An Economic Review of the movie ‘Erin Brockovich’

QUESTION

Introduction to Environmental Economics

Your extra credit assignment is to watch the movie “Erin Brockovich” closely and write a review paper discussing concepts we are covering in the class that can be related to the context of this movie. The review paper should be in a typed write-up not more than 4 pages, double spaced with 12 font size. To give you some directions, you can talk about Externality, Transaction Cost, Burden of Proof, Coase Theorem, etc. and any other concepts that you can relate to its storyline.

ANSWER

An Economic Review of the movie ‘Erin Brockovich’

Erin Brockovich, an American film depicting the story of a lady who battled an energy firm called Pacific Gas and Electric Company (PG&E), using Chromium six, to prevent rusting in their various industrial machinery. Erin is unemployed and is a single mother of three children. She was involved in a road accident with an emergency room doctor and was injured. Erin is suing the doctor by the help of her lawyer, Ed Masry. She, however, loses the case and walks out of the lawsuit penniless. The need to put food on the table for her family of three kids and pay their rent pushes her to seek a job at her lawyer’s office, who employs her only because of her persistence. While looking for employment, Erin was only focused on getting money to support her children. However, she could not hide her inherent and sincere attitude towards helping her community and insisting on justice.

PG&E had been disposing of water containing Chromium compounds into the soil and environment, resulting in the chromium-based water leaking into the local water supply. Residents of Hinkley, California were exposed to the chromium-laced water, as it got into the underground water. Repeated exposure to Chromium six is known to cause severe headaches, various cancers, bone and organ deterioration, nose bleeding, respiratory complications, liver failure and even heart failure. Erin Brockovich investigates the company and discovers the link between the many health issues affecting the residents of Hinkley and Chromium six infiltrating their water systems, through PG&E’s plant.

The investigation Erin conducted, and the subsequent suing of PG&E bring to light various ethical and economic issues in the business world. Erin Brockovich was faced with the burden of proof, defined as the legal duty of a party in a lawsuit to produce evidence proving claims they have made against another party. The lady and her law firm struggle to investigate PG&E and come up with the necessary evidence to win a suit against them. Erin, even without a law degree, uncovers incriminating evidence through her many discussions with several families in the Hinkley community, affected by health problems such as chronic headaches, miscarriages, and gastrointestinal cancer.

The issue of externalities comes out clearly in the movie. An externality is a cost that affects a party that did not choose to incur it. The industrial operations of PG&E involved careless disposal of Chromium six into the environment, resulting in the residents of Hinkley incurring huge costs in health services. Others even paid the ultimate price of death, after suffering lethal health complications such as cancer and chronic nose bleeding. Industrial activities that cause environmental pollution impose huge health and clean-up costs on the entire society. Erin Brockovich in this context serves as the community’s hero, winning $333 million in a fierce lawsuit with the help of the law firm, Masry.

The principle of Coase theorem was used in the lawsuit against PG&E. Coase theorem stipulates that when trade in a certain externality is possible, and there are adequately low transactional costs, a bargain would inevitably result in an outcome that would be Pareto efficient (state of allocation of resources from which it is practically not possible to reallocate the resources so as to make any individual better off without making at least another individual worse off) regardless of the initial allocation of property. Externalities caused by PG&E made it impossible to continue running without causing harm to the community. Pareto efficiency can be considered as just a notion of effectiveness and efficiency, which does not result in the distribution of available resources equally in the society. It does not focus on equality or even the overall well-being of the society.

Ethical issues portrayed in the movie include deception, environmental pollution, and bribery. PG&E deceived the residents of Hinkley, convincing them that their water sources were safe for usage and consumption. PG&E held a meeting with a number of Hinkley residents and illustrated to them merits their firm would bring and the advantages of using chromium three in their industry.  Chromium three is similar to Chromium six but less harmful. However, PG&E was using harmful Chromium six at their plant. They had utterly convinced the residents that they should feel comfortable while their children played in pools of water. They even told them that every member could drink the water out of their faucet. At the end of the film, we discover that this was a completely conscious deception as documents showing usage of harmful compounds were used in the lawsuit.

About the Kohlberg’s stages of moral development, the employees of PG&E can be classified at Kohlberg’s level one. They portray selfishness and did anything to survive, including working under life-threatening conditions. An employee would continue cleaning while suffering severe nosebleeds. There is, however, a man named Charles Embry, who was very instrumental in the lawsuit against PG&E. He did not destroy documents that contained evidence of harmful chemicals used by the company, even though he had been asked to do so. His relative had died at 41, after suffering severe nose bleeding while cleaning the company’s cooling towers. He had cared for other people and went against his employer’s directive to do the ethical thing. I would place this man at Kohlberg’s stage 5. The company, PG&E, has no care for its workers or the community. Instead of changing their policies to accommodate the use of chemicals that were not harmful to the environment and human beings, they give pamphlets concealing the truth about Chromium six, deceiving the community.

Market failure concept is illustrated in this movie. PG&E Company failed to control their production operations properly to minimise the destruction of environmental resources such as water and soil. Available resources are not allocated in such a way as to achieve maximum social welfare. Water catchment areas are depicted as common goods/public goods. The company incurs the loss of $333 million because of the harm caused to the community. It had a burden of care to the community and its well-being.

The dumping of toxic compounds into the environment affects ecological, environmental processes such as the water cycle, nitrogen cycle, and carbon cycle. These cycles are vital in maintaining a healthy environment that will continue to provide required resources for human sustenance and industrialization. Even though environmental conservation is expensive, companies should not ignore it. Pollution ought to be brought down to a minimum. PG&E fails to acknowledge the importance of environmental conservation and moral responsibility.

The use of intimidation, corporate power, and bribery are used in the film. A representative of the firm offers to give $250,000 to the members of the Jensen home, for them to throw away any potential future charges against PG&E. The firm even went on to cater for the community members’ visits to the doctor whenever they suffered various illnesses, ensuring that all the people went to see the same doctor, who they had paid to tell the ailing people that the health complications suffered did not have any relation to the chemicals used by PG&E.

Erin is a perfect example of a good leader. Her leadership skills help her establish a close relationship with the community members. This helps her acquire the required evidence to win a case against a big corporation, PG&E. She is led by the virtues of honesty, justice, and social responsibility. Erin’s excellent and positive leadership is crowned by the success in her case against the company, and the huge fine imposed on it. Solutions to environmental problems caused by firms such as PG&E include the imposition of environmental pollution regulations to control the disposal of industrial wastes, tradable emission permits or pollution quotas, taxes on pollution and effluent, and having well-defined property rights.

References

The film, Erin Brockovich, directed by Steven Soderbergh and written by Susannah Grant

Kurtines, W. M. (2014). Handbook of moral behavior and development: Volume 1: Theory.

Psychology Press.

Henderson, V. (1997). Externalities and industrial development. Journal of urban economics,

42(3), 449-470.