Too big to fail or too big to fix


It is certainly too early to point out the definite cause of the BP oil spill off the coast of Louisiana. However it is important to remember that it was the environmentalists, through pushing increasingly cumbersome regulation, who forced the oil industry to drill in ever deeper waters in the first place. We have, as described by Chicago Nobel economist George Stigler, the phenomenon of regulatory capture. In this case the regulators and oil industry have been getting too cozy with each other.

In the meantime the environmentalists are upset and unable to realize how technically difficult it is to plug an oil well pouring over a mile deep in the ocean. And not even Obama could fix it – their very same president who constantly projects the image of the possibility of big government performing miracles. It's a funny world which has been turned upside down. The American liberals are now learning the hard way the lesson about regulatory failure which conservative critics of big government have warned of for decades. As the WSJ puts it:

How remarkable it is to see a President who has put such exorbitant faith in the power of government being excoriated by his allies for a government failure. It's almost as astonishing as seeing Carol Browner, the White House green czar and long-time scourge of fossil fuels, being interrogated on NBC for excessive deference to Big Oil. Sometimes life really is fair.