Writing from Lexington, Kentucky
There is a problem when government interferes with what people should be doing for themselves. Government can destroy the incentive to provide for yourself and your family.
For the families of victims of the September 11, 2001 terrorists attack on New York, a board determined how much the family should receive in compensation based on a variety of factors, including the age and earning potential of the deceased. Then, the award was reduced by the amount of any life insurance the deceased had. We should ask what is the message given when government does this? What is the incentive to forgo current spending in order to buy life insurance, when the government may take the benefit that you paid for away from you? That’s exactly what happened to the people who had their own life insurance. The government took it from them, and they were worse off for having it. Conversely, for those who did not provide their own insurance, the government provided it for them, at no cost.
For those who suffered losses due to floods from hurricane Katrina in Mississippi, that state’s attorney general is suing insurance companies to force them to pay for flood damage, even though the usual homeowner’s policy fairly shouts that flood damage isn’t covered. If Mississippi succeeds in forcing insurance companies to pay for flood damage, what message does that send to those who sought to protect and provide for themselves by paying flood insurance premiums for years? At minimum, the government ought to refund the premiums they paid, if government is to give the same benefit to those who paid no premiums.
These two examples illustrate how, in an effort to appear compassionate and help unfortunate victims of tragedy, government destroys the incentive to provide for one’s own self and family. When government forces the same outcome for everyone, the same result for those who sacrificed and prepared and for those who didn’t, we might ask why even bother preparing?