All Commentary
Saturday, September 1, 1990

Perspective: Oil Spills

The Exxon Valdez in Alaska spilled over 10 million gallons of oil into the ocean. This was the third largest oil spill in history. In 1978 the Amoco Cadiz spilled 68 million gallons, and the largest spill was on the Yucatán in Mexico where an offshore oil rig spilled 155 million gallons of oil. But these are only the tip of the iceberg. For every gigantic oil spill, there are dozens of smaller spills of 10,000 gallons or more. These spills provide great danger to the shore fine and to marine fife. Concerned environmentalists often charge that the market has failed and we need more government intervention.

I think the causes are very different. First of all, in the case of the Exxon Valdez, the proximate cause was the fact that the captain allegedly was drunk and was in his cabin while the third mate, who wasn’t qualified to operate in those waters, was piloting the ship when it went aground. You might ask yourself why Exxon didn’t take greater care to be sure that an alcoholic wasn’t given such an important task. What economic incentive did this firm have to act so irresponsibly? Is Exxon run by people who don’t care—even about the bottom lane? Certainly not. One of the problems is that in the U.S., and increasingly in Canada as well, there are laws against firing people who are handicapped. Alcoholism has been declared a handicap. So if we want to lay blame on someone, let us not look to Exxon. A large share of the blame belongs to these unwise legislative enactments which make it very difficult to fire people who are identified as handicapped.

There are other problems as well. The liability of companies who spill oil into the ocean is limited to the value of the cargo and the ship. This doesn’t make any sense. You would think that in any rational set of laws the liability would be limited to the damages. Perhaps one of the reasons Exxon didn’t double-hull its ships is because the liability was limited artificially by unwise laws. Another aspect Of the problem is that fishermen have no standing to sue because they are not deemed to be the owners of the fish, even though they certainly are financially victimized by oil spills.

I am not saying that if we had a legal system more consonant with free enterprise principles there would be no oil spills. The market is not a guaranteed cure for everything. As long as there are human beings involved, there will be mistakes. But certainly, were we allowed to use market principles to help safeguard ecological systems, our society would be a lot better off than under the present system where we are not.

—Walter Block
The Fraser Institute

Vancouver, Canada

(Note: Please see p. 359 for a review of

Economics and the Environment: A Reconciliation,

edited by Walter Block.)


Rent controls, building restrictions, zoning, artificially restricted and high-priced labor all contribute to the problem of the homeless. Anything that discourages building, imposes rules and regulations to make housing more expensive, plays a role. For instance, the village where I live just denied a builder’s request to subdivide a large tract of land and construct 89 new homes; he will be permitted to erect only 59. On that account, 30 fami lies who would have bought houses in this village will not be able to do so.

If these 30 families had not been deprived of the opportunity to move to new and better housing, they would have offered their present homes on the market, making them available to others who could afford only secondhand housing. As 30 other slightly less affluent families then moved up to those 30 somewhat better homes, their homes would become available. And so on down the line. At some stage in the process, 30 residential units, vacated by their present occupants, would be converted into smaller apartments or rooming houses for the very poor.

In a free market economy, housing is continually being shuffled in this way from the present occupants to wonld-be homeowners and tenants across the entire economic spectrum. In time, even the demands of the very poor are met. When government interferences raise the cost of construction, this process is hampered. The poor who are the least able to pay for housing are the ones who suffer the most.

—Betina Bien Greaves

Farm Subsidies

Farm subsidies—roughly $25 billion a year in Federal handouts and $10 billion more in higher food prices—are the equivalent of giving every full-time subsidized farmer two new Mercedes-Benz automobiles each year. Annual subsidies for each dairy cow in the United States exceed the per capita income for half the population of the world. With the $260 billion that government and consumers have spent on farm subsidies since 1980, Uncle Sam could have bought every farm, barn, and tractor in 33 states. The average American head of household worked almost one week a year in 1986 and 1987 simply to pay for welfare for fewer than a million farmers.

—James Bovard

The Farm Fiasco

(Note: Mr. Bovard’s book is reviewed

on pp. 356-357 of this issue.)

  • Walter Edward Block is an American economist and anarcho-capitalist theorist who holds the Harold E. Wirth Eminent Scholar Endowed Chair in Economics at the J. A. Butt School of Business at Loyola University New Orleans. He is a member of the FEE Faculty Network.