Joel Grus – Helping BP Stay in Business
02-Jun-10
In a little-noticed provision in a 1990 law passed after the Exxon Valdez spill, Congress capped a spiller’s liability over and above cleanup costs at $75 million for a rig spill. Even if the economic damages — to tourism, fishing and the like — stretch into the billions, the responsible party is on the hook for only $75 million.
Libertarians are often accused of being in the pockets of big business. But here’s a case where the libertarian solution — make BP pay for the damage they cause via tort claims — was overridden by government regulators.
As Joel writes later in the same article:
“In markets, companies fail. Companies that can’t meet their liabilities go out of business, and new companies replace them. That’s how markets work. That’s the discipline that markets rely on. Those are the incentives that proponents of markets have in mind.
Because when you artificially insulate companies from the consequences of their actions, that’s not a market. It’s a recipe for reckless risk-taking and gross malfeasance.”
http://joelgrus.com/2010/06/01/helping-bp-stay-in-business/
Posted via web from crasch’s posterous
