Alarming News

May 23, 2010

Stating the obvious

I keep hearing liberals smugly ask when the “free market” is going to step in and clean up the oil spill in the Gulf. Their joke, of course, is that we need government when things go wrong, and that those of us who believe government is more of a hindrance than a help are kidding ourselves.

What they don’t realize is that they’re inadvertently making the argument for smaller-government: Of course no one is going to step in and do anything if they know the government will always do it for them. As we said in 4th grade, duh. And thus we become reliant on an inefficient, inept body which responds to our needs but in the poorest, most useless way possible. Who, exactly, wins with that system?

Posted by Karol at 11:33 PM |

Karol, but the feds did so well with Katrina, didn’t they? Even without the abstract argument of moral hazard, history shows us what reliance on government does. Post-Katrina, people returned to their New Orleans homes and waited for the government to take care of junk cars. They preferred waiting months, in some case, than taking care of their own neighborhoods themselves. Just let the government do it, at everyone else’s expense. Rebuild the city? Sure, so people from San Diego to Portland to Portland to Miami can pay for it?

Here’s how the free market works: A company that screws up will need to pass along those costs to its customers, or it could choose to take losses. The first outrightly hurts sales, and the second hurts its owners (shareholders, in BP’s case). Either way, I’m not forced to do business with BP. If its products are more expensive, I’ll go to different gas stations and/or I won’t buy Castrol.

Instead, the federal government wants to step in — meaning I and other taxpayers pay for it, whether we like it or not, whether we do business with BP or not. Great deal, huh?

Oh, but supposedly BP will be made to pay for the cleanup. The best case is that this will be years after the fact, because BP knows the government will eventually step in and take responsibility. It won’t need to do its best — let the government do it and send a bill later!

Posted by: Perry Eidelbus at May 24, 2010 at 2:09 pm

Perry, it’s a bit premature to blame BP. Here’s a post you might find useful, by a professional in oil industry.

Posted by: Tatyana at May 24, 2010 at 3:43 pm

That’s certainly a fair point that there were other companies involved, which I’ve heard and certainly acknowledge. However, take “screw up” in a more general sense: whichever contractor made errors, in the end it’s BP’s operation, and BP must assume responsibility (even if only to pay out and recover the money from any contractors found liable). So I’m not making an accusation of criminal negligence or even just incompetence, only observing that BP must make restitution for the harm its operation has done to others. The nice thing about a real free market is that people must suffer the consequences, even if it was just an accident.

Posted by: Perry Eidelbus at May 25, 2010 at 2:11 pm

Perry – they did.

From Tim’s post (he supplied links to back up his statements):

[BP] have released $25m block grants to each of the states of Louisiana, Alabama, Mississippi and Florida to help accelerate the containment and cleanup activities; they have been doing their damndest to stop the flow of oil using a variety of techniques; they have given $25 million to Florida and $15 million each to Alabama, Mississippi and Louisiana to compensate for reduced tourism in the affected areas; 19,000 personnel are involved in the cleanup, excluding volunteers; they have pledged full support for and cooperation with the US government investigation into the disaster; by 18th May they had spent $650m on the containment and cleanup which is in line with a pledge they made on 2nd May that they would pay “all necessary and appropriate clean-up costs”.

Posted by: Tatyana at May 25, 2010 at 5:34 pm

You misunderstand me. “BP must make restitution” is a time-neutral statement of their obligations to the people they harmed.

Posted by: Perry Eidelbus at May 26, 2010 at 11:06 am
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