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Source link: http://archive.mises.org/4429/killing-the-golden-goose/

Killing the Golden Goose

December 12, 2005 by

An interview with Lord Browne, CEO of BP, gives a sense of the costs which the anti-capitalist mentality imposes on business.

“We have 500 lawyers,” admits Browne, “and that only covers half our work because for litigation we call in local people. About 90pc of the litigation BP is involved in emanates from the US. That’s the way business is done there…. The Sarbanes-Oxley legislation in the US probably costs us an additional $100m (£60m) a year in external costs. Of course that doesn’t count the time we spend on it internally”

Can you imagine how much extra oil and gas we might have found if BP had devoted $100 million a year to hiring and training 500 petroleum engineers instead?

{ 2 comments }

soxwatch December 12, 2005 at 9:38 am

A new study shows that almost 90 percent of U.S. companies are engaged in litigation, averaging a docket of 37 lawsuits and that companies with sales of $1 billion or more are juggling an average of 147 lawsuits. Sarbanes-Oxley, with its whistleblower protection, is contributing to the increase. For more see:
http://www.soxfirst.com/50226711/attorneyclient_privilege_tough_calls_ahead.php

Paul Edwards December 13, 2005 at 12:32 am

Browne: “It’s a somewhat futile claim for a large company to say it’s too much. Most people would say that you can afford it. The fact is that we do it and we do it very efficiently and comprehensively.”

This is how government intervention favors the established firms to the detriment of competition and the consumer: the established firm can afford the red tape and yet the new innovator cannot and is blocked from entry to the market. This reduces competition, reduces supply, and reduces the quality of service, which in turn increases prices to the consumer and increases profits of those firms remaining. So, contrary to what Browne implies with his comments above, the point isn’t that they can afford this intervention; the point is their competition cannot. As always, it’s just too bad for the consumer.

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