BP and Moral Hazard

Rumors have it that earlier this week President Obama yelled at his aides, "Plug the damn hole!"  It's no wonder that Obama wants the hole in the rig plugged as it is not only expelling oil but also dragging down his poll numbers.  To use Top Kill or not to use Top Kill, to plug the hole or to encass the pipe in cement, to allow BP to fix the problem or nationalize the effort, these questions have been debated nonstop for the last several weeks.  Even if Obama had invented a cure for cancer and instituted Pizza Party Fridays it seems that all the media would talk about would be the leak.

Of course there is good reason to talk about the leak.  Some reports say the damage might exceed that of the Exxon-Valdez.  Many more say that this will destroy most agriculture along the Louisiana shoreline.  You can't watch the evening news without seeing video of an oil soaked bird.  Yes, this will be something that the region will be dealing with for the next few years.

Fortunately for Obama, BP is getting most of the blame.  That blame is rightfully deserved, BP certified that the rig was sound and it was not.  A Plan B was not in place in case something went wrong.  Eleven men died and the Louisiana shoreline will suffer as a result.  BP should make full restitution.

However, because of government, BP does not have to.  The government sets a statutory cap of 75 million dollars on oil spills through the Oil Pollution Act.  BP has said that they will pay more than the cap since not doing so would have huge PR implications on their business.  Also with pundits like James Carville demanding the Department of Justice indict BP representatives on crimes, the oil company is probably more than happy to pony up a few extra dollars.

The media is running with Carville's lines and demanding a criminal investigation be started but isn't this a matter of negligence, not malevalence?  BP had no motive to intentionally cause the spill, and all the reasons in the world not to.  Even if they scaled down safety is that not a result from having their liability capped?  If you have less to lose, you will spend less to avoid losing it.  The negligence is not even merely their own, the Obama administration gave the very same rig that exploded a safety award last year.  The articles goes on to say that even though the government agency responsible for safety requires inspections every month, the agency had "fell well short of its own policy."  The government's statement is proof in action that vagueness rules where specificity fears to tread.

Obama even said he took "full responsibility" for plugging the leak.
The truth of the matter is Obama didn't have anything to do with the leak.  It was an unholy alliance of big government and big business.  When gains are privatized and losses are socialized, it creates a situation known as moral hazard.  Moral hazard prevents the prudence that might normally temper a company's activity and make it act responsibly.  After all, if you keep your winnings and your losses are subsidized, is not the proper route to go for broke?  A free market may not have prevented this accident but we would not have to rely on BP's public relations department to accept financial responsibility for the spill. 

But even after the spill, capitalism works its magic.  BP will pay millions in damages and will probably upgrade their safety.  If they do not, they will fail and the company will go under or be bought out by a larger, safer company.  As for the government agency that failed, it will receive more money and more personnel.  Talk about moral hazard.

Phoning it In

Alright, so I've been trying to put up one column a week but this is my moving week, in addition to that one of my good friends is being ordained this weekend, also Monday starts a vacation I scheduled before I knew about the first two.  So I'm phoning it in this week and giving some funny pictures and good links.

I still remember when it was considered cool to "Do the Urkel!" after that dancing episode aired. 

God, 90's TV was terrible.

 I'd rather use Mercurochrome than Hydrogren Barackside, if you don't know what Mercurochrome is then you are under 50 and not dying of heavy metals poisoning.

Here's a good post on standing up to radical Islam, specifically with the fatwa on anyone who shows an icon of the prophet Mohammad.  The author asks the great question, why are we not all wearing Mohammad T-shirts?  Every so often an artist has a "everybody draw Mohammad" day but after years of this B.S. why hasn't our "f*** you" culture produced a plethora of Mohammad consumer goods that we can all display to end this nonsense?  

Arizona is still getting boycotts of its products, but no one has really been able to list one main one.  It was funny to see liberals organize boycotts of Arizona ice tea only to find out it was made in New York.  But LA is learning that a quarter of its power comes from Arizona and the Arizona utilities commissioner is threatening to cut all power to LA if they go through with the boycott.  Hey great news California, you finally found an Arizonan product!

I keep hearing about anti-incumbency fever but looking back at the primary results of this week, it seems like only the Dems have caught it.  Fred Barnes explains it's not "anti-incumbency" fever, it's anti-Obama fever.    

La Raza, for those of you who don't know, is Spanish for "The Race."  It is a group that both Obama and McCain spoke in front of during the election.  It's also the Hispanic version of the clan.  Here is an example of a professor at UCLA speaking out against "frail white people" and talking about the need for a Mexican revolution in America to destroy capitalism that took place on May 8th.

