Wednesday, June 9, 2010

Energy: don't punish po' widdle BP?

On Monday, Forbes published this gem which basically claims that punishing BP and regulating offshore drilling is tantamount to attacking freedom. Authors Westbury and Stein write,"Capitalism is created by free people. Socialism, on the other hand, is what happens when people trade their freedom for the perception of safety." See, in their view freedom is only about making money, accidents happen and trying to prevent them undermines "freedom". I take it that they're saying regulation prevents companies from taking risks that allow the wealthy and powerful to make more money.  In other words, anything that is done to limit moneymaking is an assault on freedom. Anything by the government does that is, anything the "market" does is OK. Hmmm, the less wealthy are often at a disadvantage in a unregulated market and in principle can control activities of the government. Freedom then is apparently directly proportional to the amount of money you. What about the freedom to live on a clean coastline with clean water and air? They're silent on those points, but I imagine that they would not consider those to not be freedoms since they do not, "create wealth."
It is interesting to note that Westebury and Stein attempt to back up their point with a lie, "And back in the 1970s, the U.S. government stopped the building of nuclear power plants, partially because of an accident at Three Mile Island." Not true, the federal government did not ban the future construction of nuclear power plants, it was the increasing costs (including insurance costs) and energized local opposition. In other words the market did help to punish a whole industry for an accident, but since they do not want to see that same market result happen to offshore drilling, their world view required them to blame federal regulation instead. So when people say that the "invisible hand" of the market should deal with the consequences, they don't really mean it.

On the subject of BP itself , it is also interesting to note that BP began as the Anglo-Persian oil company in 1909. Now this was at the height of the British Empire, which seems to be the role model for many a modern self-styled conservatives in America.  The economic philosophy of the empire was laissez-faire and much of the policies of the empire reflected this. The wealthy and powerful controlled the UK with no pretensions otherwise and the building of the empire was openly conducted to further enrich those people. Look into the Raj, the Scramble for Africa, the Great Game and why the "Sun Never Sets on the British Empire". The Victorians who embraced laissez-faire also adhered to Westbury and Stein's concept of "freedom". When we consider the laissez-faire approach to the GOM spill, we should consider the results to its application to disaster in the ol' British Empire, the Irish Great Famine:
"Confronted by widespread crop failure in the autumn of 1845, Prime Minister Sir Robert Peel purchased £100,000 worth of Indian corn and corn meal secretly from America. Baring Bros & Co had to act as agents for the government. The government hoped that they would not "stifle private enterprise" and that their actions would not act as a disincentive to local relief efforts. Due to weather conditions, the first shipment did not arrive in Ireland until the beginning of February 1846.'...'Sir Charles Trevelyan, who was in charge of the administration of Government relief to the victims of the Irish Famine, limited the Government's actual relief because he thought "the judgement of God sent the calamity to teach the Irish a lesson".'...'The new Lord John Russell Whig administration, influenced by their laissez-faire belief that the market would provide the food needed but at the same time ignoring the food exports to England, then halted government food and relief works, leaving many hundreds of thousands of people without any work, money or food." Quoted from the link.

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