WEBVTT NOTE Is Statism Safer for the Environment? 1 00:00:00.000 --> 00:00:04.720 I'm Judge Andrew Napolitano and this is Freedom Watch. We keep an eye on government wrongdoing 2 00:00:04.720 --> 00:00:09.080 at Freedom Watch, but we often hear the argument that there are certain problems that only 3 00:00:09.080 --> 00:00:14.320 the government can handle and the free market should stay out. The massive oil slick in 4 00:00:14.320 --> 00:00:20.360 the Gulf of Mexico was a huge mistake on the part of an oil company, BP. But would stricter 5 00:00:20.360 --> 00:00:25.580 government oversight really have prevented the problem? Columnist Joe Connison, writing 6 00:00:25.580 --> 00:00:31.500 for Salon, even argues that the oil industry is more environmentally friendly in Norway 7 00:00:31.500 --> 00:00:35.620 precisely because it's owned by the Norwegian government. 8 00:00:35.620 --> 00:00:41.260 Of course, all industry was state-run until recently in Russia and China, and those countries 9 00:00:41.260 --> 00:00:44.420 have abysmal environmental records. 10 00:00:44.420 --> 00:00:49.540 My next guest, economist Walter Block of Loyola University in New Orleans, argues that the 11 00:00:49.540 --> 00:00:54.540 record of state-run enterprises is not so spotless, or even green. 12 00:00:54.540 --> 00:00:58.020 Professor Block, it's a pleasure. Welcome back to Freedom Watch. 13 00:00:58.020 --> 00:01:00.340 Thanks for having me on your show again. 14 00:01:00.340 --> 00:01:05.340 What could the government possibly do to have prevented this that private enterprise can't 15 00:01:05.340 --> 00:01:06.340 do? 16 00:01:06.340 --> 00:01:13.780 Well, the problem is, when you have a failure in the private sector, there are automatic 17 00:01:13.780 --> 00:01:21.300 feedback mechanisms that reduce the ability of the private company to operate. Whereas 18 00:01:21.300 --> 00:01:29.300 When you have a mistake in the government sector, there are no such safeguards or protections. 19 00:01:29.300 --> 00:01:35.980 Let's change the subject a little bit from BP for a second, and let's look at the aftermath 20 00:01:35.980 --> 00:01:42.980 of Katrina, which was the Army Corps of Engineers' fault, plus FEMA screwing up the rescue service. 21 00:01:42.980 --> 00:01:46.300 Are those two institutions still in business? 22 00:01:46.300 --> 00:01:52.300 Yeah, unfortunately they are. Because they don't have to please investors or consumers. 23 00:01:52.300 --> 00:01:53.300 Right. 24 00:01:53.300 --> 00:02:00.300 Now, who's actually doing the cleaning up as we speak? Is it BP or is it the military? 25 00:02:00.300 --> 00:02:04.300 Or is it the United States government directing BP? 26 00:02:04.300 --> 00:02:11.300 Well, maybe misdirecting, but certainly, you know, they say that you can't mine coal with bayonets, 27 00:02:11.300 --> 00:02:24.300 And the government can't do anything here. It has to rely on this company. But the government has given them a subsidy in the sense that they are only responsible for, I think, $75 million and $90 million limit. 28 00:02:24.300 --> 00:02:40.300 I can't tell you, Professor Block, how upsetting to me it is that these caps are imposed. If I punch you in the nose and I break your nose, I am responsible for all the natural and probable consequences from the punch. 29 00:02:40.300 --> 00:02:49.300 The pain and suffering, the medical bills, the reconstruction of the nose, the loss of lifestyle, the loss of employment, the loss of income, if any of that happens. 30 00:02:49.300 --> 00:02:57.300 If I pour oil in a stream behind your house, I am responsible for wherever that oil goes downstream to your neighbors as well. 31 00:02:57.300 --> 00:03:09.300 But if I'm a big oil company, like the Exxon or Mobil or Exxon Mobil or BP, and I let hundreds of millions of gallons of oil into the navigable waters, 32 00:03:09.300 --> 00:03:21.300 When the government puts a cap on damages or a safety net under a corporation, doesn't that encourage reckless behavior? 33 00:03:21.300 --> 00:03:25.300 Because they know that no matter what they do, they'll never have to pay more than the cap? 34 00:03:25.300 --> 00:03:35.300 Yes. Well, this is the economic concept of moral hazard. When somebody else is paying for the downside, you take more risks than you otherwise would. 35 00:03:35.300 --> 00:04:05.300 I've even heard it brooded about, although I'm not sure if this is true or not, but just speculate with me, that part of the problem is, another part of the problem is the government's fault in the sense that they precluded companies from drilling on the continental shelf, which is very close to the shore, where it would be safer and easier, and as a result they had to go out in the deep water where it's more difficult. So if this is true, and I don't say it is, but I've heard this rumor and I'm going to check it out, 36 00:04:05.300 --> 00:04:18.060 The Gulf of Mexico covers a variety of states, and the waters from the Gulf of Mexico touch 37 00:04:18.060 --> 00:04:22.700 hundreds of thousands of persons' private property. 38 00:04:22.700 --> 00:04:28.300 What is the free market, what is the libertarian position, if you will, on how something like 39 00:04:28.300 --> 00:04:35.300 this should be regulated if at all, or controlled if at all, or addressed after a catastrophe 40 00:04:35.300 --> 00:04:37.300 of the likes of which we've just seen. 41 00:04:37.300 --> 00:04:41.500 Well, I think the radical libertarian view is that we should have private property in 42 00:04:41.500 --> 00:04:46.140 the oceans in general and in particular the Gulf of Mexico. 43 00:04:46.140 --> 00:04:51.620 If the Gulf of Mexico Company owned the Gulf of Mexico and they were responsible for any 44 00:04:51.620 --> 00:04:57.260 oil seeping onto the shores, onto other people's property, they would have been a lot more 45 00:04:57.260 --> 00:05:12.260 in a preventative mode, they would have taken greater steps to insure against this. But again, you know, the reason we have erasers at the end of pencils is people make mistakes. 46 00:05:12.260 --> 00:05:26.260 Right. I realize that this is an accident. There's some evidence that they had some indication that this well wasn't going properly, that they couldn't turn it off when they wanted to, that the pressure was stronger in some spots than they expected to be. 47 00:05:26.260 --> 00:05:44.260 It's really not practical, at least not at this stage, that somebody would own the earth underneath the Gulf of Mexico. What is the practical free market way to clean it up? The feds don't know what they're doing and BP can't seem to get its act together. 48 00:05:44.260 --> 00:06:09.260 Well, certainly the cap which we spoke about before would be something that wouldn't have happened and they would be responsible for the entire damages, just as in the elephant case of punching me in the nose, you'd be responsible for the entire damages, not just up to a certain cap. So that would certainly be a moderate libertarian position of pulling short, say, a privatization of oceans and the Gulf of Mexico. 49 00:06:09.260 --> 00:06:14.260 Basically, taking the federal government out of the equation, out of the legal equation, 50 00:06:14.260 --> 00:06:17.660 out of the moral equation, and out of the economic equation. 51 00:06:17.660 --> 00:06:19.100 Professor Block, it's always a pleasure. 52 00:06:19.100 --> 00:06:20.100 Thanks for joining us. 53 00:06:20.100 --> 00:06:21.100 Thanks for having me again.