malkusm
08-17-2008, 06:18 PM
Many of you are probably more well-versed in econ literature or Hayek than I am, but I was reading The Road to Serfdom today and came across an interesting section where I feel like I disagreed with a point that he makes:
[The] two kinds of security are, first, security against severe physical privation, the certainty of a given minimum of sustenance for all; and, second, the security of a given standard of life, or of the relative position which one person or group enjoys compared with others....There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security should not be guaranteed to all without endangering general freedom....[T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody....Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance---where, in short, we deal with genuinely insurable risks---the case for the state's helping to organize a comprehensive system of social insurance is very strong....To the same category belongs also the increase of security through the state's rendering assistance to the victims of such "acts of God" as earthquakes and floods. Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtedly be taken.
Earlier in the book, however, he contrasts the psychological effects of such misfortunes and disasters in a planned economy with the effects in a free market economy:
There will always exist inequalities which will appear unjust to those who suffer from them, disappointments which will appear unmerited, and strokes of misfortune which those hit have not deserved. But when these things occur in a society which is consciously directed, the way in which people will react will be very different from what it is when they are nobody's conscious choice....While people will submit to suffering which may hit anyone, they will not so easily submit to suffering which is the result of the decision of authority.
My question is this: why should assistance be granted in the case of a natural disaster when that act is just as random and unmerited as the changing of economic conditions which might cause a business to fail? More precisely: where do we draw the line between an event that is acceptable to grant assistance, and one that is an unfortunate consequence of a business cycle? And, in the case of a natural disaster, what level of "the state" should handle the assistance - certainly not a monolithic federal government, but likely a local government, if it should happen at all.
I'm betting that not everyone, even in a coastal area, would agree that state taxation for assistance in future emergency situations is just or necessary. And if this is the case, why shouldn't private enterprise, such as insurance companies, handle these circumstances?
[The] two kinds of security are, first, security against severe physical privation, the certainty of a given minimum of sustenance for all; and, second, the security of a given standard of life, or of the relative position which one person or group enjoys compared with others....There is no reason why in a society which has reached the general level of wealth which ours has attained the first kind of security should not be guaranteed to all without endangering general freedom....[T]here can be no doubt that some minimum of food, shelter, and clothing, sufficient to preserve health and the capacity to work, can be assured to everybody....Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance---where, in short, we deal with genuinely insurable risks---the case for the state's helping to organize a comprehensive system of social insurance is very strong....To the same category belongs also the increase of security through the state's rendering assistance to the victims of such "acts of God" as earthquakes and floods. Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make provision for the consequences, such communal action should undoubtedly be taken.
Earlier in the book, however, he contrasts the psychological effects of such misfortunes and disasters in a planned economy with the effects in a free market economy:
There will always exist inequalities which will appear unjust to those who suffer from them, disappointments which will appear unmerited, and strokes of misfortune which those hit have not deserved. But when these things occur in a society which is consciously directed, the way in which people will react will be very different from what it is when they are nobody's conscious choice....While people will submit to suffering which may hit anyone, they will not so easily submit to suffering which is the result of the decision of authority.
My question is this: why should assistance be granted in the case of a natural disaster when that act is just as random and unmerited as the changing of economic conditions which might cause a business to fail? More precisely: where do we draw the line between an event that is acceptable to grant assistance, and one that is an unfortunate consequence of a business cycle? And, in the case of a natural disaster, what level of "the state" should handle the assistance - certainly not a monolithic federal government, but likely a local government, if it should happen at all.
I'm betting that not everyone, even in a coastal area, would agree that state taxation for assistance in future emergency situations is just or necessary. And if this is the case, why shouldn't private enterprise, such as insurance companies, handle these circumstances?