How BP should have handled the spill

How to communicate in public is something I spend more time thinking about than is probably good for my sleep... I teach the research seminar at the UPF econ department, which is a second-year boot camp on research techniques for our doctoral students. A lot of emphasis is put on presenting and writing, and I actually show students Steve Jobs introducing the Ipod on youtube and then discuss with them what you can learn from Steve for our presentations.
Sometimes, one can learn a lot from bad examples, too. Little people, listen up - BP didn't quite get it right, to put it mildly (the chairman of the board, after meeting Obama, graciously spoke about the "little people" in the US affected by the spill). So, in a bid to be constructive, here is some brilliant advice from the good folks at Daily Goat on what BP should have done...

McCarthy is alive...

and well, and currently grilling BP. A whole string of papers in international macro and finance argues that the US is uniquely good at translating corporate cash flows into paper that someone wants to hold. This superior "security production technology" is all about respect for the law and property rights. I always thought that Enron should have put paid to much of that literature, but it is doing well. Now we have the enormously awkward spectacle of the Obama administration first putting almost unlimited liabilities on a company, with the idea of oil workers who can now no longer work on drilling rigs being compensated; then the 20 bn$ escrow account, outside the control of BP; and the grilling of Tony Hayward, CEO of BP, in front of a Congress committee that reminds me of Stalinist show trials and the worst excesses of McCarthy and friends. I am not saying that the environmental damage isn't real, or that BP should be let off lightly. But limited liability is there for a reason, as are rules on the maximum that, say, an airline can be made to pay for a crash. There is no reason to put all of the costs of a disaster on a private company, because - ex ante - this may discourage many good projects. As long as penalties are severe, firms will be careful anyway, and I don't see anything in the current share price of BP to suggest that private investors got a free lunch... So my sense is that, while the company should be made to pay a lot, the US is shooting itself in the foot, by trampling on due process and the law, and conducting its liability determination process in a way that one would have expected from Hugo Chavez.