Nozick on reciprocal risks

In our previous post, we saw Nozick’s “limited compensation rule” for risk-producing activities: in a state of nature, such activities should be allowed, but compensation must be paid if the risk materializes and a third party is injured by the risky activity. But what about the poor man problem? What if the person engaged in the risky activity is so poor that he is unable to pay compensation? Should he be prohibited from engaging in the risky activity in the first place? Nozick will address these questions in the next to last subsection of Chapter 4 (pp. 78-84).

To begin with, Nozick recognizes the reciprocal nature of the poor man problem. Simply put, if we forbid a poor man from engaging in a risk-producing activity because he is unable to pay compensation when someone is injured, this prohibition imposes a harm on the poor man because we are restricting his freedom of action. But at the same time, if we allow poor people to engage in risky activities, this permissive stance imposes a harm on their potential victims, since the victims will receive little or no compensation … So, what is to be done? For his part, Nozick offers an original way out of this reciprocal dilemma: poor people must be forbidden from engaging in risk-producing activities, but they must receive compensation (but from whom?) in exchange for this restriction on their liberty. In Nozick’s words (p. 81), “those who forbid in order to gain increased security for themselves must compensate the person forbidden for the disadvantage they place him under.”

Nozick’s original solution poses two problems–one practical; the other strategic. Let’s present the practical problem first. Since we are in a state of nature, there is no central government imposing and collecting taxes. Without such a public fund, however, how will Nozick’s compensation scheme work? Since no one has been injured yet, and since the identities of a poor man’s potential victims can not be specified ahead of time, who then is going to pay out compensation to poor people when they are prohibited from engaging in risk-producing activities? Perhaps one of the private protection rackets will step in and pay this compensation (recall from Chapter 2 that a dominant but benevolent (?) protection racket will emerge in every village of Nozick’s Lockean state of nature), but now we must deal with a strategic problem, which is even more serious than the practical one. After all, if I can receive compensation for doing nothing, what is to stop me from pretending to be poor and pretending to want to engage in a risk-producing activity in order to extract compensation from my rich neighbors? By way of example (see image below), do I really deserve to receive a payment for not texting while I am driving? To his credit, Nozick addresses this strategic problem in the last subsection of Chapter 4 (pp. 84-87). We will complete our review of the chapter in our next blog post …

Image result for danger of driving

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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1 Response to Nozick on reciprocal risks

  1. Pingback: My natural rights critique of the economic shutdown | prior probability

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