And if we aren’t careful, we will encourage companies that have enough money for collection to leave the drilling to those that don’t.
That's from Richard Thaler and the entire column is worth reading. Here is his wise conclusion:
We are left in a difficult place. Neither the private nor the public sector seems up to handling these kinds of problems. And we can’t simply wait for the next disaster, because, as people might say if they had to use G-rated language, stuff happens.
>>And if we aren’t careful, we will encourage companies that have enough money for collection to leave the drilling to those that don’t. >>
Then don’t grant drilling rights to those that don’t.
If drilling isn’t safe enough for a company to be reasonably sure it will profit, after taking into account the chance of liability, then drilling isn’t safe enough to be allowed.
Yes, we know from experience that insurance deters the moral hazard that leads to financial meltdowns. (sarcasm off)
How about, instead, creating barrier to entry in order to create rents you would be careful to protect? Not an original idea, but perhaps still worthy.
If you agree that neither private nor public sector is good at handling these types of problems, does this affect your overall worldview that is optimistic about the future and our abilities to solve problems?
” If it prevents just one blowout, won’t it be worth it?”
Um. Yes?
Why have we decided that the public sector is not good at regulation? Having incompetent Republicans who don’t believe in the federal government leads to an incompetent federal government. That doesn’t mean it’s impossible to have well-balanced regulation. It just means you shouldn’t elect people who want to dismantle the government to run the government.
For some reason we seem to think Bush and Cheney’s actions were reasonable, but we’d think it was insane if a Fortune 500 elected a CEO who believed that all the company’s profits should be distributed to the poor. Both of those are completely irrational actions and both only prove that the public or private sector don’t work well when run by people intent on destroying them. They don’t prove anything about how well the public or private sector can run, however.
Government made oil companies drill in the wrong places to begin with…
The real upshot seems to be that BP is a huge bargain right now. I haven’t seen any estimate suggest that this will cost the company more than a few billion and it’s down 44 billion.
“The real upshot seems to be that BP is a huge bargain right now. I haven’t seen any estimate suggest that this will cost the company more than a few billion and it’s down 44 billion.”
WHAT IS THE GOING RATE FOR DESTROYING ONE OF AMERICA’S GREAT NATURAL RESOURCES ANYWAY?
Rahul asked: “Any good examples where this utopian public sector regulation has worked well? After all, the republicans weren’t always in power”
Remember the great fires of Chicago, San Francisco etc.? Why don’t they happen any more? Not because we’re better at rapidly extinguishing fires (we are) but because anyone who wants to build anything has to obey the fire code.
Why do earthquakes in Indonesia kill thousands but equally strong in California kill just a few? Because anyone who wants to build anything had to obey the earthquake code.
Our cities exist and are inhabitable because of public regulation. This has been true since the cities of Harappa and Mohenjodaro in the Indus Valley or the cities in ancient Sumeria.
-Arun
The extreme expense of deepwater and ultra-deepwater drilling means that the companies in that business will have pockets deep enough to handle the expense of operations a mile beneath sea level, particularly since e&p companies will splurge for more effective blowout preventers and other safeguards in the wake of the Deepwater Horizon accident. Or we could just roll with ideological blinkers.
Except that we live in an oil economy, and oil is a finite resource. Oil runs virtually every aspect of our society. And switching to nuclear or something like that will be politically non-viable until the oil runs out and we have no choice.
Given that, we can:
A) Have private companies drill the oil.
B) Have government drill the oil.
Having traveled to parts of the world like Azerbaijan, and seen how the socialist USSR “protected” the environment, I am not implicitly for option B.
Except that fire codes where largely a product of lobbying by the “evil” insurance companies, and not some altruistic progressive policy. We can trust the government to enforce fire codes, because there is a powerful multi-billion dollar economic interest who will see to it that it is enforced. Fire codes work, because the corporate interests that support fire codes (i.e. insurance companies) are more powerful than the corporate interests that oppose fire codes (i.e. contractors).
I am not aware of any powerful financial interest who will ensure that more environmental regulations are enforced. The modern environmental lobby doesn’t seem to have the financial or intellectual resources that the insurance lobby does.
No Republican has actually done anything but increase the government, by any metric you want to choose.
Your belief in some mythical deregulation that never happened is rooted in your fundamental messianic belief in government.
If your premise is that god created the universe, and that god is benevolent and good… well, when faced with all the evil and suffering in the world, you must either:
a) Reexamine your faith in god. or
b) Create a Satan figure, an anti-god, to take the blame.
If your premise is that the government is the messianic source of everything good in society… and faced with the undeniable fact that government is getting larger and more and more powerful, yet our problems are getting worse, you must either:
a) Reexamine your faith in government. or
b) Create a Satan figure, or an anti-government, to take the blame
See, if Bush and the Republicans where simply incompetent, or stupid, or corrupt, that in itself is a flaw in the regulations you put so much faith in – After all, sometimes incompetent, or stupid, or corrupt people will win elections – any political or social system that isn’t fault tolerant of stupidity or corruption from the top is non-viable. So you need to imagine that someone like Bush is part of some imaginary anti-government conspiracy – that Bush could have solved all our problems but chose not to simply because he is ideological opposed to “big government” (how anyone could accuse the Republicans of being against “Big Government” with a straight face is mind boggling – but nothing makes people more delusional than ideology).
They can be required to post a bond of a gazillion dollars.
Neither the private nor the public sector seems up to handling these kinds of problems.
Then maybe we shouldn’t allow activities that might create them.
“You think that has nothing to do with the fact that people in California can afford a house that will withstand earthquakes? If we plopped the California earthquake building code into Indonesia would they be way better off? How do you know? Has there been research into the effect of building codes on fires, independent of other factors?”
This sort of thing has been studied in Turkey (Izmir), and yes, building with earthquake codes – believe it or not – makes a difference.
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