While Paul Krugman has quite an amazing resume, his blog and his TV appearances inspire anything but amazement. He seems to be a poster-child for the idea that involvement in politics may be incompatible with intellectual honesty. Yesterday, he served us on his blog with "Why Libertarianism Doesn't Work Part N".
Basically, he brings up an old Milton Friedman interview in which Milton Friedman says that regulation is unnecessary because if a company messes up, it will be held accountable in front of a court of law by those it harmed. Or as the reporter puts it: "So tort law takes care of a lot of this..." The media coverage of the recent oil spill has made everyone aware of a $75 million cap on damages for oil spills. Unfortunately, when a bill was introduced to raise that bar to $10 billion, the bill was blocked in the Senate by Republicans. (I guess they overheard Obama may potentially like said bill) Of course, if damages are capped (especially at such a ridiculously low level compared to actual damages) then the threat of a lawsuit isn't much of a deterrent to companies acting in ways harmful to third-parties and consumers. And so there is the obvious answer that such bills should not be blocked and probably that we need different people in power. (How about people who can vote for bills by "the other side" for a change?)
But Krugman has found the silver bullet. Of course politicians are corrupt. They always will be. And so "If libertarianism requires incorruptible politicians to work, it’s not serious." Brilliant! Except that it demonstrates that Krugman either lacks intellectual honesty or is incompetent. If the Senate so grossly distorting the liability by private corporations is the failure of libertarianism, what about the failure of agencies in charge of regulation?
Off-shore drilling is heavily regulated. In charge of such regulation is the Minerals Management Office at the Department of the Interior. Those are the people who were in charge of collecting royalties from off-shore drilling, making sure off-shore drilling platforms are safe and that if they have accidents, there are measures in place to recover rapidly and effectively. According to MSNBC's Rachel Maddow (not the most conservative, libertarian or really anything except liberal) those people were caught "doing meth off the toaster over," (never having done meth or any drugs myself at all, I cannot say whether that makes any sense at all...) taking "embarrassingly small bribes" from oil companies, having drunken sex at oil company resorts (what the hell is that?) with oil company lobbyists. Those people are about the last people I would trust with a $5 bill, much less with managing the entirety of the natural resources of a country efficiently and safely.
Of course, it's not as though all regulators are like that and all we have to do is get some people who don't do drugs with industry execs in that office right? Well, not according to Paul Krugman. I mean, if regulation requires non-corrupt regulators, it's not serious.
There is a real debate concerning the role of government. There are intelligent sophisticated honest people on all sides of that debate. Paul Krugman is obviously not one of them. And it annoys me to no end. An ethical economist (or any scientist social or otherwise) makes it clear when he speaks as an economist, and when he speaks as a politician. It may just be that Paul Krugman has completely abandoned all claim to being a rigorous economist to become another biased talking head. But if that is the case, I request that he please ask to not be introduced as an economist. I cringe every time it happens.
16 hours ago