Damages: Worse for some

There was a very interesting letter in today’s Tokyo Shimbun. A 51-year-old company executive from Kodaira, Tokyo, wrote that he recently visited his sales department in Sendai, and one of the employees told him that the residents of the condominium where he lived until the earthquake of Mar. 11 all received “charity donations,” presumably from the Red Cross, totaling ¥450 million, or ¥3 million for each of 150 households. Since the building was declared “zenkai,” or uninhabitable due to the extent of the damage, all the condo owners have had to move. Obviously, thought the executive, ¥3 million is not enough money to replace their apartments.

But what really bothered the letter writer was that he soon learned that other, presumably less deserving victims of the disaster also received donated funds. Another “acquaintance” was given ¥2.5 million. His apartment was also condemned, but it was a rental. The executive said that the person hardly needed that much money, because all he required was “maybe ¥200-300,000 to move to a new rental apartment.” Even more outrageous was the intelligence that someone who lived in a public apartment (koei, meaning that the amount of rent is pegged to the tenant’s income) also received “a lot of money” from the fund. The executive couldn’t understand why, since all that person had to do was “move to another public apartment.” In the end, the letter writer said, “I have doubts that this donated money was spent meaningfully on victims who really needed it, and a lot of people I know in Sendai feel the same way.”

Most of those people are probably home owners themselves, and the letter brings up a matter that has simmered under the surface of disaster coverage for months now: Do home owners deserve more help than other people? Obviously, they think so, but one of the basic tenets of “ownership” is that the thing owned is the owner’s responsibility. He has dominion over that thing and no one can take that away from him. This belief forms the sacred core of capitalism and free enterprise: You can do anything you want with your property, and the unavoidable corollary is that you and only you are responsible for what happens to it.

But ever since the disaster home owners in the affected areas have demanded that the authorities (including TEPCO) help them rebuild, and not just with loans, but with direct payments. In response to the Great Hanshin Earthquake, the government passed the Disaster Relief Act, which provided funds for people affected by natural disasters. Owners of homes assessed to be zenkai can receive up to ¥3 million toward rebuilding. Many homeowners say this is not enough, and there is even a plan for the government to buy up private land along the coast that has become uninhabitable due to changes in the shoreline.

The magnitude of the disaster has, however, obscured an important point. Japan is a capitalist democracy, so why should the government give any free money to home owners? By using tax money to help them, even people who don’t own homes pay to help replace lost private property. This concept violates the spirit of “ownership” and certainly constitutes what libertarians would call a moral hazard.

We don’t necessarily support this view. The lives of people in the stricken areas have been destroyed, and we believe it is a social obligation for all of us to help them get back on their feet, whether through the agency of the government or through charitable concerns like the Red Cross. However, the man who wrote the letter to the Tokyo Shimbun has his priorities twisted. Why is a home owner–who tacitly accepts the risk attendant to ownership–eligible for greater charitable assistance (on top of the money he/she will receive from the government) than is someone who rents? Because he has “lost more”? Perhaps, but loss is an unavoidable component of ownership, so why should a renter be penalized for risking less? It’s a class distinction; no more, no less.