The Social Cost Theory
The following article appeared in the July 1988 issue of the NMA's newsletter. Keep in mind that the numbers cited in this article reflect costs at that time.
By James Baxter, NMA President
For well over two decades I have climbed onto innumerable podiums and written hundreds if not thousands of pages in an attempt to warn of the dangers of accepting 'social cost' arguments as justification for limiting or reducing personal freedoms and individual discretion.
Traditionally, governmental intervention or intrusion into personal affairs was typically confined to actions where other people or other people's property were likely to be directly harmed. Certainly there were exceptions, particularly where moral judgements were involved (e.g. sexual conduct, suicide, and religious rites). Even Prohibition and early drug laws were sold on the basis that users were directly harming other members of society, including abuse of their families.
That a person could assume risks or engage in practices that would be personally injurious was never seriously questioned, to my knowledge, until 1966. In 1966 the U.S. Government embarked on its first large-scale effort to mandate that certain safety initiatives be adopted at the state level, or highway funds would be withheld. One of the mandates was a mandatory helmet law for all motorcyclists.
At the time I resented being told to wear a helmet, being told to do so by some condescending elected official, and being coerced by the force of law to do something that impacted only me directly. In comes the social cost argument.
"Mr. Baxter, your failure to wear a helmet and subsequent injury in an accident will result in lost benefits to your family and others in society, as well as place a financial burden on other taxpayers for your care and possibly the support of your family." Pretty heavy stuff!
I and other motorcyclists re-thought our position and came back with a two-pronged attack. One: helmets may cause as many accidents and injuries as they prevent. Two: motorcyclists were being discriminated against.
We chimed in, "Why not pass seat belt laws or prohibitions on smoking?" Never did we realize that we were in a sense institutionalizing the social cost concept as justification for controlling individual discretion.
A combination of raising the discrimination issue and the efficacy of helmet usage resulted in a majority of states repealing mandatory helmet laws in the late 1970s. The pendulum has again reversed and mandatory helmet laws are being heavily promoted in a number of states. Ironically, this pressure is occurring during a period where motorcycle fatalities are in decline.
Louisiana was the first state to reinstate a helmet law. This past year Nebraska, one of two states to repeal its seat belt law via referendum, passed a mandatory helmet law. Oregon followed suit and reinstated its helmet law through a referendum. California, the only state never to have a helmet law (and never lost any highway funds) almost did, had it not been for the Governor's veto.
In each case the social cost or social burden argument was honed to a fine edge with magnum dollar amounts and statistics implying that unhelmeted motorcyclists were responsible for at least half the national debt.
"Let those who ride decide" and similar slogans from the 1970s sounded pretty weak against testimony presented by the medical community, insurance industry, and the remaining safety establishment. Add in a certain amount of resentment and hostility harbored by a large portion of the non-motorcycling public and the "free to choose" people didn't have a snowball's prayer in Miami.
But this isn't really about helmet laws; this is about the pervasive nature of the social cost argument.
Helmet laws simply provide a case history of how this argument can be applied and accepted for limiting individual choice and discretion.
A recent article on the same subject in a motorcycle trade journal trotted out the usual exaggerated examples of how the Government would next be telling us that we couldn't eat fatty foods, smoke or drink because such habits could lead to disease and premature death and lost productivity. At least, these used to be exaggerations.
In a recent newspaper article quoting US Surgeon General Koop, he seriously floated the idea that the public (whoever that is) was sick and tired of these people with poor lifestyles (i.e., people who eat and drink too much, smoke, and fail to get adequate exercise), and it might just come to pass that this same public would not continue to support the provision of health care to these overweight, self-indulgent couch potatoes.
Now as harsh as this might sound, I doubt that our society will simply stand by and let fat people die in the streets. However, sanctions, penalties and publicly sponsored forms of discrimination against overweight people are not all that far from reality. Perhaps a program preventing anyone more than 20 percent overweight from enjoying the 'privilege' of a driver's license could be introduced! Sounds a little extreme!
These esoteric tirades aside, there is one basic truth that is being ignored in this whole debate: the social cost theory is an economic fraud.
Setting aside personal values and morality issues -- which is exactly what the social cost theorists do when they dismiss the importance of personal freedom and individual discretion -- we can take a purely economic view of motor vehicle accidents.
Consider the following points:
- Motor vehicle accidents account for $6 billion annually in medical costs, or one percent of the $600 billion spent annually on health care in the United States. Motorcycle accidents represent something in the range of 8-10 percent of motor vehicle accidents, or less than one-tenth of one percent of total health care costs.
