This article by my long time friend Sheldon Richman, editor of the Foundation for Economic Education’s magazine, The Freeman, explains why the BP affair is far from a failure of the free market but is rather a failure of progressivist crony capitalism.
This is not the story of a well-meaning or negligent firm operating in
the free market… BP is a player in a corporatist
system that for generations has featured a close relationship between
government and major business firms…Prominent companies have always been influential at all levels of
government ? and no industry more so than oil, which has long been a
top concern of the national policy elite, most particularly the
foreign-policy establishment. When state governments failed in the
1920s to put a lid on unruly competition and low prices, the oil
companies turned to Franklin Roosevelt and the federal government,
winning the cartelizing Petroleum Code, significant parts of which were revived after the National Recovery Administration was
declared unconstitutional. In the 1950s, when cheap imports depressed
prices, the national government imposed quotas on Middle Eastern oil.
(In 1960 OPEC, a ?cartel to confront a cartel,? was founded.)
Republican or Democratic, energy policy is not made without oil
industry input…The coziness between government and the oil industry is also apparent in the cap on liability for damages ? a paltry $75 million ? from offshore oil spills (not
including cleanup costs). The interesting question is whether BP?s
dubious conduct would have been different without the cap.
