The Libertarian View of the Oil Spill

I received an email from Wes Benedict, executive director of the Libertarian National Committee. His thoughts on the oil spill are worth quoting at length:

I think a big problem here is the fact that federal law limits the liability of BP (and Transocean, the company that actually owned the rig.)

The New York Times has reported that federal law limits BP's liability to $75 million, and Transocean's liability to $65 million.

These kinds of artificial liability limits distort the markets, and basically create "moral hazard" by encouraging companies to act in riskier ways than they would otherwise. If BP's well causes damage to property, then BP should be fully liable for all of the damage. It is BP's responsibility to "make whole" whoever gets damaged.

If Congress hadn't limited BP's liability, it's likely that BP would have acted differently.

Knowing that a spill could cost them billions, BP might have demanded additional safeguards for their well, or tested their safeguards more thoroughly. These choices would have been expensive, but they might have prevented the huge costs that the spill area is now facing.

BP has said that it will pay all "legitimate claims," even if they go past the liability limit. The problem is that when it comes to property damage, a court should decide what "legitimate claims" are, not the offending company!

Once again, the problem is not big business, it is big business in bed with government. If elected, this is the stuff I will seek out and destroy.

It is time to wake up!