Friday, August 10, 2012

Book review: Who Gets What

With news that donations to a fund for the victims of the theater shooting in Aurora, Colorado have topped three million dollars, it's only appropriate to take a look at Kenneth Feinberg's book Who Gets What.

You may not have heard of Mr. Feinberg, but you're probably aware of some of his work. He's an attorney and a mediator who has been asked to manage compensation funds for soldiers exposed to Agent Orange, victims of the 9/11 attacks and folks on the Gulf Coast who suffered financial injury due to the Deepwater Horizon blowout.

His book is an account of how he came to design and manage those compensation projects. Yes, unless you are a mediator or a fund administrator, the book can be quite dry. The book also raises some troubling questions about who decides who gets what.

Let's take the 9/11 attacks as an example. In response to the terrorist attacks the federal government decided to set up a compensation fund the victims of the hijackings. Of course no one set up a fund to compensate the victims of the bombing of the federal building in Oklahoma City, but then that didn't happen on live television in New York City.

The government decided that the monies should be doled out with tort principles in mind. For those who haven't undergone a law-botomy that means taking lost wages into account when determining who gets what (since the hijackings were deliberate acts it apparently didn't mean determining whose negligence caused the deaths). The result was a plan in which the wealthier the person killed, the more money his or her relatives received. This valuing of lives lost caused much resentment at the time as the plan seemed to say that a stockbroker's life was worth more than the person working behind the counter in the cafeteria.

The larger question, however, is whether such a scheme was necessary or even wise. Why should the federal government give away our tax dollars to the victims of an unfortunate event? Who decides what events are so bad that they require the government to compensate the victims? And what about life insurance? Why are some folks entitled to double-dip in the compensation pool?

Nobody from the federal government lifted a finger to help the victims of Hurricane Katrina. For days those who were stuck in New Orleans lived in fetid conditions while President Bush twiddled his thumbs. The folks in New Orleans didn't ask to be hit by a hurricane. The residents of New Orleans weren't responsible for the canal built for the oil interests that created a man-made pathway for the surge from a storm striking the coast. The residents of New Orleans were responsible for the state legislature paying Tom Benson, the owner of the New Orleans Saints, to keep the team in the city (private enterprise, my ass) instead of maintaining the pump system and levees.

Mr. Feinberg's book doesn't delve too much into the issue of who decides who gets what. He prefers to spend his time describing how he and his team created the various compensation schemes and managed them. His programs included plans that were funded by the government and plans that were funded through private sources - including BP's $20 billion escrow fund after the blowout in the Gulf.

While I agree that our tort system isn't always the best method to compensate victims of wrongdoing, the compensation programs Mr. Feinberg administered have their own shortcomings. At least in litigation either a jury sits down and decides how much a claim is worth or the parties sit down with a mediator and make the decision. With these compensation programs the decisions were made by a man with no accountability who was given broad powers to act in an arbitrary manner.

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