Graduate Student Contribution by Eric Lofgren

An Interest Rate Problem of Interest

by Eric Lofgren

Much talk has circulated over what has dubbed the ‘new neutral’ in which interest rates are projected to be low for a long time. With their ability to pin down the short-end of the yield curve, central bankers across the developed world have sought to stimulate their sluggish economies with cheap credit. The European Central Bank (ECB) implemented a negative 1/10 interest rate on deposits at their facility in hopes of spurring banks to lend. However, as Atif Mian and Amir Sufi related in their new book House of Debt, the problem is a demand issue. They provide compelling evidence that households ran up debt and are currently repairing their balance sheets after housing prices collapsed, unwilling to take on new debt. While at the depths of the recession there was a credit crunch on the supply side, today’s lenders cannot find the “right” kind of demand. This leaves central bankers in a bind. There are compelling reasons to keep interest rates low...

 

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Graduate Student Contribution by ES Blogger Jennifer Lee

Assessing Potential Risk for Offshore Oil Rig Workers

Offshore oil drilling is notoriously known to be a hazardous career, fraught with numerous, and often deadly, risk for those choosing to work in this field.  Whilst the offshore oil drilling process exists in various countries, we narrow our focus to evaluate the legal protections available in the United States, both in the federal and state level, for these operatives; both common and statutory laws are generally applicable to prevent and/or mitigate future liability. The areas of such potential liability for the offshore oil rig workers are diverse. By highlighting the worker’s compensation aspect to offshore oil drilling, the possible dangers the offshore workers face when out at sea are evaluated. We look to examine, albeit cursory, the impact these laws have as a factor when evaluating the minimization of social cost by accidents in this field.

The Perils of Offshore Oil Drilling

What is offshore oil drilling? In basic terms, offshore oil drilling merely is the method companies use to drill ocean beds known to be oil rich for the purposes of extracting raw petroleum. Oil companies employ teams which determine the best method to elicit the raw petroleum while being cognizant of the necessary safety precautions.  Three types of offshore drilling techniques are generally employed: 1) Straight Hole Drilling, a straight line drilling; 2) Directional and Horizontal Drilling, drilling which allows for a “90-degree turn after drilling only a few feet into the ground”; and 3) Rotary Drilling, which is “[the] use of a rotating drill bit to dig into the earth.”  [Raychaudhury, Anurag and Santhosh, Nithin. “Risk Assessment and Mitigation strategies for ‘Off shore drilling’ & 'Upstream activities' in the Oil & Gas Sector,” (research project, SCMHRD, 2013)  p. 28-9]   

Oil drilling on land has its own hazards, but such possible dangers increase with offshore drilling when the additional factors, such as the uncertainty of ocean, must be considered. As Raychaudhury and Santhosh note, “[o]il drilling is dangerous enough work on land; at sea[,] the risk to workers in compounded by the hazards of an ocean environment. […] Since petroleum is flammable, the threat of fire is constant.” [Raychaudhury and Santhosh, p. 20] Among the potential risk to the offshore workers are accidents stemming from personnel mistake and equipment failure, as well as operational malfunctions. [Raychaudhury and Santhosh p. 29-30] The general recognition of increase risk creates a unique array of issues challenging the customary worker’s compensation laws as interpreted in the United States for those working in these mini-cities out in the ocean.

The Impact of Tort Law in Minimizing the Social Costs of Offshore Oil Rig Accidents

As stated, supra, by limit the scope of analysis to solely tort law, both common and statutory, within the United States, much of the pertinent tort laws fall under the umbrella of worker’s compensation, but with special regulations by states invested in the field of oil drilling, such as Texas and Louisiana. General tort laws allow...

 

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Quotes To Live By :

Image found on Wikimedia commons

Image found on Wikimedia commons

“Under a system of perfectly free commerce, each country naturally devotes its capital and labor to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole….[It] distributes labor most effectively and most economically; while, by one common tie of interest and intercourse, the universal society of nations throughout the civilized world.”

-David Ricardo

Quotes To Live By :

image found on Wikimedia commons

image found on Wikimedia commons

“A government that sets out to abolish market prices is inevitably driven toward the abolition of private property; it has to recognize that there is no middle way between the system of private property in the means of production combined with free contract, and the system of common ownership of the means of production, or socialism. It is gradually forced toward compulsory production, universal obligation to labor, rationing of consumption, and, finally, official regulation of the whole of production and consumption.”

-Ludwig Von Mises

Quotes To Live By :

image found on Wikimedia commons

image found on Wikimedia commons

"...The net result of government credit has not been to increase the amount of wealth produced by the community but to reduce it, because the availiable real capital has been placed in the hands of the less efficient borrowers rather than in the hands of the more efficient and trustworthy."

-Henry Hazlitt

Second Segment of 'Law and Economics' monthly series.

Law and Economics versus Economic Analysis of Law: Is There a Difference?

By Guest Blogger Jennifer Lee

 

Geoffrey P. Miller’s “Law and Economics versus Economic Analysis of Law” [Miller American Bankruptcy Institute Law Review, Winter 2011] advocates the terms “law and economics” and the “application of economic analysis onto the law” should be two separate and particular terms. More than a mere parsing of words, the author urges scholars to recognize, and apply, the distinction between the two terms rather than the traditional approach of interchangeability.  Miller delineates the economic analysis of law as the “application of pure economic theory to legal materials,” whilst law and economics is “a genuine partnership of two disciplines, each with something to contribute.” [Ibid.]  For Miller, the analysis of law and economics may initially be more challenging than the economic analysis of law…

Jennifer Lee is a GMU ES Guest Blogger currently pursuing a graduate degree in Actuarial Science at George Mason University. She is licensed to practice law in Virginia and the District of Columbia.

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