Jeff Ely1 argues, contra Rand Paul, that even if the Deepwater Horizon spill is an “accident,” politicians should be fomenting outrage against BP—only then will the system of incentives for good behavior work properly.
The incentives are structured so that when bad outcomes occur, BP will be punished. If the incentive scheme works then BP acts in good faith and then it is true that bad outcomes are just accidents. The problem is that when the accidents happen it is true that BP was acting in good faith and so they don’t deserve punishment. And if doling out the punishment requires political will then the political will is not there. After all, who is going to stand up and demand that BP be punished for an accident?
This is the unraveling of incentives. Because the incentive worked only because BP expected to get punished whether or not it was an accident. To prevent this, it is the politician’s job to stir up outrage, justified or not, in order to reignite the political will to dole out the punishment. The blame game is a valuable social convention whether or not you believe there is someone to blame.
So keep your pitchforks handy.
1Not a typo; this is the economist at Northwestern, not the historian at Michigan.