Should Uncle Sam pay victim compensation to 9/11 families?
The debate about how to distribute the federal subsidies to survivors of those murdered in the Sept. 11 attack cannot be resolved, because the wrong question is being asked.
Those who favor dividing the federal money equally among the families and those who favor a more complex formula that depends on the victims' previous earnings are assuming that the federal government should compensate victims' families. But should it?
One of a free society's greatest strengths is that each of us is free to decide which causes we will support and in which ways to support them. Some of us sent money to the families of the victims of the 1995 Oklahoma City bombing. Many more of us sent money to help the families of those killed on Sept. 11. Others volunteered their time at ground zero. Each of us had the freedom to choose, and it was important to all who made such choices that they voluntarily gave their own money and time.
Even the British magazine The Economist, which so often turns up its nose at the crassness and naiveté of Americans, is impressed by our generosity. In 1997, The Economist pointed out that the average American gave a little more than one weekly paycheck to charity annually, the highest rate in the world.
There's a reason for this generosity and the reason is freedom. First, because the US economy is one of the freest in the world and has been for two centuries, we Americans have one of the highest standards of living. Being generous, therefore, is easily affordable for almost all of us. Second, governments in the United States take much less responsibility for people's lives than governments in other countries. This leaves room for communities to develop and support their members.
When governments take responsibility, however, they crowd out private efforts. Many people ask themselves why they should give when the government is handling the problem. Russell Roberts, an economist at Washington University's Weidenbaum Center, has documented this crowding out. He points out that in the first few years of the Great Depression, private relief expenditures grew from $10.3 million in 1929 to $71.6 million in 1932. These were substantial numbers in an economy whose dollar value of gross domestic product was less than 1 percent of today's. But by 1935, government relief expenditures were more than triple their 1932 level and private expenditures had fallen to one-fifth their 1932 level.
Kenneth Feinberg, administrator of the Victims' Compensation Fund, said on Dec. 20 that the average award would be about $1.65 million, tax free. He estimated the cost to the federal government at about $6 billion and called this "an unprecedented display of taxpayer generosity."
I'm not sure it is unprecedented - the federal farm-subsidy program gives similarly large amounts of money to thousands of farmers every year. But I'm sure it has nothing to do with generosity. It can't be taxpayer generosity precisely because it comes from taxes, which means that we taxpayers have no choice in the matter. And it's certainly not generosity on the part of the politicians who voted for the program, because it wasn't their money.
President Bush called Sept. 11 an attack on our freedom. Finding the attacker is difficult. But the government is easy to find. Let's get it to stop attacking our freedom. We should be free to choose the level, the means, and the recipients of our generosity.
David R. Henderson is a research fellow with the Hoover Institution and the author of 'The Joy of Freedom: An Economist's Odyssey.' (Financial Times Prentice Hall, 2002).