BP a problem for the libertarian i.e conservative economic theories?

In the case of Deepwater Horizon, the more salient question would be for somebody to explain how the government we have with its regulations and its wide breadth has at all helped with this disaster.

Short answer: it has not. Sadly, as we have come to learn, the government is poorly equipped to deal with certain crises. This is one of them. I have felt badly for Obama on this one. He is in a no win situation. The entity in the entire world that is the best equipped and prepared to deal with this is the entity that caused it in the first place.

 

I guess that begs the question; should our government allow businesses which can essentially profit despite their own ineptitude (think "too big to fail"/monopolization of an industry or service) to operate in our country? Pardon the pun, but sometimes the invisible hand seems to disappear in situations like this. It's the achilles heel of the libertarian economic model, the fact that a completely unbridled market eventually seems to eat itself.

 

In this particular situation, the problem stemmed from there not being enough government involvement in the form of regulations on offshore oil prospecting.

 

The government that you put your faith in was the very one that abdicated its regulatory responsibilities. The only way we will stop seeing environmental disasters related to oil is if we stop consuming so much of it.

Not all libertarians are capitalists.

 

Congratulations. This is the first time anyone has ever realized that corporations are capable of lack of foresight! You've sunk the libertarian battleship!

 

Correction: a semi-free market with the Federal Reserve manipulating interest rates and quasi-government backed entities such as Fannie Mae distort how a true free market should function. We never had a completely free market - this was one of the problems.

 

That's not really what I was applying my statement to, some parts of the market are freer than others, but for the sake of this discussion, we're focusing on BP.

 

Well in that case, the market will self-correct. I don't think government regulation is a necessity for every single operator out there to evaluate risks of their own drilling programs and invest necessary capital on blowout preventers with dual blind sheer rams. BP chose slightly riskier methods of drilling and now they are paying the cost dearly. Everyone including BP itself will learn from its mistakes. It's akin to any producer coming out with a product that flops. A free market is full of mistakes and poor decisions, which is why the incompetent and careless get wiped out and pay the price.

It is unfortunate that a mistake in drilling for oil can lead to such a disaster as we have now, but that is the nature of the beast.

 

And we go around again on this because the careless and incompetent are so large that the systemic risk is too much to tolerate and the whole free markets idea collapses on itself. The ones who get wiped out are the taxpayers who have no choice but to take it or watch the economy go up in smoke. If BP, GM, BAC, C, Lehman, etc. were some small town company we wouldn't be having this conversation. The "invisible hand" dictates that large companies create better economies of scale and grew so large due to their amazing efficiency and business acumen. Adam Smith and Ayn Rand fail to mention what should happen if these companies suddenly screw up and go bankrupt.

It's unfortunate that we continue to desire so much oil to incentivize BP to drill recklessly. This of course is the underlying problem.

 

But how much risk are you willing to stomach?

Not this much, I hope.

 

Best line ever.

 

I have an idea - let them go bankrupt. That's the only way a free market will work.

 

Is this a joke post? Because basically the opposite of what you are saying happened.

The MMS was a joke that had been completely owned by the industry it was supposed to regulate since day 1, particularly in the last decade, when it was largely left to get in bed with the industry - literally. I mean it was created in 1982 by James G. Watt for god's sake - do you think he was creating a large bureaucracy to a "wide breadth"? Right...

It's probably no coincidence that during the last decade, the scandals at the MMS happened during the term of office of the two biggest absolute shills to the energy industry in the history of the executive branch.

Actually that's wrong, let me correct myself. They weren't shills to the energy industry - they WERE industry. That was their sole field of expertise outside government for both of them.

They wanted deregulation and small government, particularly with respect to their industry. They got it. So we got drill baby drill. And the result was spill baby spill.

Republicans of the modern era are pretty good at obtaining power. But they are awful at actually using that power other than to deregulate and delegate in the name of efficiency, effectively abdicating their authority (see, e.g. "heckuva job brownie" or Alan Greenspan preaching the virtues of ARMs).....then in the face of their own failure to govern or assume authority, they claim it's because government can't work.

And yes, they're right, government doesn't work - when those tasked to govern don't bother to try either directly or indirectly allow others to intentionally **** things up.

 

I don't think there is much of an alternative solution.

 

Not necessarily. The way top execs are compensated with performance-based bonuses, there is more incentive to make big chunks of short-term profit at the expense of long term stability. We've seen this at the banks during the financial crisis, and won't be surprised if BP has a similar salary structure. When profits are made they get bonuses, but if the whole thing blows up they don't pay back the money they lost. The worst that could happen to them is they lose their job, but after they've already taken the bonus money in previous years.

 

Do you mean that in a "well we don't have any alternatives because gubbermint is owned and operated by the fossil fuel industry and they're the ones running the show on our energy policy" or do you mean that in a "there are no other practical ways to produce energy" kind of way?

Cause if you mean the former, I can see that, however cynical and pessimistic it might be. If you mean the latter, I'd say you're dead wrong.

 

And a great way to a Depression worse than 1929, in the case of allowing Lehman, Bear Stearns, GM, Chrysler, Wachovia, Washington Mutual, Bank of America, Merril Lynch, Citi, AIG, etc. all to go bankrupt at the same time.

 

Don't you think that's because you had 8 years of people who hated gov't regulation basically not enforcing it? I mean, BP was in bed with the regulators probably somewhat literally.

I think the mistake was trusting BP in the first place. The role of gov't is to ensure business doesn't act against our national self-interest.

When a gov't turns a blind eye towards practices that are highly destructive to our financial system or our environment - this is the result.

 

The problem with that view is that it neither prevents or stops the disaster.