The campaign to seize BP’s assets in the name of the “public interest” is about building socialism, not providing financial compensation to families and businesses affected by the spill. FULL ARTICLE by Carl F. Horowitz
Source link: http://archive.mises.org/13145/seizing-bp-assets-compounding-one-disaster-with-another/
Seizing BP Assets: Compounding One Disaster with Another
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Carl, I share your concerns about the “ANSWER Seize BP” organization and calls from them, Reich and others to place BP under receivership.
However, you are not only preaching to the choir here, but you completely fail to examine how it is that Austrians and other libertarians have allowed socialist to steal their thunder – after all, the “shrill prose” of which you complain could easily have come from a libertarian:
But instead of attacking the corrupt marriage of Big Oil and State and offering suggestions for positive change, you and others (from Lew on down) here have been acting as lawyers and apologists for BP, and letting others offer criticisms. Sleeping on the job and sympathetic to industry, Austrians hamstring themselves and then compound the error.
None of you are really doing libertarianism or the nation any favors here. Sure, we should be aware of socialist agendas – but isn’t declaring our own the best way to have influence outside of our little echo chamber?
I’ve never seen anybody anywhere suggest that BP shouldn’t pay for the damages that it has caused. That’s blindingly obvious to even the most casual observer, which is probably why nobody here has written an article about it. But the point is, BP should have to pay only for the damages it has caused; it shouldn’t have to pay just for the sin of being a big corporation, which is what the lefties want. And this problem certainly doesn’t justify nationalization, which is just plain fascism. And when BP does pay, it should be through accepted legal procedure, not through a political shakedown. This is what we have the court system and class action suits for.
So perhaps you could explain how exactly the “corrupt marriage of Big Oil and State” caused the oil spill? How is corporatism relevant to the oil spill? And if it’s not, maybe that’s why nobody has written about it, hmmm? (BTW, when you say “Big Oil”, you sound like a shrill leftie. What, are oil companies all supposed to be small, so they can be less efficient and offer us their product at higher prices???)
Perhaps you could also explain, while you’re at it, how the “corrupt marriage of Big Oil and State” is a more important problem than the government going full-blown to the left, turning the “corrupt marriage” into the government exercising droit de seigneur on every “evil” corporation it can get its hands on? Don’t you think that the government going full-blown fascist is a more important concern than fashionable corporation-bashing? Where’s your sense of proportion? Or are you just an enviro-whackjob wolf in libertarian sheep’s clothing, as I’ve always suspected?
If you read and digest as many details about this spill as possible, you will see overwhelming evidence of corporatism at work. Trust me, plenty of people will write about it. In the meantime, connect the dots for yourself.
Fascism exists here and now. You cannot “bash” it by only bashing government. Sticking up for the rights of corporations does not mean sticking up for one that is corrupt. If you defend a corporation that colludes with our existing fascist administration, you are defending fascism.
Russ, here’s a good piece on corporatism and oil:
http://www.quebecoislibre.org/10/100615-3.htm
TokyoTom, there is a time and place for disagreement with the crony capitalism problem (which has been discussed on this site already), but the problem is the need to avoid creating unintentional coalitions between socialists and libertarians.
Socialists will ultimately make these problems worse. Agreeing with them on some aspects isn’t going to help anyone and it’s hardly going to make socialists into libertarians.
Those at the margins are still able to read libertarian positions on the crony capitalism that created this problem. But if that’s put front and center then LvMI is put in the position of creating a defacto coalition for seizing BP even though they don’t agree with that.
Matthew thanks for your comment, but I have to completely disagree with you.
Libertarian positions on crony capitalism MUST be put front and center if libertarians don’t want to be completely written off as irrelevant or dishonest and IF libertarians are interested in actually SOLVING problems.
Libertarians should all be banging loudly on the chief and obvious problems:
- because government insists IT owns the Gulf resources. ALL of those whose lives in one way or another are linked to it are disenfranchised and subject to the whim of a greedy and inept government, which acts chiefly for the most powerful interests. If fishermen were self-managing the Gulf and controlled decisions about drilling, we could be damned sure those who drill would be MUCH more careful, and that those fishermen charged with oversight would do a MUCH better job than government officials/politicians.
- drilling risks have been mismanaged because of:
– the close marriage of the petroleum industry and the “defense” establishment
– federal drilling incentives and federal limitations on liability and
– government-created and -regulated corporate structures that shift risks from executives to the public at large and to shareholders.
- the Obama/BP lockdown of information in the Gulf is not simply outrageous, but it drastically interferes with the ability of people affected to plan and respond on their own initiative, thus turning us all into Oil Serfs of one kind or another.
