Market Feedback Worksheet
This worksheet helps evaluate the presence or absence positive-sum closed-loop feedback required by free market theory.
Description of Economic Situation for Evaluation: ______BP Oil Spill in the Gulf of Mexico _____________
Part 1: Immediate Involvement
Gains, Benefits, Profits
List or describe gains received
Investors, Owners, Stockholders
Potential for dividend (never realized)
Federal subsidies / tax cuts
CEO, CFO, Executives
Millions in compensation and bonuses
High status job
Workers
Good wages for laborers
Costs, Risks
List or describe costs realized
Investment value plummets
40 hours a week
Long times away from families
11 Dead
17 injured
Consumers
Potential for oil (never realized)
Part 2: Indirect Involvement
Gains, Benefits, Profits
List or describe gains received
Families of Workers
Initial pay
Insurance settlements
Downstream (Environmentally affected water, air, land, & health)
Next Generation (duration of impact?)
Costs, Risks
List or describe costs realized
Long separations while workers are out on the rig
Loss of primary bread winner
Widows and orphans
Fishing Industry – loss of primary source of income due to contamination
Gulf Coast Vacation Industry – loss of tourist income due to oil on beach
Tax payers –state & federal resources used to clean up the Gulf
Cost of search and rescue
Fish consumers – food source contaminated, lost, unsafe
Possible long term impact floor of Gulf – bottom of food chain
Reduced Oxygen in water – may contribute to dead zone
Oil contaminants persist in food chain
Part 3: Source of Resource & Impact
Value Added
Value Taken
List work for which the producer owners should rightfully be paid
List value derived from sources other than the producer
Drilling, transporting, refining
Pre-existing resource
The oil existed long before BP existed. BP did not produce it.
Resources derived from other properties
The oil is derived from public lands. As such it naturally belongs
to those nations and their citizens.
Depletion rate vs. replenishment rate
Oil is non-renewable. To use it now leaves future generations
without it.
Evaluation
In a perfect free market, profit is made by those who do the actual work and take the risks, and all parties involved are properly compensated. All person’s and
properties affected are appropriately compensated for their involvement. The further an economic situation deviates from these relationships the less the
market is functioning according to the free market ideal. If entries in the profit and cost columns (Parts 1 & 2) correlate strongly the transaction is working
close to the market ideal. If they are highly different the transaction does not represent a free market. If the producer is appropriately compensated for value
added and value is only taken with consensual agreement and compensation (part 3) then the market is working as a free market. If value is taken without
consensual agreement and compensation then the transaction does not represent free market action.
Is this situation strongly characteristic of a free market, or not characteristic of free market ideals? (i.e.: do the profit columns and cost columns
highly correlate?
The BP oil spill does not characterize free market ideals.
 Those who paid the costs received relatively low gains or no gains at all.
 Many of those who paid the costs were not consensually involved. They were not given a chance to negotiate appropriate
compensation for their involvement.
 Those who received the primary gains were not involved in any of the major costs or risks.
 The primary value of the oil was derived from public property and existed independent of the