Update: What Obama Taught Shahzad

When I posted the original "What Obama Taught Shahzad" post I missed some of the more nutty aspects of the story.  The first has to do with Mayor Bloomberg of New York City. When asked about the Times Square attack, the mayyor responded by saying the guilty party was probably a  "homegrown, maybe a mentally deranged person or someone with a political agenda who doesn't like the health care bill or something."



Really?  Because when I heard there was a bomb found in New York City, I assumed it was a Muslim male in his 20's or 30's of Arab descent.

Contessa Brewer of MSNBC said she had hoped that the bomber was not Islamic:



There is either great ignorance or willful blindness on the liberal side that sees Tea Partiers as potential terrorists but finds Islamic radicals' motives inscrutable.  Yes, there are nuts of European descent but how many times must we hear about McVeigh when there have been dozens of terrorist attacks in the last few years around the world perpetuated by many different people all named Mohammad?    

Happy 50th Post to Me

Thank you to everyone who has linked my blog in their facebook status or who have commented on my blog posts. I hemorrhaged one more friend from facebook for my blog post on immigration, leaving the total at 5. The support could not have come at a better time. I'm dedicating my 50th post to my followers, commenters and all the lurkers out there. Although still at a small number, I have doubled my followers in just 2 weeks and started getting some good feedback.

I have also added some features, now you can E-mail a post to someone by clicking on the envelope at the end of the entry. I have opened up the comments section to anyone, it will remain this way unless there starts to be abuse and spam showing up there. More features will come as I find time to add them.

I don't have any illusions of grandeur regarding this blog but the post on immigration really opened my eyes to the race-baiting and arrogance surrounding our politics when it comes to certain issues. Unfortunately, with the election of Obama we did not transcend race as a nation as we were told. Instead, any criticism of our President is considered through a racial prism by our detractors. Does anyone think I would be any less critical of the administration if Hillary had won?

I will continue to blog on issues that are important to me and those who disagree can choose not to read or even better, respond (responsibly) in the comments section. In my initial post I said that this blog is for everyone, left and right, those who choose to shun me rather than comment back show that they simply are not equipped for the debate. I won't be wasting any time on them in the future.

Thank you to everyone who was helped keep me motivated to continue this blog.

Yours Truly,
Conservative Ken

What Obama taught Shahzad

Eyes rolled when Bush described the actions he took around the world after 9/11 as the "long war." Liberals cried that the President was fearmongering. By creating a long-lived boogeyman, he was scaring the electorate into reelecting him and expanding his own power. Some said that 9/11 was a fluke and that there really was no determined effort to hit the US on a regular basis. Whereas a lack of future casualties told conservatives that the President had truly stepped up and put security first, liberals believed that Bush was too stupid to protect anyone so the threat must be imagined.

While conservatives remember the Shoe Bomber and the anthrax scares in D.C. and around the country that occurred shortly after 9/11, liberals lost themselves in a haze of "Bush lied- kids died" and "No Blood for Oil." After Bush created the Department of Homeland Security and passed the Patriot Act the closest repeat we had of those events were the arrests of  the Buffalo Six and the Fort Dix Six.   Although no one would say Bush did a perfect job, in the seven years after 9/11, we were not hit again. 

Subscribing heavily to the belief that terrorism fears were overblown, Obama began dismantling the tools put in place by Bush as soon as he was elected. Interestingly, Obama still did not keep his promises to end warrantless wiretaps, close Guantanamo or pull our troops from overseas but he did reinstate the criminal justice paradigm of the Clinton years over the GWOT (Global War on Terror) paradigm of the Bush years. Khalid Sheik Mohammad would be granted a civilian trial, as would his coconspirators.  The Christmas bomber would not be interrogated but would be offered a plea bargain for his cooperation. 

Clearly not impressed by the toughness of Obama's policies, Faisal Shahzad, a Pakistani-American,  set up a makeshift bomb in a Nissan Pathfinder and attempted to detonate it in Times Square.  Under Bush, he would have been just another news story buried by the New York Times about Bush "claiming" to have caught another terrorist long before the plot unfolded.  Under Obama we are merely lucky that the bomb failed to detonate.  Shahzad has been arrested by authorities and has already been read his Miranda rights though the administration insists he is still cooperating. 

There are serious legal, moral and practical questions surrounding how we should deal with terrorists who plan to attack the homeland.  While Bush erred on the side of keeping us safe, Obama errs on the side of civil liberties, even when it comes to non-citizens.  As a libertarian, I often look at things in terms of incentives.  For example, if the government subsidizes home loans for people who can't afford them, you will get a bubble followed by a crash.  In this case, if you take a shot at an American soldier on a battlefield in Iraq or Afghanistan you will either be killed or captured and tried by a military tribunal, however if you try to bomb American civilians you will be arrested and be given a civilian trial.  Hmm, what is the incentive we are creating here?