Dr. Curtiss is a member of the staff of the Foundation for Economic Education.
A tiny news item in your morning paper may have escaped notice; certainly many readers would miss its significance.
A messenger boy in a New York office, while awaiting an assignment, was amusing himself by shooting paper clips out of a window with a rubber band. He was injured when a clip backfired and hit him in the eye.
The Workmen’s Compensation Board awarded the boy damages. The boy’s employer protested, but the Appellate Division of the courts upheld the Compensation Board by a three to two vote. The case was taken to the higher Court of Appeals and the decision of the Appellate Division was affirmed five to one.
The Workmen’s Compensation Board decided the boy’s activity was sufficiently close to the regular course of his employment to make his injury compensable. The Appellate Division observed: “The act and the instrument when conjoined to cause the injury have a somewhat closer relationship to the employment than those in the ordinary case involving horseplay.” Presumably, if the cook in the firm’s cafeteria had been the victim, the injury might not have been compensable. The article reporting this incident was headlined: PAPERCLIP FLIPPING IS UPHELD BY COURT—COURT RECOGNIZES THAT BOYS WILL BE.
Though this item appears of infinitesimal significance in a day of moon-shots, summit meetings, and general world tensions, nevertheless, it illustrates a weakness in our system: turning over to government a responsibility that rightly belongs to individuals. Similar illustrations could be taken from the government-controlled compulsory auto insurance, social security, and a host of other welfare schemes.
Workmen’s Compensation
Before we had compulsory Workmen’s Compensation laws, workers were protected under common law against negligence and carelessness of their employers. It was understood that an employee assumed the obvious and customary risks of his job. True, an employee might have had to go to court to recover damages; and undoubtedly there were cases where justice did not prevail.
It was under Bismarck in Germany that “social consciousness” first became popular, leading to the adoption of many welfare schemes. In this country, President Theodore Roosevelt advocated Workmen’s Compensation in a message to Congress in 1908. By 1911, ten states had passed laws, and now, all states have Workmen’s Compensation laws.
Workmen’s Compensation is essentially an insurance plan, required of employers. In New York State, an employer may insure with a private carrier, with the State Insurance Fund, or—in some cases under strict regulation—can self-insure. Under the law, compensation is not contingent on proof of the employer’s negligence; it is required that the injury be job-connected. Over the years, the decisions of the New York State Board have become more and more “liberal,” resulting in the “paper clip” decision cited above.
Many employers have welcomed Workmen’s Compensation laws. They have been willing to pass their responsibilities along to the State Board and to the insurance carriers, often unaware of the cost involved.
In consequence, New York employers now pay rates for Workmen’s Compensation that are among the highest in the land.
American producers, in many lines, are finding it more and more difficult to compete in world markets because of their high costs of production. New York producers are at a disadvantage in competing with producers in other states where insurance rates are not so high. While costs of production, including insurance for Workmen’s Compensation, do not directly determine selling prices, they do have a vital effect on profits and on the ability to stay in business.
Aside from its economic consequences, the “paper clip” decision has deep-seafed moral implications. Is it proper to relieve a youth, or his family, of all sense of responsibility for his actions? Various forms of individual and family insurance are available to cover cases like this, leaving the responsibility where it belongs, and at the same time reducing the incidence of such cases. A government-sponsored, compulsory plan is certain to result in inefficiency, waste, graft, and abuse. And in the long run, a higher cost will be the general breakdown of the moral fiber of a people.
