Role of regulatory failure in the sinking of the Titanic

(Cross-post from my other blog, Freedom is Moral.)

The sinking of the Titanic is usually blamed on that careless, horrible Captain Smith and the greedy, capitalist shipowner who didn’t want the expense or inconvenience or clutter of enough lifeboats.  Rarely discussed is the role of the regulators in the tragedy.

Chris Berg points out in his Wall Street Journal article a year ago, The Real Reason for the Tragedy of the Titanic, that the regulators, the British Board of Trade, required all boats over 10,000 metric tons to have 16 lifeboats. It didn’t matter how many passengers were on board. Just put 16 lifeboats on.

Was the Titanic in compliance? Yes.

Yet the Titanic was fully compliant with all marine laws. The British Board of Trade required all vessels above 10,000 metric tonnes (11,023 U.S. tons) to carry 16 lifeboats. The White Star Line ensured that the Titanic exceeded the requirements by four boats. But the ship was 46,328 tonnes. The Board of Trade hadn’t updated its regulations for nearly 20 years.

The operating concept was that only enough lifeboats were necessary to transfer passengers to other ships that would be passing by soon. As the article points out, if the Titanic had taken as long to sink as the previous disaster in 1909, which was 36 hours from damage to sinking, then all of the passengers could have been transferred to seven other ships that would have passed by within a reasonable time.

But the regulators hadn’t updated their thinking or boat count in 20 years.

So when the White Star staff presented their plans to the Board of Trade for comment, they didn’t require any changes.  And if the regulators have created requirements and demand compliance, then that is enough, right?

Here’s the conclusion:

At the accident’s core is this reality: British regulators assumed responsibility for lifeboat numbers and then botched that responsibility. With a close reading of the evidence, it is hard not to see the Titanic disaster as a tragic example of government failure.

There is a direct lesson for today regarding attitudes and actions of regulators.

This is a distressingly common problem. Governments find it easy to implement regulations but tedious to maintain existing ones—politicians gain little political benefit from updating old laws, only from introducing new laws.

The danger of those subject to regulation is to consider that the regulator knows enough to correctly assess risks and then accept those rules as sufficient.

And regulated entities tend to comply with the specifics of the regulations, not with the goal of the regulations themselves. All too often, once government takes over, what was private risk management becomes regulatory compliance.

The danger? Merely complying with the requirement, instead of making an independent, private risk assessment of what is needed.

The tragic irony is that if the regulators did not have a bright line requirement, then ship builders would have been forced to figure out how many lifeboats were needed as each ship was designed.

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