5 ms·

I would love to hear the libertarian defence of a private enterprise's accident that is putting thousands of people out of work and destroying an entire coastli

by seldo 16y ago

I would love to hear the libertarian defence of a private enterprise's accident that is putting thousands of people out of work and destroying an entire coastline's worth of ecosystems.

mynameishere 16y ago
#1 On the whole these wells are net positive. #2 It's the government capping BP's liability. Not a libertarian, but please.
- anigbrowl 16y ago
  Agree with #1. but on #2, that $75m liability cap is a crock - it only applies in cases where there has no been gross negligence or willful misconduct. If it can be shown that BP lied to the MMS or created the situation by failure to comply with regulations (even if they started complying once they realized they had trouble), then the limit doesn't apply. See http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_00002704----000-.html http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_0... subsection c.
andreyf 16y ago
I'm not a libertarian, but I imagine a libertarian plan might include the privatization of parts of the ocean and shoreline. When an spill like this happens, BP can then be sued for violating the rights of the owners of the clean ocean surrounding the rig, and the damage they've done to the shoreline. As long as the shoreline is public property, they can get away with convincing senators and bureaucrats that they'll spend $x on cleanup, donate $y to their campaigns, and that's that. If the cleanliness of the ocean/shoreline were privatized (those private rights enforced by courts), the threat of a lawsuit would lead to both more responsible pre-accident risk assessment on behalf of BP and a more responsible cleanup strategy.
- ojbyrne 16y ago
  Isn't tort reform and an ending to "frivolous" lawsuits one of the clarion calls of those same libertarians?
  - mrkurt 16y ago
    Usually corporatists, not libertarians.
    - jbooth 16y ago
      Splitting the hairs pretty thin at that point.
      - mrkurt 16y ago
        Really? I don't think so at all. Libertarians are generally proponents of a whole swatch of changes that would knock large corporations in the US down a few pegs. That's in addition to greatly limiting the power corps have to do business by legislation.
        jbooth 16y ago
        Well, I'd say my picture of "what libertarians are proponents of" boils down to 3 categories or "levels of advocacy": 1) The "if we could remake the world", fully libertarian state -- I can see some libertarians agreeing with you about knocking corporations down a peg here, but many other "libertarians" that are basically supply-siders or mainline republicans with affectations that wouldn't. 2) The things libertarians actually advocate for as far as real-world policy, as in people lobby for these things and vote for candidates that espouse them. 3) The subset of those things that actually get traction Out of those, 3) winds up being an unabashedly pro-corporate set of policies advanced by the republican party and 2) actually seems to lean more pro-corporate than anti. YMMV. But I can see your point in regards to 1).
- angrycoder 16y ago
  Suing is all fine and dandy. But no amount of money is going to fix the ocean.
  - holygoat 16y ago
    The idea is that assigning a tangible cost to fucking up will cause people to try hard to avoid it. For example, if everyone in the BP executive chain were personally responsible, and would go to jail/get beaten up/etc. as a consequence of an oil spill, then this might not have happened.
    - angrycoder 16y ago
      No, it won't. The execs will make their money, spend it or squirrel it away, and be gone when the damage is done. Even if you did something as extreme as threaten jail time, the chance to make millions still outweighs the chance of any punishment. Thats all it is at that point, its gambling. Either you make a ton of money, or you loose. The only problem is, when you loose, you make a whole shitload of other people and the environment loose in the process.
  - byrneseyeview 16y ago
    That argument applies to any transaction that transfers money. The point is to give BP the proper incentives. There is some point at which the reward for drilling (cheap energy) is worth the risk of a disaster. By ensuring that they'll get sued for the monetary cost of the disaster, you can get the socially optimal level of drilling. And if they'd been "regulated" by an insurer who promised to pay the cleanup costs of the once-a-decade spills, you can bet that these regulations would be to a higher standard.
    - MichaelSalib 16y ago
      And if they'd been "regulated" by an insurer who promised to pay the cleanup costs of the once-a-decade spills, you can bet that these regulations would be to a higher standard. Given that a large insurance provider called AIG promised to pay massive clean up costs and utterly failed at regulating its clients, I think your theory is incorrect. At the very least, it is incomplete. Your theory needs to incorporate the fact that human organizations often behave irrationally, and even when motivated by appropriate incentives, they are prone to systemic reasoning errors. In addition, it needs to deal with the fact that a representative government cannot credibly refuse to promise to clean up messes of this sort, so an element of moral hazard will always remain.
- jonknee 16y ago
  What happens when the firm that destroys the coast simply goes out of business afterwards? All the profits they made before the recklessness came to roost has been funneled to shareholders around the world.
  - riffer 16y ago
    Not a problem, just require firms that have the potential to inflict substantial costs on the rest of society to carry insurance against such a catastrophe. The pricing mechanism on the insurance will act as an incentive to minimize the real risk to society.
    - jonknee 16y ago
      But that's regulation... Lots of it actually because the insurance companies need regulated too (lest they default when a huge oil spill occurs).
    - anigbrowl 16y ago
