The BP Oil Spill prompted brilliant libertarian legal theorist Richard Epstein to remind us that the problem isn’t regulation, it’s government limits on liability (see op-ed at the Wall Street Journal). Big Business doesn’t mind regulation, as long as it can put caps on it’s liabilities (see “Too Big to Fail” … )
A tough liability system does more than provide compensation for serious harms after the fact. It also sorts out the wheat from the chaff—so that in this case companies with weak safety profiles don’t get within a mile of an oil derrick. Solid insurance underwriting is likely to do a better job in pricing risk than any program of direct government oversight. Only strong players, highly incentivized and fully bonded, need apply for a permit to operate.
In an environment of unlimited liabilities for harmful externalities, insurance would be a must, and insurance companies will be far better regulators than the government. After all, the government employee gets paid the same amount of money with the same amount of (never-ending) job security whether he actually assesses risk correctly or not. The insurance company? One wrong risk assessment, and it’s in the breadline.
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June 23rd, 2010 at 4:35 pm
The under-accountability and under-responsibility are direct results of the over-regulation!
June 23rd, 2010 at 6:15 pm
Not to change the focus of the subject, but one thing I’m frustrated about is this administration’s use of our National Guard…to assist in filing claims against BP? Pushing paperwork and promoting lawsuits? How bout sending them to our southern border and lending a hand there?
June 26th, 2010 at 4:01 pm
Pointing out the problem is needed but the article would have been much more valuable if you had published some information on how to correct the problem. News like this is only depressing unless you advise people on how to make the necessary changes happen. Tell people to bug their representatives and get out and VOTE. The only way we’re going to change anything in Washington DC is to change the people in office. A state by state sponsored referendum on the next ballot to limit all Federal senators and representatives to 2 terms, whether consecutive or NOT would go a long way towards reclaiming what our Founding Father’s meant when they designed our representative system. Who is in office in Washington is supposed to be a WORKING PERSON not a professional politician.
A public, state by state referendum on the next ballot to mandate that the general public has to vote on how much money the representatives get while in office would be a good idea too. Those in office in Washington make far too much money for what they give back.