Le Club Pigou?

by on July 6, 2010 at 10:48 am in Economics, Law | Permalink

French tourists who run into trouble after taking unnecessary risks overseas could have to pay for their rescue and repatriation under legislation debated today by MPs in Paris.

The proposed law, put forward by a government tired of having to foot the bill, would enable the state to demand reimbursement for "all or part of the costs … of foreign rescue operations" if it deems that travellers had ventured knowingly and without "legitimate motive" into risky territory.

According to the foreign ministry, the bill is an attempt to encourage a "culture of responsibility" among French travellers at a time of frequent kidnappings, hijackings and civil instability across the world.

Germany already does this to some extent; for instance a German backpacker rescued in Colombia had to pay twelve thousand euros to cover the cost of her helicopter trip.  The full story is here.  

1 Doc Merlin July 6, 2010 at 10:59 am

How is this Pigouvian?

Pigou emphasized using redistributionary type schemes (taxes etc) to fix for externalities. This is a government ending an externality by simply ceasing to make one.

Much of what government does is an externality by the way they do it. Its hardly Pigovian when they start charging for it to make it a private good (that is offered by the state) instead of a public good (that is offered by the state).

2 Sharro July 6, 2010 at 11:30 am

More on this same topic from the Spring issue of Regulation:

http://www.cato.org/pubs/regulation/regv33n1/regv33n1-9.pdf#page=4

3 Joe July 6, 2010 at 12:11 pm

Doc Merlin:

One argument: The fixed/capital costs of the infrastructure necessary to execute rescues overseas are a public good; i.e., the classic national defense argument for government. However, it is possible to use a Pigovian pricing structure to internalize the variable cost of actually executing a rescue, as demonstrated here.

“Having a government that can rescue you from pirates” is a public good; “being rescued from pirates” is a private good which, barring a pricing mechanism, will be consumed more than is optimal.

4 Ryan Vann July 6, 2010 at 3:16 pm

Is there any opt out language in this proposal? Why would the French Citizen version of me have any confidence that the French Government would use the least cost extraction practices?

5 Rahul July 6, 2010 at 3:42 pm

@Ryan Vann:

The government could provide a 30-day “no fees” return-window. They ferry you you back (gratis) to Afganistan if you don’t find their charges reasonable. 🙂

6 Rahul July 6, 2010 at 5:32 pm

Wouldn’t one alternative be forcing travelers to “risky” destinations to buy repatriation-and-ransom insurance?

7 kurt9 July 6, 2010 at 7:18 pm

Japan has always had this policy and they stand by it. The government discourages people from traveling to places they consider to be dangerous and where there is no legitimate reason for Japanese people to visit. Some Japanese young people went to Iraq (I think) and were kidnapped, even though they were warned many times not to go there. The Japanese government rescued them, then made them pay for their flights home.

I think this is a reasonable policy. There is a saying that if you go looking for trouble, you’re going to find it. I think the West produces way too many “do gooders” who go to all kinds of places they have no business being in and end up getting themselves into trouble. One of the things I appreciate about East Asian culture (not just Japan, but “greater” China and Korean culture) is the lack of do gooders and other “romantic” and “sentimental” idiots that seem prevalent in Western culture.

8 jimbino July 7, 2010 at 12:24 am

All the while that poor German gets no benefit overseas from the 15.5% of his income that he pays for health insurance. That’s what Obamacare will bring: Americans will pay for health insurance that, like Medicare and Medicaid now, will pay not a red cent for any (even very cheap) health care overseas.

9 Doc Merlin July 7, 2010 at 1:20 pm

Thanks, bbb

To those who say that it is a public good. You can hire private companies to do the same thing. Lockheed, Xe Services, and others all provide this good to those who can pay.

It is not a public good, just a state subsidized private good, that the state is now decided that the moral hazard of subsidy is too high.

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