It is literally impossible to prove that the total elimination of motorcycle accidents, let alone those related only to failure to wear a helmet, would have any meaningful impact on health care expenses in the United States. - Of the roughly $60 billion spent annually as a result of motor vehicle accidents, $21 billion is retained by the insurance industry to cover administrative expenses. This does not include $4 billion for legal expenses associated with these accidents. The largest chunk ($27 billion) goes for property damage and represents the real motivation behind most insurance company policies.
Not only do they view helmet laws as reducing personal injury -- a minor financial consideration -- but they may also recognize that helmet laws significantly reduce vehicle and passenger miles ridden, thereby reducing overall exposure, particularly property loss. Actually I give them too much credit, as I suspect they only recognize that losses are greater in states without helmet laws and may not really understand why. - Social cost theorists never examine or account for the positive economic aspects associated with accident-related expenditures. Body shops, vehicle component manufacturers, retail dealers, the health care professions and even the insurance industry derive income from the aftermath of vehicular accidents (in the case of insurance companies, from the anticipation of such accidents).
This income pays employees and taxes, and is circulated back into the economy through the purchase of goods and services. Keep in mind I'm not making personal value judgements on how this money could otherwise be spent, or the personal losses related to the accident. The owner of the body shop might commiserate with the owner of a damaged vehicle but his family needs food, clothing and shelter, just like the plumber, or ski salesperson or appliance store owner who might have otherwise captured the dollars spent on auto repair.
From a personal perspective the victim would rather spend his money with these other three people, but we're not talking personal preference. We're talking social cost. - A point that only a few people will refute is that everybody dies; some sooner, some later. Assigning lost value to a person's premature (accidental) death is an abstract absurdity.
There is no shortage of people on this planet or in this country. When a productive position opens up as a result of death, injury or retirement it is rapidly filled, frequently by someone with new and better ideas, more ambition, and often at lower cost. To suggest that every person who dies prematurely represents a loss to society is little more than moralistic nonsense. The chances are probably equal that they would have benefitted or detracted from society. The greatest likelihood is that they would go through life carrying their own weight, no more and no less. - It is not uncommon for an individual to put in 30 years in the work force, retire, and spend another two or three decades living on Social Security and pensions. During retirement, many people are forced by illness or other infirmities into nursing homes, or become dependent on others for their care and well being. The social cost theorist would argue that the entire system would be economically better off if these elderly invalids were forced to take a one-way walk across the Bonneville Salt Flats without water.
If they believe that we as a society cannot afford to let people make decisions concerning their own welfare, it follows that they also believe we cannot afford to keep large numbers of incapacitated old people around using up finite resources and billions of dollars of services while returning no economic benefit.
What has been lost among the safety zealots is that human beings joined into groups to enhance their freedoms and share the burdens of certain risks, including old age. Security has too often been confused with the loss of freedom and individual discretion. That is an unfair and inaccurate characterization. The security that results from joining together in a society is the freedom to make decisions concerning your own welfare, and protection against the tyranny of man and nature.
When the individual makes a decision the risk inherent in that decision is largely borne by that individual, but there are obviously secondary impacts. Because everyone in the society makes decisions every day that entail some risk, it is inherent in a free society that the secondary burdens and the benefits of those risks are shared.
The safety establishment led by the insurance industry now says that we as a society should not share risks, but rather that the risks be eliminated, i.e. criminalize the use of individual discretion in matters that potentially impact an individual's welfare. This covers just about every aspect of life.
The general public had better start thinking long and hard about whether they want to live in a society that shares risks, or a society that attempts to eliminate all risks through the elimination of personal freedoms and individual discretion.
Kit
COMMENT -
Great old article. Since it was written, how many new laws have gone into effect? Maybe a million. And what have these laws done? Created more criminals. That's why we in the U.S. have the greatest prison population on the planet - more than Communist China and former Communist Russia - COMBINED. And I think it's a fair guestimate to say that 4/5ths of those in prison are there for violating laws - not for causing harm to persons or property. Many of those prisoners are there for the harm they "could have" caused, not for actually CAUSING harm. So it appears that the social harm is being caused by our superstitious belief in government - certainly not by "careless, selfish" motorcyclists.
So who's the REAL perpetrator of social cost? In a word: VOTERS.
What's the solution? Based on my own research and critical thinking, the freedom to be left alone by government will not be known in my lifetime. But thanks to the internet, there is hope that freedom might be reached through a multi-generational approach once we embrace the concept that it is not okay to initiate violence against anyone.... especially our children - ever!
Until then, I'll do my best to do nothing to legitimize government. I'll do what I have to to keep the statist guns away from me. But this summer I'm taking a lone motorcycle ride to Mexico. I'm not believing all the propaganda about the dangers of Mexico and I wanna find out for myself.
Happy riding.
TL
