Unfunded Liabilities

Historically, governments - including liberal, democratic governments - have done some terrible things and committed horrible injustices. The victims of these injustices (or, in many cases, their descendants) clearly deserve compensation, so clearly the government should give them money.

Except the government doesn't have money of its own. The money it receives comes from taxpayers, and in most cases it is not at all clear that taxpayers can reasonably be expected to pay. I see two reasons why a taxpayer might have an obligation to contribute to compensation: first, that they are somehow morally responsible for the injustice, and second that they have (involuntarily) benefited from the injustice. (Actually, there is sort-of a third - that taxpayers have consented to the State, and that part of what they have consented to is paying for its cock-ups, but apart from the general implausibility of non-hypothetical consent based arguments this just seems like a very ad hoc argument. Moreover, if the State were actually committed to paying compensation for every single one of its historical injustices with a traceable victim or descendant of victims, then even ignoring administration costs this would be so expensive that I really can't see anyone consenting to paying the bill, even in light of all of the other supposed benefits of the State.)

Moral responsibility: where to begin? Well, first note that the average person has essentially no power over what their government does, due to a mixture of large population size and the actual power being held by civil servants, politicians and various other interests. Second, this does not help explain any duty to pay compensation for anything which happened before the taxpayer in question was able to vote. That said, we might be able to justify a policy of holding actual politicians responsible for their mistakes, and if necessary selling them into slavery into to pay for any injustices they have ordered.

As for benefiting from the injustices? It is rare to find a clear-cut case of this. The biggest injustices I can think of committed by governments which are, in some form, still around today include:

• Colonialism, in particular the slave trade and the scramble for Africa c.1870-1900
• Various wars
• Immigration restrictions
• Various measures by nanny states, moralising states and surveillance states (in which category I include racially and sexually motivated discriminatory measures such as Jim Crow laws and the widespread persecution of homosexuals and of various religious groups)

It seems unlikely that most Britons benefited from the slave trade. Certainly a minority did - embarrassingly perhaps, John Locke (he of the "natural rights") was among them - but the wealth of the First World is due to industrialisation, not slavery or colonialism. In fact, the one group who clearly have benefited are in fact the descendants of the people trafficked to the Americas. This doesn't make the initial injustice okay, but I would suggest we apply something like the Advantage Rule from football.

Wars do not tend to enrich the winning nation. There are thousands of people killed and injured, there are billions of productive man-hours foregone to soldiering and to armaments/materiel production.

Perhaps the majority of  the absolutely vast benefits from open borders would accrue to those allowed into richer countries, but it seems unlikely verging on completely implausible that none of them would accrue to the native population. I for one look forward to the day when all of my housework is done by cheap immigrant labour.

The final category of injustices which I have outlined tends to be perpetrated against the native population. Hence in many cases it would simply be a case of I-pay-the-government, the-government-gives-me-the-same-money-back-minus-administration-costs. But even if this weren't the case, who are the supposed beneficiaries? These kinds of measures are (at least officially) supposed to help the people they target.


So we're left with something of a quandary: there are many people deserving compensation, and no-one with an apparent duty to pay it (other than politicians, and from their own pockets rather than through taxation). This is an unpleasant situation, so to finish I'll quote David Henderson, talking about the late economist Walter Oi:

The second story begins with a phone call I received from Walter when I was a senior economist with President Reagan’s Council of Economic Advisers in the early 1980s. A government commission looking into the World War II imprisonment of all Japanese-Americans living on the West Coast had just come out with a report, and its recommendation was that each person imprisoned be compensated with a check for $20,000. Walter wanted me to get him a copy of the report.

When I had first met Walter, while interviewing at Rochester, I had followed my curiosity. I have learned that, contrary to what almost all my elders told me when I was growing up, people generally love to talk about themselves, even about sensitive issues, if you ask them with some sensitivity. I had asked Walter if he had been imprisoned as a child during the war. He had been. He reminisced talked about being taken prisoner by the U.S. government when he was 13 years old and, before being shipped inland, living with his family for the first few days in a horse stall at the Santa Anita race track in Los Angeles. He had some pretty strong feelings about his imprisonment. I told Walter I would get him the report and then asked, “So what do you think of the commission’s recommendation?”

“I’m against it,” he snapped. He then went on to tell me that yes, the Japanese Americans were treated unjustly, but that the best thing to do for Japanese Americans was to move on and not create a new government program.