Why regulation doesn’t work, part n

Via Tyler Cowen, Paul Krugman attacks libertarianism:

Thinking about BP and the Gulf: in this old interview, Milton Friedman says that there’s no need for product safety regulation, because corporations know that if they do harm they’ll be sued.

Interviewer: So tort law takes care of a lot of this ..

Friedman: Absolutely, absolutely.

Meanwhile, in the real world:

In the wake of last month’s catastrophic Gulf Coast oil spill, Sen. Lisa Murkowski blocked a bill that would have raised the maximum liability for oil companies after a spill from a paltry $75 million to $10 billion. The Republican lawmaker said the bill, introduced by Sen. Robert Menendez (D-NJ), would have unfairly hurt smaller oil companies by raising the costs of oil production. The legislation is “not where we need to be right now” she said.

And don’t say that we just need better politicians. If libertarianism requires incorruptible politicians to work, it’s not serious.

This spill is evidence that regulation doesn't work. This doesn't mean a libertarian system would have prevented the spill, but it's pretty solid evidence that regulation didn't prevent it. Those oil rigs were regulated. They were Obama's regulators, too. After 15 months in office, he can't pass the buck to George Bush.

In case anyone gets the wrong idea, let me also point out that Sen. Lisa Murkowski is not a libertarian. As a representative of an oil state, she's basically practicing crony capitalism.

And don’t say that we just need better regulators. If progressivism requires incorruptible regulators to work, it’s not serious.