A Question of Priorities

Capitalism favours the efficient, thanks to the dual incentives of competition and profit. Hence, the reason BP has done so well hitherto is because it has highly efficient competitors, such as Shell, to incentivise it towards ever cleaner and more useful profiteering; and also because it has shareholders, who will punish the management for any slackening of performance. This is why, now that Mother Nature has been so tactless as to allow BP's activities to afflict Americans instead of Africans, it makes perfect sense for BP's chief executive, the hapless Tony Hayward, to bribe his shareholders into keeping rather than selling their stake in the company. BP's shares have already lost more than a quarter of their value over the course of the public-relations problem in the Gulf, and it is not yet known how far politicians will be willing to pass the costs of cleaning things up on to the taxpayers. Accordingly, Hayward has decided to pay out thousands of millions of dollars in dividends in order to prevent share prices going down any further, because a fall in share prices would mean that BP is an inefficient company. The mere pumping into the Gulf of Mexico of a few million litres of toxic waste is, by comparison, little more than an indiscretion.