Let Free Markets Reign!

[dem mba]

by Barry Ritholtz

As Larry Kudlow tells us nightly, “Free market capitalism is the best path to prosperity!” Free markets rock! Get regulations and restrictions out of the way and let good ole free market competition determine the winners and losers. Regulations and government intervention are for (socialist) losers. It’s in our DNA.

Imagine my surprise, then, when I saw a section of the Oil Pollution Act of 1990 (Sec. 1004) that places limits on liability for polluters! How un-free-market-like, to limit BP’s liability in the Gulf of Mexico debacle to a mere rounding error of $75 million! What true free-marketeer would ever stand for such nonsense?

Sec. 1004:

SEC. 1004. LIMITS ON LIABILITY

(a) GENERAL RULE.—Except as otherwise provided in this section,
the total of the liability of a responsible party under section
1002 and any removal costs incurred by, or on behalf of, the responsible
party, with respect to each incident shall not exceed—

(3) for an offshore facility except a deepwater port, the total
of all removal costs plus $75,000,000;

Balderdash! How dare the government limit BP’s liability. Let the free markets determine BP’s fate. Why should it be otherwise? Should they face multiple lawsuits and get sued out of existence, that’s nothing more than the Darwinism of capitalism.

I’m just guessing here, but I assume when Senator Lisa Murkowski (R – Big Oil’s Pocket, AK) blocked a proposed bill that would have raised BP’s liability from $75 million to $10 billion it was because, as a Republican and free-marketeer, she preferred no cap at all on their liability and wants to see the free markets work as God intended them to (i.e. sans caps). I base that assumption, in part, on Senator Murkowski’s free-market opposition to a windfall profits tax on the oil industry (“…a windfall profits tax is simply no answer at all. In fact, it is counterproductive.”).

So here’s the deal: What’s good for the goose is good for the gander. If you’re a free-marketeer and believe that BP’s liability for the gulf disaster should be capped by statute — at whatever amount — you’re either not a free-marketeer or a hypocrite.

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