Corporate Death Penalty

Watching CBS's Sixty Minutes tonight made it seem very likely that the BP blowout in the Gulf was due to a reckless disregard for public safety and the safety of the BP workers. If so, this will not be BP's first example of corporate manslaughter. If similar acts of criminal recklessness had been committed by individuals, they would face loss of all their assets and long prison terms.

Maybe it's time to apply the same standards to corporations. Imprison responsible executives, and size all corporate assets. A credible threat might lead to serious consideration of consequences.

By comparison, current penalties are a joke. Bought and paid for legislators passed strict limits on corporate liability, and criminal penalties are likely to be small - compared to the damage done - fines.

Paul Krugman points out how this is yet another example of how libertarian theory fails in the real world.

Thinking about BP and the Gulf: in this old interview, Milton Friedman says that there’s no need for product safety regulation, because corporations know that if they do harm they’ll be sued.

Interviewer: So tort law takes care of a lot of this ..

Friedman: Absolutely, absolutely.

Meanwhile, in the real world:

In the wake of last month’s catastrophic Gulf Coast oil spill, Sen. Lisa Murkowski blocked a bill that would have raised the maximum liability for oil companies after a spill from a paltry $75 million to $10 billion. The Republican lawmaker said the bill, introduced by Sen. Robert Menendez (D-NJ), would have unfairly hurt smaller oil companies by raising the costs of oil production. The legislation is “not where we need to be right now” she said.

And don’t say that we just need better politicians. If libertarianism requires incorruptible politicians to work, it’s not serious.

Libertarianism, like its utopian cousin, socialism, is just another clever sounding idea that doesn't work. Each forgets to take into account human nature.