America's Colonial Safety Net

Copyright, The New York Times Company

The United States Coast Guard’s search-and-rescue division is considering some of the same trade-offs that are found in better-known safety-net programs related to unemployment and health care.

Among other duties, the Coast Guard rescues people in, on and near United States waters. In addition to having highly trained life-saving personnel, the Coast Guard has ships, helicopters, planes and some of the world’s most modern life-saving equipment.

Taxpayer financed, the Coast Guard every day offers its services free of charge to the people it rescues. In that regard, the search-and-rescue part of the Coast Guard is a kind of safety net –- taxpayers pay so that people can have help on the rare occasions when they need it.

In fact, these search-and-rescue activities predate Medicaid and unemployment insurance; the Coast Guard can be traced back more than 200 years to a private search-and-rescue organization in Massachusetts called the Humane Society.

Safety-net programs have what economists call “moral hazard” as an unfortunate byproduct: recognizing that the government is standing by to help, some people do too little to take care of themselves. For example, a significant fraction of unemployed people delay finding a new job until their benefits run out. This may not be a choice we condone, but because unemployment insurance makes unemployment a little less painful, some people will respond by doing less to exit unemployment.

In their marine rescue efforts, the Coast Guard has noticed that many boaters do not wear life jackets that can prevent or delay drowning, and a number of boats venture miles offshore without a radio beacon that can help rescuers find troubled boaters.

Unfortunately, some boaters’ imprudent actions may actually be the result of the Coast Guard’s life-saving proficiency. Boaters know that they can call the Coast Guard when their boat takes on water, catches fire or otherwise becomes disabled, and many times help will arrive before the boaters have to leave their vessel and jump in the water. The Coast Guard even has ways of locating people who do not have radio beacons.

President Obama signed a health care law that will require Americans to get health insurance. Although less known, President Obama also authorized the Coast Guard to consider mandating radio beacons for boats venturing offshore and mandating that boaters wear life jacket in many situations (the Coast Guard has long required boaters to have life jackets on board, even if they are not worn).

Although it is sometimes asserted that the federal government has limited legal power to mandate citizens’ purchases, there can be a good economic case for mandates. While economists are often not inclined to interfere when a person knowingly risks his life for thrills or any other reason, the fact is that our government is in the safety net business, so individuals may take risks without recognizing the costs they create for rescuers.

A boat owner may save himself a few dollars by forgoing the purchase of a radio beacon, and that can ultimately cost the Coast Guard –- and thereby American taxpayers –- a great deal of money in search-and-rescue resources. Over all, it might be cheaper if the owner were force to make the purchase.

On the other hand, it is possible (although not logically necessary) that mandating marine safety equipment may encourage dangerous activities on the water, because the safety equipment reduces the costs of dangerous activities. Years ago, Prof. Sam Peltzman of the University of Chicago found that mandating the wearing of seat belts in automobiles resulted in more dangerous driving and more accidents, because, thanks to the seat belts, the average accident was less deadly.

As always, helping people has its side effects, and some rescues are necessary because the safety net exists.