In the Telegraph, Jeremy Warner considers the impact that the Obama administration’s treatment of BP has had on our economy:
As is now apparent, the social, economic and environmental costs of the disaster, while not to be underestimated, have proved far from the outright catastrophe of recent media and political imagination. In most respects, it has been a much happier outcome than seemed even remotely possible a few months back.
Yet the long-term damage, not just to BP but to big business as a whole, has been profound, and regrettably, this damage has still to be capped to anything like the same degree as the well itself; the aftershocks will reverberate for years to come. …
The Obama administration’s shamelessly populist response to the disaster is in some respects understandable. Just as business leaders accuse the president of being hostile to their interests, many voters think him too kind.
Yet whatever the political merits of this populism, economically it’s proved a spectacular own goal. Had Obama stood on the floor of the New York Stock Exchange wielding a banner marked “investment not welcome here” he could scarcely have done a more effective job in undermining international confidence in the safety and legal protections of the US economy. Most corporations with sizeable interests in the US are re-evaluating their attitude to political risk in the world’s wealthiest economy after seeing the legally questionable way in which BP has been treated.
No wonder increasingly cash-rich multinationals are turning to previously high-risk emerging markets for salvation. It is not just that these markets are higher growth; bizarrely they also seem safer, not just in terms of credit and market risk, but legal and political certainty, too.
Bulls of the US economy frequently point to the flush state of the US corporate balance sheet to support the idea that an investment boom will soon be riding to the rescue of growth and job creation, but as things stand there is little reason for wanting to invest in the US, which seems as politically inept as it is economically marooned.
I’m not sure we’re economically marooned, but we certainly are politically inept. The rule of law is probably the single most important factor in generating long-term economic growth. The consequences of the Obama administration’s abandonment of the rule of law in favor of gangster government may not be felt immediately, but they nonetheless are likely to be immense.