If Austrians and others are so terribly afraid of “soicialists”, they should go out into the public field of battle and confront them. It seems like a perfect (and essential) opportunity to state the libertarian message against crony capitalism and to show how the state has failed and cannot be expected to do a better job.
TT
The short answer is to simply look at who would be doing the seizing: the federal government. The Obama administration would not distribute the spoils according to the needs of those suffering losses, it would distribute them on a political basis to satisfy the needs of big government and big business.
As in the case with GM, BP was made an offer it couldn’t refuse, an offer to benefit the few at the expense of the many. The ones to be “made whole” start with the players. The “donation” of $20 billion was not made without conditions. In return for that donation, BP will maintain control of the faux cleanup, where they will be allowed by regulators to continue to operate using the same cost-saving strategies that caused the disaster. They will be permitted to call whatever shots they like as long as they do not interfere with political agendas.
The article states “BP has every interest in fixing the problem.” Wrong. They have every interest in hiding the problem, in downplaying the problem, in spinning the problem. They’ve already lost face, so all that’s left to save is money. If a million in PR saves two million in expenses, so be it. Their loyalties are to shareholders, not stakeholders, and the bottom line will drive the policy.
BP purposely hid and misstated the oil flow rate. They have relied on cheap but toxic dispersants to sink the oil rather than costlier skimmers to gather it. They have spent millions on PR yet have restricted information access to the media, local governments, and independent scientists. Federal agencies have gone along with BP’s gameplan. The result is a still-expanding ecological disaster that is orders of magnitude beyond what it could have been.
The agendas of those with great power will take priority over “doing the right thing.” BP will do what it wants, and then do what DC wants. DC will do what it wants, and then do what BP wants. BP and DC will create and deliver mutual value to one another at the expense of everyone not on their teams. It’s a toxic marriage, one made in hell.
Noah, very well said.
BP and Obama clear care only about covering their own asses, and in making sure that Govt and BP, and not communities, remain in charge. The other “stakeholders” here – those whose livelihoods are directly and indirectly affected plus the rest of concerned citizens (and envirofacsists like me) – are all being emasculated and turned into Oil Serfs.
Good article but I’m going to have to echo TT’s criticisms of it. It’s a little too disjoined and intent on throwing facts out (some of which are interesting, like Venezuela), rather than putting forth a consistent libertarian argument against nationalisation/receivership, because surely BP must compensate its victims on libertarian principle, REGARDLESS of the consequences to the firm and that needs more stress. The problem is the government will just arbitrarily decree how much and try use this whole fiasco for its own gain. What amuses me is how these events rouse so much hatred for the company whilst all the benefits it provides to consumers are safely forgotten. I know it’s a state-corporate partnership and thus is not wholly deserving of sympathy, but equally it is not the vulture in this case. The government and socialist opportunists are. But all blame is being shifted to it, and the government portrayed as some servile, helpless entity. Libertarians need to point out how active it is in these disasters.
I read the other day that BP is the corporate result of a revolution that overthrew the
government of Iran and got into the oil production under a very dubious set of circumstances.
I don´t have the facts or the source, but I think this is a very important aspect of the problem. Just how legitimate was the founding of BP. Please include these consideration in your analysis.
Sincerely, and looking for a “clean” capitalism. Joe Keckeissen in Guatemala
isn’t this sins of the fathers?
Another major aspect that most of them don’t bother thinking about is the actual owners of BP, which is made up not of wealthy individuals lighting cigars with endangered mammals but of regular people holding retirement investments in 401ks. BP happens to be a common share held in many Lifepath-style funds in mutual funds and 401k portfolios. A full siezure of assets would effectively wipe out a large portion of the retirement income of existing retirees and for people attempting to prepare for their later lives. None of these individuals had any say or choice in the matter and punishing them further is ludicrous.
And? So? Yes, many working poeple may well no longer have a retirement? They’re all co-owners of BP and have to face the consequences. At least their non-BP assets are safe.
J. Murray, while one might be inclined to have some sympathy for the “innocent” shareholders, anyone doing a modicum of research could easily turn up how much environmental damage firms like BP do around the world – wherever they are dealing with corrupt and incompetent governments instead of empowered landowners.
But this kind of convenient moral blindness and risk-shifting is endemic to many corporations (particularly those that have been able to use the state to blunt competition), and is an intended consequence of the blanket grant of limited liability to shareholders. This grant has fuelled the growth of massive and powerful corporations, which undermined common-law protections of property, leading to large-scale pollution/related problems, and to the growth of the federal government (at the cost of state/local control) and to escalating fights over who controls government. Lost along the way has been shareholder control over management, who have shown themselves adept at passing risks on not only to the public, but to shareholders as well.