      Two problems here. 1. they do carry insurance. Their fuel assets are insured by Jupiter Insurance ltd. ( a wholly owned subsidiary of...BP itself. According to their annual report, they consider external insurance a poor economy and carry as little as possible - basically $1 billion per incident, figuring that any overages can be paid for out of revenues. Awesome. http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/BP_20-F_2009.pdf http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/gl... 2. OK, so make them carry more insurance...but then you're back to the dead hand of government regulation or whatever you want to call it. And with the best will in the world, sometimes events take place which are beyond our ability to predict. I imagine the government's recent cautious endorsement of more offshore drilling was based on a careful look at the number of rig disasters in recent years, and the assumption that the industry was sufficiently mature to appreciate the importance of risk management. It's kind of ironic that this occurred right after Obama upset the 'ban all drilling' crowd.
    - MichaelSalib 16y ago
      Sure! BP could just get an insurance policy from a reputable insurance provider like...AIG. What could possibly go wrong? I mean, a reputable insurance company like AIG would never, ever, ever offer policies for complex products that it did not fully understand for prices so low that it couldn't cover the risks involved. Insurance company officials would never ever ever cut lots of fundamentally unsound deals in exchange for big bonuses. And even if they did, such behavior could never blow up and eliminate a few trillion dollars of value in a massive economic collapse. That's totally absurd. Really now, this "solution" boils down to "assume the existence of insurance companies that act radically differently from any insurance companies we have experience with"...tis much like "now, assume a can opener".
bh23ha 16y ago
Well you could calculate the total damage of a spill and personally charge everybody from middle managed up for it. If that's not enough, go after the share holders, even grandma Millie. But we can't do that, the whole point of LLPs and Incs. is to limit the investor's liability. This is partly why we have agency risk. This is why while I consider myself a libertarian, I still think we need competent and aggressive regulators in all the places where the market is not self-corrective. But I'm not sure how we could avoid regulatory capture for ever.
deleted 16y ago
[deleted]
ewanmcteagle 16y ago
Why would a libertarian viewpoint defend this? Are you suggesting that this is happening because it's an unregulated industry? Also, what is the success criterion for number and severity of accidents before whatever approach to regulation has been taken can be judged a success? If any time an accident happens it requires throwing away the whole system that might be too high of a standard to work with.
jeffreyg 16y ago
The libertarian belief is that BP is responsible for all costs incurred by its neighbors because of its actions. Your use of the word 'defense' here just shows ignorance.
- anigbrowl 16y ago
  In passing, this is an example of where libertarianism breaks down as a practical alternative. How will you determine what these costs are? It might be simple if I have a fishing business in Louisiana, but what if I'm a bar owner who depends on the dollars of hard-drinking oil workers when they're on shore? What if I'm just depressed by the whole thing and miss work? There are millions of people living in that area, and the gulf coast economy is about 2-2.5 trillion. You simply can't handle every individual case in court, it's going to be a series of class actions. And without some kind of judicial standards for how those should be handled, the result will be arbitrary at best. Additionally, BP will argue that oil drilling is fundamentally risky and the residents of the area liked it when the going was good. So there will be further arguments about the degree to which it is really their fault. Again, without agreed standards in place the outcome of such wrangling will be arbitrary. Finally, whatever a court orders BP to hand over as compensation for its poor drilling practices is purely hypothetical unless there is some way of enforcing it; BP might just sink the remains the of the rig, announce the failure of its 'gulf operations subsidiary' and just turn its attentions to operations elsewhere, where they have never had an accident. Perhaps they'll just blame the whole thing on inferior oil workers in that region. So without standards for judging claims and liability, or mechanisms for enforcement of judgments, the situation will not be properly resolved. Those standards and mechanisms are the basis of laws, and we elect governments to serve as our agents in establishing and promulgating them.
  - deleted 16y ago
    [deleted]
  - ArturSoler 16y ago
    In a libertarian society, BP would just need to compensate the owners of the properties directly affected (ocean and shoreline). Fishing business would then not pay those owners to operate in their property and lose an opportunity, but they are not owed anything, since those owners have no obligation of letting the fishing business operate in their property.
Encosia 16y ago
A Libertarian would probably point out that regulation played a significant role in this mess. The $75m liability cap gave BP incentive to continually act as recklessly as they did over the years. $75m is a joke compared to getting a new, high-production well up and running months or years earlier than if they were more cautious. Obviously, it wasn't a good gamble this time, but it should be no surprise they've acted as our rules and regulations incented them to.
- anigbrowl 16y ago
  Forget about the $75m cap - it doesn't apply in cases of negligence or misconduct. That was only newsworthy when BP's 'oh no, what a terrible surprise' posture seemed credible.
  - Encosia 16y ago
    That liability cap does apply to negligence. It applies to any civil suits. However, it does not apply to criminal charges, and the DoJ has intimated that it may pursue criminal charges against someone in this. Even if the liability cap is pierced during this particular incident, that's still orthogonal to the impact it has had on the behavior of exploration up until now.
    - anigbrowl 16y ago
      (c) Exceptions (1) Acts of responsible party Subsection (a) [incl the $75m cap] of this section does not apply if the incident was proximately caused by— (A) gross negligence or willful misconduct of, or (B) the violation of an applicable Federal safety, construction, or operating regulation by, the responsible party, an agent or employee of the responsible party, or a person acting pursuant to a contractual relationship with the responsible party (except where the sole contractual arrangement arises in connection with carriage by a common carrier by rail). [...] sounds pretty cut and dried to me. http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_00002704----000-.html http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_0...
      - 16y ago

