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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (43727)	6/9/2010 9:51:10 PM
From: TimF	Read Replies (2) \| Respond to of 71588

For example: how easy/successful would individual court actions be against BP, (a la the Exxon Valdez example!). The mere possibility of success is enough to provide an incentive to stop the leak. In the Exxon Valdez example the lawsuit's damages where reduced, but Exxon still had to pay a lot of money (and a lot of lawyers fees to reduce the amount it paid). It doesn't provide a counterexample that would remove or even minimize the incentive to stop the leak. For example: if the pressure in that one blow-out well would naturally exhaust itself in some 'reasonable' period of time --- might it not be CHEAPER to BP to simply do nothing (a la the Pinto example I gave)? Unless there is very little oil in the deposit, or unless you had a fantastic stroke of luck with the seismic activity doing exactly what you needed when you needed it to seal the leak, that isn't going to happen. The possibilities for either are not great, and would not enter in to the decision making process in an incident like this since they would not be anticipated. And if they could be solidly anticipated, than it might make sense not to make much of an effort to seal the leak. The has long been past "reasonable", but lets say it would only leak at peak rates for a day (or at say 1000bbls/day for a few weeks). And that this was known. And that the liability could be known to be low because of the lower quantity of oil (this is where your idea probably falls down since it could still be high). Then yes BP might not have tried as hard to shut the leak down (esp. if it would know that its attempts would fail for months anyway, like they actually did). Would such lack of efforts have caused more harm? No, not in my specific example of your general scenario of a leak of a reasonable amount of oil for a reasonable time. Would it be possible to construct a theoretical example where the exact situation and balance of knowledge and interests where such that BP would be incentivised to take (or avoid taking) actions in such a way as to be against the general interest? Yes of course. The market is not perfect, esp. not in all theoretically possible conditions. But that's hardly much of an argument against "Probably much sooner than the government will" in response to "How Soon Until the Free Market Stops the Oil Spill?" In the reality of this situation, and in more situations than not, the market (esp. broadly defined to include actual damage liability), provides better incentives to avoid or fix such situations than politics/government does. Both in the sense of providing strong incentives when they are needed (worst case its just slightly possible that BP could go bankrupt), and in terms of not providing them in cases where they would be unwarranted (regulatory requirements, and punitive damages, can easily incentives taking unreasonable costs to avoid) It is not always* one, and only one, of those choices which is the correct 'answer'.* Yes but both the general trend, and the actual real situation in question, shows Cesca's headline to be rather unreasonable.