Government and Business: A New Relationship

Gerald F. Seib of the Wall Street Journal writes today that "the BP oil spill is just the latest in a series of traumatic events forcing a rethink of government's relationship with business."

We learned in the bank bailouts and auto company rescues, Seib writes, that the government isn't into nationalizing industries. And there seems to be general consensus that while federal regulation can sometimes go too far, at times it doesn't go far enough.

But the question of where exactly to draw lines will continue to be vexing. For example, Seib notes, when it comes to oil spills, "the federal government, it turns out, has precious little equipment or manpower to bring to a cleanup." President Obama addressed this issue in his news conference yesterday:

"When it comes to stopping the leak down below," he said, "the federal government does not possess superior technology to BP. ... Now, one of the legitimate questions that I think needs to be asked is should the federal government have such capacity." That, Obama said, is among the issues the presidential commission he has set up will address.

Such a move would dramatically expand the federal role in the oil industry. And if you extend this line of thinking -- that is, it's the government's responsibility to mitigate the effects of potential adverse consequences of industrial activity through the application of technology superior to that in the private sector -- you're looking at a very large expansion of government's role in the economy. That may be where we're headed. The question is, before we go there, will we have a genuine debate on what that will mean for the size, structure and cost of government?

(Hat tip: Chris Dorobek)