How About We Try the Free Market Solution?

by John Cole

This makes no sense to me:

The White House said it backed "significantly" raising the cap on damages faced by energy firms that pollute the environment, as it demands BP pays in full for the Gulf oil spill.

Officials also hit out at fresh complaints by Republicans that it had not acted quickly enough in the immediate aftermath of an explosion on a rig in the Gulf of Mexico last month, which triggered the huge slick.

Under a law introduced after the Exxon Valdez oil tanker disaster in Alaska in 1989, oil companies are bound by law to pay for the full clean-up and containment costs of any oil seeping from their facilities after an accident.

But the legislation caps the damages for which the firm is liable at 75 million dollars unless the company is guilty of "gross negligence." Bills introduced in the House and the Senate would fix the cap at 10 billion dollars.

Here's a revolutionary idea- why don't we get rid of the limit altogether! If BP or Exxon cuts corners and makes a hash of things, and they cause 60 billion dollars worth of damage, they are on the hook for the whole 60 billion dollars! And if they can't pay for the whole bill, the company is liquidated, the shareholders get wiped out, and the company ceases to exist.

Why don't we give that a shot?

http://www.balloon-juice.com/2010/05/06/how-about-we-try-the-free-market-solution/