The BP Oil Spill – Brought to You by Uncle Sam …
June 5, 2010 · Posted in Interventionism
So long as people believe in the necessity of a government, there is no need to act surprised about the inevitable moral hazard that comes with it. Furthermore, there is no need to be surprised about cozy public/private partnerships between regulators and regulated, who always turn out to be on the same side. We need more regulation, NOT more government!!
The BP oil spill is a grandiose example of how government interventionism has brought about yet another gigantic disaster, and how individuals nonetheless clamor for more state power, viz more power to the guys with the guns and the prisons, as the magical panacea to this immensely complex problem. Wouldn’t it be great if only it was that simple!? :)
Let me just list a few things that come to my mind right now, that would not exist, if it weren’t for a group of people with the right to perform acts of aggression against peaceful individuals with impunity, a.k.a. the government:
- The government created legal entity called “corporation” as a shield for individuals to avoid taking responsibility for losses
- Taxpayer funded cleanup of environmental disasters, while not a single one of the executives in charge will lose a house, a car, or anything else that would make him learn anything from this.
- Government regulations that prohibit drilling on the land, pushing drillers off into the deep ocean for incredibly risky drilling ventures
- Military presence in the middle east, thus subsidizing the flow of oil into western countries, and discouraging from the use of alternative fuels
- A national oil reserve, generating additionally coerced demand for oil, again shouldered by the oh so invisible taxpayer
I’m sure there are many more things, but those are just the most obvious ones to me.
I found a great piece on C4SS as well, In a Truly Free Market, BP Would Be Toast:
… Let’s take a look, instead, at how a free market (a genuine free market, in which all economic actors do business on their own nickel, as opposed to the system of corporate-government collusion we’ve had for over 150 years) might deal with something like the British Petroleum oil spill.
Without a government-imposed liability cap, BP would be liable to the full value of its assets not only for cleanup costs, but for the full amount of economic damages resulting from the Deepwater Horizon disaster. Estimates of damage to tourism and fishing center on around $5 billion, but it could be far worse if the slick spreads far enough to affect fishing and boating for Florida’s $65 billion tourism industry (just think of the Everglades). Keep in mind, also, that we’re not just talking about one-off costs this year; we’re talking about big hits to fishing and tourism for years to come, especially as the movement of toxic chemicals up the food chain may make Gulf seafood inedible for generations. This is not just a one-year loss of income from 130,000 fishing jobs, but possibly an end to these people’s careers. There are also possible indirect effects if the loss of wetlands increases coastal areas’ vulnerability to hurricanes.
And that’s not even taking into account the possibility of criminal negligence by BP executives — who apparently rivaled Massey Energy’s Don Blankenship in cutting corners for just about every conceivable kind of safety measure — and the cleaning out of their personal assets by angry juries.
And remember, we’re talking about liability in addition to cleanup costs, which were $3.8 billion for the less severe Exxon Valdez spill.
These cumulative damages stack up pretty tall against BP’s total equity, which was around a hundred billion (at least before its stock took a hit the last month or so).
So absent a liability cap, as the flood of individual and class action lawsuits ate up the company’s equity, the market pressure for holding robust liability insurance (for damages up to tens of billions of dollars) would be a well-nigh non-negotiable prerequisite for economic viability in the industry.
And let’s face it. After what happened with BP, in a legal regime with no limits to liability short of total liquidation of a corporation’s assets, insurers will have a pretty significant interest in making sure policy-holders don’t bankrupt them.
What passed for federal regulations were ineffectual because, among other things, it’s not the federal government’s own money that’s at risk. Things get downright chummy between regulators and regulated. Inspectors sleeping with executives and snorting crystal meth off of toaster ovens is what you call a “public-private partnership,” I guess.
I mean, seriously. When Congress and the White House are packed with people who all got millions of dollars in campaign contributions from all sorts of regulated industries, and most of the political appointees in regulatory bodies are former directors and vice presidents of corporations in the regulated industries, how tough do you think that regulation’s gonna be? Last I heard, brown pelicans don’t contribute much to campaign funds.
But if relations between regulators and regulated aren’t really all that adversarial, you know what is adversarial? Relations between insurers and the insured. Insurance companies are notorious for not liking to pay claims, and for taking an adversarial view of policyholders who make them. Especially when slipshod safety measures mean a multi-billion dollar payout from the insurance company’s own funds. And the “adversarial” relationship is likely to entail things like actual inspections to make sure the failsafe devices work, maybe requiring relief wells as a standard precaution, things like that.
Insurance companies take the kind of adversarial attitude toward the insured that liberals only wish government regulators took toward regulated industries.
It is sooo important, I can’t repeat it often enough, to understand the immensely beneficial role that free insurance companies, and insurance ratings and premiums, would play in a stateless society. The desire to be insured against catastrophic damages of this kind is in universal demand, and opportunities to make profits would drive numerous competing agencies into this field.
We all know from our own lives how well insurance companies are capable at making their clients more disciplined and careful in their lives, simply by the means of charging and potentially upping premiums. We all know how harmful a bad ebay rating is for our future prospects of doing business on the platform. We all understand in our own lives that it ain’t right to walk around and point guns at people and steal from them.
Lil’ Billy and lil’ Timmy know intuitively that something is seriously wrong when Mom, for the 100th time, makes them clean up their bigger brother Jimmy’s apple juice spill. Would you recommend that they run to Mom again about this problem?
People, we have to come to our senses for once! The solutions and the truth are right before your eyes! It actually takes effort and brain bending to NOT see them!!
Here are two more great clips from Freedomain Radio on this matter:
In particular I would like for those who truly care for the environment (and I dearly hope that environmentalists do) to look into this matter. It’s simply too important and the consequences are too tragic to keep repeating the same old mistakes over and over again. What a mess!
And it keeps going and going and going …