by seldo 16y ago

I would love to hear the libertarian defence of a private enterprise's accident that is putting thousands of people out of work and destroying an entire coastline's worth of ecosystems.

mynameishere 16y ago

#1 On the whole these wells are net positive. #2 It's the government capping BP's liability. Not a libertarian, but please.

anigbrowl 16y ago
Agree with #1. but on #2, that $75m liability cap is a crock - it only applies in cases where there has no been gross negligence or willful misconduct. If it can be shown that BP lied to the MMS or created the situation by failure to comply with regulations (even if they started complying once they realized they had trouble), then the limit doesn't apply. See http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_00002704----000-.html http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_0... subsection c.

andreyf 16y ago

I'm not a libertarian, but I imagine a libertarian plan might include the privatization of parts of the ocean and shoreline. When an spill like this happens, BP can then be sued for violating the rights of the owners of the clean ocean surrounding the rig, and the damage they've done to the shoreline. As long as the shoreline is public property, they can get away with convincing senators and bureaucrats that they'll spend $x on cleanup, donate $y to their campaigns, and that's that. If the cleanliness of the ocean/shoreline were privatized (those private rights enforced by courts), the threat of a lawsuit would lead to both more responsible pre-accident risk assessment on behalf of BP and a more responsible cleanup strategy.

