In this case I am using communism to refer to communal ownership. Or more accurately, ownership by no one, but benefit taken by whoever can get it.
Why would BP let this happen? Oh, sure get all up in arms. Yes, they let it happen. Why should they not? Of course they dislike the loss of the oil. But most of the economic loss is not theirs. They will never pay the full cost. They know this and it factors into their calculations of how to spend resources.
We've seen this before with the Ford Pinto. Short version: the cost of recalling the car and fixing the problem was estimated to be more than the cost of lawsuits or whatever else would come up. Human life was indirectly given a value, in the form of how much people would whine about deaths. It sounds horrible, doesn't it?
It's merely rational economic choice for the company. Why should they spend more than they'd benefit? They are not a charity.
I'm a monster, aren't I? Oh no. I am just able to see the problem and the solution. The problem isn't corporate greed. That is merely a force; like gravity. Do we blame gravity for plane crashes? That would be stupid. No, the true problem is externalities: benefits or costs which are not incurred by the groups which are part of an economic decision.
BP will never pay the full cost of the gulf spill. Is the solution greater regulation, greater fines? No. That is just going to add more government, more taxes, and doesn't actually fix the problem and more than sticking a box on the leak would fix it (it hasn't, btw). Instead the solution is to make BP responsible for the damage to the Gulf of Mexico: the coastal areas, the fisheries, the tourism.
How do we make them responsible without more government? The free market of course! Remove the communism, the free use of the water, the ability to cause damage without incurring any cost: Privatize the water.
Sell the gulf to BP and other companies. This would settle a huge portion of the government debt, while also reducing government burden, thereby killing two birds with one stone and poisoning their food supply. In this metaphor the birds are bad government (redundant).
They could then lease the fisheries and beaches and whatever else. That profit stream would give a strong incentive to keep the water clean, much stronger than government bureaucrats looking over their shoulders.
If it happens that they still don't care, then it only means that the non-oil revenues were insufficient. It means that they were not viable as a sustained source of economic benefit.
The crisis of the commons is most easily fixed by privatizing the commons.
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But on the other hand, the "opportunity cost" of settling the debt and the environment in an unpopular way such as this would be a reduced number of votes, the currency career politicians value. Who cares about "logical" if the logic leads to your own demise?
ReplyDeleteAlso, what kind of unintended consequences would this have? Would businesses be faced with increased entry costs, leading to depressed fishing industries? BP would most definitely try to make its money back on the cleanup ASAP, and the easiest way to do that is to jack up leasing prices. This could lead to public clamor for government intervention on behalf of the "little man" against the "evil BP" which "obviously" staged the oil spill so they could take over the fishing industry, or some other ludicrous conspiracy theory. Ironically, you could end up with more regulation than you had before.
Not to mention that the mere act of a corporation handling "government business" results in cries of elitism and old boy's clubs and whatnot. Take a look at this article:
http://www.gloucestertimes.com/fishing/x1446230272/Fishing-sector-fee-of-10K-draws-fire?FORM=ZZNR9
BP cannot 'jack up fees', the market would not allow it. If they charge too much, they will end up with lower revenues overall. When it seems that a company has raised its prices too much, it may only mean that they were charging too little before.
ReplyDeletePeople only deserve to use the gulf as much as they can afford to. There are no free lunches, so why should people get fish and water for free?