Today the bipartisan National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling released an advance chapter from its final report, to be published on January 11, and a summary of its findings on the blowout of BP’s Macondo well. The summary contains a number of conclusions of which two are critical. First,…
First, thanks to Lawrence Baxter for inviting me here. I am a big fan of the new blog and its contributors. Re-energizing the conversation about regulation is an important task. I’ll mainly talk about health care regulation, but I thought I’d start out by joining a conversation in the news: the troubling parallels between failures…
For those readers who assume that private enterprise always does things better than government, read this post from insider oil blog (hat tip 14). It is hard to be optimistic about the Gulf oil disaster; indeed, the post is positively chilling. Yet the best the captains of industry can come up with before Congress this…
One of my favorite commentators and the coauthor of one of the most important books on the recent financial crisis, James Kwak, has just posted a profound and timely addition to his blog. He notes the developing interest in behavioral economics and the importance of understanding irrationality in decisionmaking, most prominently by my pathbreaking colleague,…
A thoughtful but scary post by Charles Hugh Smith this afternoon demonstrates the amazing parallels in the corporate, government and public reactions to the financial crisis as triggered by the collapse of Lehman, on the one hand, and the Deepwater Horizon catastrophe in the Gulf. 1. The extreme levels of inherent risk in each system were…
In efficient markets the mistakes of individual participants are corrected by the aggregate performance of the market as a whole. But when companies become so large that their mistakes spill out into the pubic arena, requiring some kind of public intervention to repair or salvage the situation, the pubic has an interest in reducing the…
Regulation is necessary to ensure that companies, pressured by the contraints of competition and the need to generate profits, take the precautions necessary to ensure public safety. The recent revelations about decisions made by BP before the gas blowout in the Gulf are once again a demonstration that strong, sophisticated and effective regulation must accompany…
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