ojbyrne 16y ago
Isn't tort reform and an ending to "frivolous" lawsuits one of the clarion calls of those same libertarians?
- mrkurt 16y ago
  Usually corporatists, not libertarians.
  - jbooth 16y ago
    Splitting the hairs pretty thin at that point.
    - mrkurt 16y ago
      Really? I don't think so at all. Libertarians are generally proponents of a whole swatch of changes that would knock large corporations in the US down a few pegs. That's in addition to greatly limiting the power corps have to do business by legislation.
      - jbooth 16y ago
        Well, I'd say my picture of "what libertarians are proponents of" boils down to 3 categories or "levels of advocacy": 1) The "if we could remake the world", fully libertarian state -- I can see some libertarians agreeing with you about knocking corporations down a peg here, but many other "libertarians" that are basically supply-siders or mainline republicans with affectations that wouldn't. 2) The things libertarians actually advocate for as far as real-world policy, as in people lobby for these things and vote for candidates that espouse them. 3) The subset of those things that actually get traction Out of those, 3) winds up being an unabashedly pro-corporate set of policies advanced by the republican party and 2) actually seems to lean more pro-corporate than anti. YMMV. But I can see your point in regards to 1).
angrycoder 16y ago
Suing is all fine and dandy. But no amount of money is going to fix the ocean.
- holygoat 16y ago
  The idea is that assigning a tangible cost to fucking up will cause people to try hard to avoid it. For example, if everyone in the BP executive chain were personally responsible, and would go to jail/get beaten up/etc. as a consequence of an oil spill, then this might not have happened.
  - angrycoder 16y ago
    No, it won't. The execs will make their money, spend it or squirrel it away, and be gone when the damage is done. Even if you did something as extreme as threaten jail time, the chance to make millions still outweighs the chance of any punishment. Thats all it is at that point, its gambling. Either you make a ton of money, or you loose. The only problem is, when you loose, you make a whole shitload of other people and the environment loose in the process.
- byrneseyeview 16y ago
  That argument applies to any transaction that transfers money. The point is to give BP the proper incentives. There is some point at which the reward for drilling (cheap energy) is worth the risk of a disaster. By ensuring that they'll get sued for the monetary cost of the disaster, you can get the socially optimal level of drilling. And if they'd been "regulated" by an insurer who promised to pay the cleanup costs of the once-a-decade spills, you can bet that these regulations would be to a higher standard.
  - MichaelSalib 16y ago
    And if they'd been "regulated" by an insurer who promised to pay the cleanup costs of the once-a-decade spills, you can bet that these regulations would be to a higher standard. Given that a large insurance provider called AIG promised to pay massive clean up costs and utterly failed at regulating its clients, I think your theory is incorrect. At the very least, it is incomplete. Your theory needs to incorporate the fact that human organizations often behave irrationally, and even when motivated by appropriate incentives, they are prone to systemic reasoning errors. In addition, it needs to deal with the fact that a representative government cannot credibly refuse to promise to clean up messes of this sort, so an element of moral hazard will always remain.
jonknee 16y ago
What happens when the firm that destroys the coast simply goes out of business afterwards? All the profits they made before the recklessness came to roost has been funneled to shareholders around the world.
- riffer 16y ago
  Not a problem, just require firms that have the potential to inflict substantial costs on the rest of society to carry insurance against such a catastrophe. The pricing mechanism on the insurance will act as an incentive to minimize the real risk to society.
  - jonknee 16y ago
    But that's regulation... Lots of it actually because the insurance companies need regulated too (lest they default when a huge oil spill occurs).
  - anigbrowl 16y ago
    Two problems here. 1. they do carry insurance. Their fuel assets are insured by Jupiter Insurance ltd. ( a wholly owned subsidiary of...BP itself. According to their annual report, they consider external insurance a poor economy and carry as little as possible - basically $1 billion per incident, figuring that any overages can be paid for out of revenues. Awesome. http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/global_assets/downloads/I/BP_20-F_2009.pdf http://www.bp.com/liveassets/bp_internet/globalbp/STAGING/gl... 2. OK, so make them carry more insurance...but then you're back to the dead hand of government regulation or whatever you want to call it. And with the best will in the world, sometimes events take place which are beyond our ability to predict. I imagine the government's recent cautious endorsement of more offshore drilling was based on a careful look at the number of rig disasters in recent years, and the assumption that the industry was sufficiently mature to appreciate the importance of risk management. It's kind of ironic that this occurred right after Obama upset the 'ban all drilling' crowd.
  - MichaelSalib 16y ago
    Sure! BP could just get an insurance policy from a reputable insurance provider like...AIG. What could possibly go wrong? I mean, a reputable insurance company like AIG would never, ever, ever offer policies for complex products that it did not fully understand for prices so low that it couldn't cover the risks involved. Insurance company officials would never ever ever cut lots of fundamentally unsound deals in exchange for big bonuses. And even if they did, such behavior could never blow up and eliminate a few trillion dollars of value in a massive economic collapse. That's totally absurd. Really now, this "solution" boils down to "assume the existence of insurance companies that act radically differently from any insurance companies we have experience with"...tis much like "now, assume a can opener".