TT
good point tokyo tom
The following article blames the EPA and the Obama Administration for the slow cleanup. The Netherlands offered skimmers immediately. However, the EPA would not approve them, and the Administration would not grant a waiver on the Jones Act (which does not allow foreign ships to be used). This has compounded the problem. BP should only be responsible for the damage that would have been caused if The Federal Government Agencies had acted in a timely way.
Read “Why Is the Gulf Cleanup So Slow” here:
http://online.wsj.com/article/SB10001424052748703426004575339650877298556.html?mod=WSJ_hpp_sections_opinion
“BP should only be responsible for the damage that would have been caused if The Federal Government Agencies had acted in a timely way.”
Your comment, and the article, neglect a possibility: perhaps BP does not wish DC to act in a timely way. BP put up $20 billion in escrow, a mere fraction of the total potential claims. In a few years, they will be able to use the exact argument you mention to defend against further claims. Also bear in mind that BP will be a long term beneficiary of cap and trade legislation.
Do you think anyone voluntarily writes a check for $20 billion with getting something in return? This was not a shakedown. It was a quid pro quo bribe. Heavy on the quid.
The resources exist to contain this spill. They are not being deployed. This inaction has a political upside for DC and a financial upside for BP. Do the math. Try not to puke.
Walt, the Jones Act applies only within three miles of the coast, and not out at the Deep Horizon site. In the event the Obama administration refused any waiver request, this would be public knowledge, but in any case, cleanup vessels can be deployed and fuelled at the site without ever visiting US ports.
TT
You very well may be right on this. If you’ll excuse the pun, I smell something fishy here. I expected to hear the name Halliburton on a 24-hour loop tape – all we have had is a deafening silence. Also why is the US Government funding drilling at 14000 feet off the coast of Brazil, while at the same time questioning the safety of drilling at 5000feet in the Gulf of Mexico?
I have already predicted that BP will either be hit by crippling fines or sued into oblivion and will probably be forced to forfeit all its US-based assets to avoid going broke. After all politicians live by the motto “Never let a crisis go waste”. These assets will be auctioned off (if you can call a State-based fire sale an auction) to US oil companies. After allowing most of the Iraqi concessions to end up in Russian and Chinese hands the poor chaps are surely owed something!
And as I said before Shell and Citgo had better watch their backs now.
Just draining a few more billion from BP would be wasting the crisis. The game is much bigger. BP has supported cap and trade (and will profit immensely from it) and there is no bigger prize for the power elite than the ultimate control of humanity that cap and trade can provide. The scope of Obamacare is miniscule by comparison.
I suspect with the help of government BP will find a way to socialize much of the loss related to the spill, and the fines will be a fraction of what they should be.
Note the previous bad guys on Obama’s enemy list: Goldman Sachs, Big Pharma, Big Insurance. Feel their pain? They were demonized in public and handed cash in the back room. These battles are about as real as professional wrestling. For now, BP is worth a lot more alive than dead. It provides the state with an extra straw to use for sucking blood.
Two things.
First, BP is foreign.
Second, cap and trade may have seemed like a brilliant idea when everything worked fine and dandy but economic and political reality (public opinion doesn’t matter) is killing off what seemed a winning “get rich quick” scheme.
Also the Obama administration has shown absolutely no restrain in hitting hard foreign companies to keep disaffected allies in line and to profit their domestic buddies. Look at Toyota: they issued a few recall bulletins. Every manufacturers does this, it’s absolutely normal. The US government immediately seized the opportunity to humble what is one of the best car manufacturers in the world for doing what a responsible manufacturer should do.
The reasons? First, perhaps people will stop buying those damn Japanese cars and buy good ol’ American vehicles. Remember that both GM and Chrysler are both government controlled. This contrast sharply with the media silence over a certain US-owned German car manufacturer whose vehicles tend to develop abnormal fuel consumption after a few thousand miles and for which no recall bulletins were ever issued. Second: this was a good way to teach Japan a lesson for questioning their military presence in the country and the continuous breaches of a number of treaties between the two countries. Japanese are very proud of their reliable products… what better way to humble them?
BP is UK based. And we all know the Britons are starting to question what the Hell they are doing in Afghanistan and why their boys died in Iraq and why they didn’t get a single drop of oil in return. Differently from Japan, Britain hasn’t got a healthy, innovative industry anymore. They cannot be accused of peddling unsafe cars or refrigerators to innocent, apple pie-eating Americans. But they can be accused of setting up unsafe operations threatening the “homeland” itself.
