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Home Publications Blogs Beat the Press In the "Free Market" BP Pays for Every Cent of the Damage It Caused

In the "Free Market" BP Pays for Every Cent of the Damage It Caused

Tuesday, 04 May 2010 22:07

The NYT somehow thinks that when President Obama insists that he is going to “keep our boot on the throat of BP” that he is going against free market principles. This is 180 degrees at odds with reality. BP caused damage to hundreds of thousands of people, possibly millions, living in the gulf states. Under free market principles, they are supposed to compensate people for the damage that they have caused by their irresponsible conduct.

However, the "socialists" in Congress passed legislation that limited BP's damages to $75 million. This means that they ignored market principles and had the government step in and seize property from individuals and hand it to BP.

It would be good if the NYT and the rest of the media got the issues straight here. No one is arguing about a free market. We are arguing about whether a huge oil company can wreck people's lives with impunity. Conservatives are claiming that they can, but this reflects their belief that the government exists to redistribute wealth income upward, not out of any commitment to the free market.

Comments (11)Add Comment
written by izzatzo, May 05, 2010 6:47
Boot on my throat, politicians in my pocket,
Wink wink, win win, heads or tail you lose.

Freedom's not free, it's always for sale, Subsidized capitalism behind risk free ruse.

Born by suckers who bear its cost,
Chanting free markets as they lose.

Drill baby drill, spill baby spill,
Privatize my gains with socialized crude.
written by Ron Alley, May 05, 2010 9:04
Free market principles are vague concepts -- at least as articulated by the political establishment reflects crony capitalism. Until we rid ourselves of the members of Congress who so readily limit the effects of free market discipline we will continue to enjoy an endless succession of corporate bailouts.
written by AbqMike, May 05, 2010 10:31
Well said, Dean. To use the well-worn cliche, "Free market" often seems to mean "private profits, socialized losses." As for the government-imposed limits on liability, it's by no means the first time. For example, many years ago Congress limited the liability of the nuclear power industry for harm resulting from any accidents (and the Supreme Court upheld the limit).
written by PeonInChief, May 05, 2010 10:38
No, no. The function of the "free market" is to keep a boot on the necks of the not rich. The rich are good and pure, and shouldn't have a boot (unless it's a riding boot at a fox hunt) anywhere near them.
written by nassim, May 05, 2010 10:45
Free market has nothing to do with trade. It has to do with behavior. It means that if you can afford it, you can do whatever you want. If you can afford to bridge the politicians, then you are FREE to do whatever you want. The politicians are the free market. They go to the highest bidder. If you don't have the capital to invest in your favorite politician, then that is how the market forces work. You are out of luck.
written by Nick B from DC, May 05, 2010 10:47
Always satisfying to see someone's bass ackward logic thought out to completion. Thanks for the clarification, and the humor for making fools out that NYT story.
written by diesel, May 05, 2010 12:38
Maybe we've been casting this debate in the wrong terms all along. A cap was placed on
BP's liability presumably because, were they held financially responsible, they would go broke.

BP isn't too big to fail.

BP is too small to pay for the cost of the damage they have caused. As were the investment banks.

Like a child playing with matches, they have burned down half the town. Now, once again, the adults, i.e. government, are called upon to clean up the mess. The equivalent of the "big boys" of Goldman's brag haven't stepped up yet. They won't show till the grunt work is done and it's time to draft (or rather hamstring) new regulations.

Somehow, they're big enough to get us all into trouble, but too small to extricate themselves or us. Someone's intellectual model is wrong somewhere, and, as Dean and others have suggested, the problem lies in the ambiguous use of the word "free".
In the "Free Market" BP Pays for Every Cent of the Damage It Caused - Amen
written by floccina, May 05, 2010 2:15
"However, the "socialists" in Congress passed legilsation that limited BP's damages to $75 million. "

How do we get those in Congress to do right?

Here are some points that I made on the spill elsewhere:

Sh?t happens in all spheres of life.

No one likes oil spills. Not conservatives or liberals. Not believers in economic freedom or advocates of more government controls.

Oceans are traditionally public property, therefore even this libertarian believes that Government should mange the use of oceans.

BP should pay every penny for the cleanup and damage and should sue their suppliers if appropriate.

One spill should not necessarily bring an end to all new ocean drilling.

We should not be knee jerk but should let some time pass and then adjust to the facts.

@diesel BP is big enough and profitable enough to amortize the damages that they have done.
Arguing about a free market
written by skeptonomist, May 05, 2010 3:03
A "free market" is an ideal which is approached only in certain circumstances and there is no reason to think that such a thing would be the ultimate solution to any societal problem. Markets in natural resources like coal, oil, gas and mine products have never been "free" because these things are obtained from land and because of the general environmental costs which have not been taken account of. Through the 19th and most of the 20th century government policy was to exploit resources to the maximum, never mind the environmental costs. It was not so long ago that oil, gas and mining were given depletion allowances, that is massive tax breaks. One of the things which caused the rise of the USA relative to Europe was probably the fact that the government could give land away free for exploitation of resources and for building railroads, etc. Attitudes have changed some, but the government is still giving away land and markets still do not take account of environmental costs.
Cossacks work for the Czar
written by Bruce Wilder, May 05, 2010 3:04
And, Jackie Calmes, of the N.Y. Times works for Editor-in-Chief, Bill "Son of Chevron" Keller.

written by diesel, May 05, 2010 8:22
We take it for granted the everyone knows what we are talking about when we use the term "freedom". Certainly Milton Friedman did in his book Capitalism and Freedom, because, not once in the entire screed does he supply a definition of the word. The result, of course, is a book full of nonsense. "Commit it to the flames for it contains nothing but sophistry and illusion".

We tend to think of freedom as a simple entity and speak of it as though it were some one thing or state of being. But if it is a compound, relational term we shall always be wrong in doing so. If the word itself is a paradox, it will always be susceptible to ambiguity in use. The perfect term to elide our real meaning, because depending on circumstances, we can make it shape-shift at will.

For Hegel, every relationship distilled down to Master/Slave. In Marx's hands, this morphed into the class-structured society. In more recent parlance, we speak of zero-sum games in which freedom for one comes at the expense of the other.

The brain trust behind Reagan assured us that freedom (like wealth) was not a zero-sum game. All boats would be lifted by the same rising tide. Admittedly, the bigger yachts first, but, in time, the effect would trickle down to the rowboats and canoes. For these wits, a free market was synomynous with a free society. To skeptically point to the growing disparity of wealth (and freedom) in America, Britain and those countries that most wholeheartedly embraced the neoconservative logic was to be guilty of that most heinous crime--lack of enthusiasm.

I have no statement to offer really, just a question. Is the "free market" the closest approximation we can offer up to the larger notion of a free society?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.