The largest coal company in the world, Peabody Energy, recently declared bankruptcy. Like many coal companies that have taken shelter in the Bankruptcy Code, they will stop paying the hard-fought pensions of a generation of workers who risked their lives for a decent wage while executives and shareholders recklessly profited — and will continue to profit even after bankruptcy. The Obama Administration and EPA are blamed for costing coal miners their jobs and pensions, yet it is decades of government and financial subsidization of the coal industries’ exploitative business model that deserve the blame.
Perhaps no industry has caused more harm to our planet and people. Coal mining has contributed more to global warming (and perhaps to climate change deniers) than any other human activity. Its contamination of water and air kills a million people a year. It denudes land of vegetation and soil for millennia. And it kills workers whether things go wrong (explosions, collapses) or not (black lung disease).
Yet these harms were never included in the cost of coal mining, except to the extent that collective bargaining and government regulation have indirectly raised the cost of doing business. Peabody and other coal companies are now shirking these costs again. Through the Chapter 11 bankruptcy process, mining companies are able to repay billions in debt to financial giants that propped up the industry despite its obvious impending displacement by cleaner energy, to cancel their obligation to fund worker pensions, and then to keep on mining for large profits and executives bonuses even on the cusp of coal’s demise.
Apologists for this financial bail-out under the guise of bankruptcy explain it is only fair that banks get repaid because they would not have risked their money without the promise of priority in the event of a bankruptcy. This justification can be disposed of with a simple question: Did miners risk their lives for the glory of extracting coal from the pits of hell or for the benefits that they were promised first?
Perhaps no feature of “free” market economics is more disingenuous, hypocritical, and exploitative than the shirking of externality costs, especially when these externalities take the form of grievous harms. Pollution, landscape destruction, workplace disasters, diseases, and pension defaults impose grave costs on each of us, as do the minimum wages and inadequate health benefits provided by employers, such as Wal-Mart and fast food chains, whose full-time workers qualify for public assistance programs. Taxpayers subsidize these unsustainable business models while executives, shareholders, and politicians profit.
How can this be? Why do we excuse this injustice on a grand scale?