect in such a small municipality. Therefore based on administrative data everything was good, but based on actual activities and scale it should have been judged differently and have a much bigger fire department or be much more closely linked to Rotterdam and the Security Region (financially, experience, etc.).

Concluding one could say that with hindsight a three strikes out policy could have avoided the whole situation combined with a set of streamlined rules that do not contradict each other and thus leaving no room for uncertainty and creative interpretation of these rules. If a disaster however does happen, as it can never be fully excluded, the damage it does has to be minimized by having a fire department that is actually capable of fighting the fire in the best way possible. This can only be done if they either fall under the responsibility of the Security Region of Rotterdam or if they get enough money to sustain a bigger fire fighter corpse with very close relations with the security region to exchange experience, etc.

Friedman’s proposition: The business of business is to increase its profits.

I always thought that Friedman had some very icily scary economic ideas that took out all things that make up humanity and only focused purely on the financial gain aspect. As my wife is Chilean and grew up under the regime of Pinochet and his Chicago Boys, of which Friedman was one of them, I always resented anything to do with them. Someone who supports a dictator and uses him in order to experiment the deployment of his own economic model in a such an extreme way that would ordinary never have happened in society, can only be seen as immoral in my view. Naomi Klein in her Shock Doctrine also writes about the Chilean case and describes that the initial shock of violently overthrowing a democratically elected socialist president was used to impliment its shock program of of "sweeping reforms including privatization of state-owned industries, elimination of trade barriers, and cuts to government spending". All those opposing these changes were subject to torture or just were made to disappear by the military regime.
Naomi Klein however was just one of the books I read on the case and I also saw several documentaries and spoke to many Chileans on Pinochet times and never once thought “wow because of them Chile now is where it is” as Friedman followers always like to think. Friedman is a fundamentalist and fundamentalist should always be avoided and steered clear of as their ideas are radical and dangerous. Unfortunately they are of all times, so I think we will always have to keep on the watch for new threats to a more balanced comprehensive vision in which economy, environmental and social aspects all get their fair share of attention. However the most fundamental reason why I do not agree with Friedman is that forcing his model upon a country in an undemocratic way can never be justified.