Mencken saw this back in the ’20s when he said that governing amounts to little more than keep coming up with hobgoblins to terrorize the public. And to make a nice pile of cash for your friends, of course.
A large chunk of BP’s assets are outside of the US; that and corporate ring-fencing means that it is not possible to even all of BP’s US assets – so whatever may actually be seized or fined will be woefully adequate to pay the short- and long-term damages racking up.
There is a legal reason why BP is controlling everything in the Gulf. The legal reason is because Great Britain still has partial control of the Mississippi River. Article VI of the Constitution states that any agreement made under the Articles of Confederation is still in effect. The Peace Treaty of 1783 gave both the U.S. and Great Britain free access to the Mississippi River. See the actual statutes from the United States Code that uphold this fact at http://wp.me/pCW6e-5X including the Peace Treaty.
Why was the cleanup after Katrina such an unorganized fiasco? For the same reason. The U.S. doesn’t have complete ownership of the Mississippi River.
There is more that needs to be known. The U.S. government is a bankrupt entity. This is evidenced by the correlation between the United States Code (U.S.C.) and the Code of Federal Regulations (C.F.R.): title 11 U.S.C., “Bankruptcy”, is implemented by title 11 C.F.R., “Federal Elections”. Our vote is nothing more than to elect a bankruptcy “administration”.
Bankrupting the U.S. government though wasn’t enough to destroy the individual American’s sovereignty. Social Security was created to do that. Applying for a S.S.# made the applicant into a federal employee. After all, only a federal employee would be liable for federal employment taxes.
You’ve heard the name of the federal employee a thousand times – the “taxpayer”. “Taxpayer” is a term defined at 26 C.F.R. 2.1-1(a)(5) as a member of the Merchant Marine – a federal employee. Further, at 26 C.F.R. 2.1-1(b) it states that this is the definition of the term as used throughout the Code and the regulations for all calculation of taxes.
We’ve given away all sovereignty. As federal employees, we have no constitutional guarantees. The government may make any laws it likes for its own employees.
We Americans need to wake up and restore our proper sovereignty and the proper role of the government that was created to uphold and defend our freedom.
To see the entire Social Security Scam go to http://wp.me/PCW6e-E and learn more.
The fact that still bothers me is the contractual agreement between BP and he US government to limit BP’s liability to $70M in exchange for “permission” to drill in international waters, an area which the US has no jurisdiction. Despite all the ravings and rantings how can this contract be nullified,and should it? One of the functions of government is supposedly to enforce contracts. Of course recently the government has failed to do this across the board. One such example is the stiffing of GM bondholders by discounting and calling the bonds during the takeover (bailout/nationalization) then distributing the assets to favored voting supporters (the unions).
If the government honors this contractual obligation, taxpayers will be on the hook for any damage from the oil leak. While the damage is in the public eye, it pales by comparison to the money already shelled out in the bank and corporate bailouts.
Further I don’t feel the socialists really know what they are asking for by clambering for a government takeover. Neither the socialists nor the US government has the resources to contain the leak. The leak is an engineering problem, not a political one. Witness the job the Corps of Engineers did on the levies in New Orleans that failed, thus causing the city to flood. The “rescue” operation after Katrina should serve as an indicator to the efficiencies of government, yet the socialist plan to seize the assets of BP amount to New Orleans II.
The environmentalist faction should also shoulder a huge responsibility in this leak as they forced the drilling of this deep water well by prohibiting near shore drilling. As US waters extend to 12 miles government was certainly within it’s jurisdiction, even if misguided in doing so.
The American public should revisit the history of socialism, not in theory, but in actual practice. The socialist superpowers of Cuba, Russia, East Germany, and North Korea serve as useful examples. Capitalism too is getting a bad name as the public is told the system that the US is currently operating under is that system. The truth is the current system is a composite of fascism and merchantilism and certainly not a free market. Only us little people are allowed to be somewhat capitalistic in that we can fail while our betters bailout their friends.
Very well said, Al. But be careful, lest you sound like a shrill leftie, enviro-whackjob wolf in libertarian sheep’s clothing, like me!
BTW, never hear of the 200-mile EEZ?
TT
Don’t sweat it, TT. The guy who intimated that is just a shrill rightie, security-state-whackjob in libertarian sheep’s clothing.
I wonder how ANSWER Coalition would feel if this was a State owned Venezuelan oil rig.
I have a feeling there would be no protests.