bh23ha 16y ago

Well you could calculate the total damage of a spill and personally charge everybody from middle managed up for it. If that's not enough, go after the share holders, even grandma Millie. But we can't do that, the whole point of LLPs and Incs. is to limit the investor's liability. This is partly why we have agency risk. This is why while I consider myself a libertarian, I still think we need competent and aggressive regulators in all the places where the market is not self-corrective. But I'm not sure how we could avoid regulatory capture for ever.

deleted 16y ago

[deleted]

ewanmcteagle 16y ago

Why would a libertarian viewpoint defend this? Are you suggesting that this is happening because it's an unregulated industry? Also, what is the success criterion for number and severity of accidents before whatever approach to regulation has been taken can be judged a success? If any time an accident happens it requires throwing away the whole system that might be too high of a standard to work with.

jeffreyg 16y ago

The libertarian belief is that BP is responsible for all costs incurred by its neighbors because of its actions. Your use of the word 'defense' here just shows ignorance.

anigbrowl 16y ago
In passing, this is an example of where libertarianism breaks down as a practical alternative. How will you determine what these costs are? It might be simple if I have a fishing business in Louisiana, but what if I'm a bar owner who depends on the dollars of hard-drinking oil workers when they're on shore? What if I'm just depressed by the whole thing and miss work? There are millions of people living in that area, and the gulf coast economy is about 2-2.5 trillion. You simply can't handle every individual case in court, it's going to be a series of class actions. And without some kind of judicial standards for how those should be handled, the result will be arbitrary at best. Additionally, BP will argue that oil drilling is fundamentally risky and the residents of the area liked it when the going was good. So there will be further arguments about the degree to which it is really their fault. Again, without agreed standards in place the outcome of such wrangling will be arbitrary. Finally, whatever a court orders BP to hand over as compensation for its poor drilling practices is purely hypothetical unless there is some way of enforcing it; BP might just sink the remains the of the rig, announce the failure of its 'gulf operations subsidiary' and just turn its attentions to operations elsewhere, where they have never had an accident. Perhaps they'll just blame the whole thing on inferior oil workers in that region. So without standards for judging claims and liability, or mechanisms for enforcement of judgments, the situation will not be properly resolved. Those standards and mechanisms are the basis of laws, and we elect governments to serve as our agents in establishing and promulgating them.
- deleted 16y ago
  [deleted]
- ArturSoler 16y ago
  In a libertarian society, BP would just need to compensate the owners of the properties directly affected (ocean and shoreline). Fishing business would then not pay those owners to operate in their property and lose an opportunity, but they are not owed anything, since those owners have no obligation of letting the fishing business operate in their property.

Encosia 16y ago

A Libertarian would probably point out that regulation played a significant role in this mess. The $75m liability cap gave BP incentive to continually act as recklessly as they did over the years. $75m is a joke compared to getting a new, high-production well up and running months or years earlier than if they were more cautious. Obviously, it wasn't a good gamble this time, but it should be no surprise they've acted as our rules and regulations incented them to.

anigbrowl 16y ago
Forget about the $75m cap - it doesn't apply in cases of negligence or misconduct. That was only newsworthy when BP's 'oh no, what a terrible surprise' posture seemed credible.
- Encosia 16y ago
  That liability cap does apply to negligence. It applies to any civil suits. However, it does not apply to criminal charges, and the DoJ has intimated that it may pursue criminal charges against someone in this. Even if the liability cap is pierced during this particular incident, that's still orthogonal to the impact it has had on the behavior of exploration up until now.
  - anigbrowl 16y ago
    (c) Exceptions (1) Acts of responsible party Subsection (a) [incl the $75m cap] of this section does not apply if the incident was proximately caused by— (A) gross negligence or willful misconduct of, or (B) the violation of an applicable Federal safety, construction, or operating regulation by, the responsible party, an agent or employee of the responsible party, or a person acting pursuant to a contractual relationship with the responsible party (except where the sole contractual arrangement arises in connection with carriage by a common carrier by rail). [...] sounds pretty cut and dried to me. http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_00002704----000-.html http://www.law.cornell.edu/uscode/html/uscode33/usc_sec_33_0...
    - 16y ago