Part of the reason why this happened in the first place was that after the Exxon Valdez incident, the government moved to assume a large share of the liability for oil spills (in exchange for higher taxes on oil companies and more control over the oil industry). Combine that with the fact that government-run insurance always does a horrible job of managing risk (FDIC and federal flood insurance, anyone?), and it’s really quite surprising that something like this didn’t happen earlier. I think the specific law (on liability) was mentioned in the article.
Your mention of Federal Flood Insurance Program (FEMA) and poor risk management really struck a chord with me. I live on an island near Key West, and my mortgage company requires this “insurance”, even though I live in a stilt house with the living space some 14 feet above mean sea level (MSL) level. The “insurance” does not cover anything below “storm surge” elevations, which was determined to be 8 feet above MSL by the Corps of Engineers. To add insult to injury, FEMA requires all dwellings to be inspected by the county to make certain nothing below flood grade exists other than garbage cans and lawn care tools. Above flood grade I am “allowed” to have storage shelves, but no workshop of any kind. For the inspection we are charged $300 and the county provides a written list of non-conforming items. My “hit list” included a freezer, standalone wash sink, a 4 x 12 air conditioned enclosure, and my small machine shop (metal lathe, drill press, grinder, workbench, tooling, etc). Remember the insurance covers none of this, but the rationale is FEMA “will have to transport all destroyed items as part of the cleanup”. So in essence we pay a high premium monthly for trash hauling in the event of a hurricane! In the past 17 years we have had 2 damaging hurricane events, yet I had no claims.
My fellow citizens claim it is too costly to have free market (private) insurance, as the high premiums would discourage building here. Yet the reality is that building here is indeed a bad idea due to the potential flooding, thus FEMA creates yet another moral hazard. Our flood insurance” is the equivalent to the FDIC. The idea of FDIC is to prevent bank runs and the flood insurance is to prevent using common sense where houses should be built! In short their IS NO RISK management at all.
@Al Sledge,
Government “contracts”, being entered into on behalf of individuals who have not given the government the express permission to do so (the US taxpayers), are illegitimate. It would be like me sheltering someone else from liability by saying that my nextdoor neighbor will pay any damages incurred.
While I agree these contracts are illegitimate, the government has control of the guns, a monopoly on the use of violence. You could do the example you provided if you hold a gun to the head your next door neighbor and demand that he “pay up or else”. Kinda like our “voluntary tax system” that Harry Reid discusses on YouTube.
Such contracts are only illegitimate in Libertarians’ eyes as they will hold up in any court.
Actually only partially true. A contract between you and I would be held up in court. However a contract between government and anyone else is arbitrary where the government can change the terms anytime after the fact, and the change is generally upheld in court. BPs contract with the government would limit liability to $70M for ANY damage. This was because the government saw only the income to its coffers. Now government want to change the terms as it foresees huge losses. That too will be held up it court. Courts operate using two sets of rules with government playing by a unique set. I fail to see how this law/feature can be considered Libertarian as most conservatives and many liberals believe in the rule of law, not the rule of men. Government turns contracts into a folly.
Having worked on a number of government contracts, most are spelled out in great detail, far too much to go into here. But after the fact if the government changes the terms and refuses to pay there is little that can be done. One is not allowed to sue the government without their permission, and if you do get to court, you stand before a judge who is a government employee. Kinda like having your wife as a mediator in a contract conflict between you and I. The system appears to be pretty rigged to me, but then again I have been called a conspiracy theorist before.
Gil’s comment is erroneous. Generalizations often are.
Contracts between citizens, and between citizens and government, are struck down on many grounds, including illegitimacy. Must be all those libertarians sitting with the gavel in hand.
The focus is entirely wrong. BP and our government agreed, by way of BP’s lease, to do certain things. Only to the extent that BP committed outright fraud is the Company responsible beyond its lease payments and agreements. The federal government is also liable, to the extent that it has been telling us forever that its oversight and regulations are sufficient to look after our interests. We’ve been paying the government to do this, as has BP, and our rulers obviously have been deceiving us, either through gross incompetence or a complex scheme of inter-related fraudulent actions and pronouncements.
I think that, if BP is to set money aside, so, too, should the individual governmental employees. Using taxpayer monies just increases our tax bill, and extracts no responsibility for those individuals’ failures to do what they represented to us they were doing, even as they took our money for all these years. Their fraud is astronomical and inexcusable, and there is no reason to punish the defrauded taxpayers further.
Let’s confiscate the personal wealth of the bureaucrats, past and present, who brought this on! And then we need to abolish the programs altogether — they obviously don’t work as promised, and the government will argue that all that was possible, was done. Since “all that was possible” was useless, let’s fold it up.
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