How to Make China Pay and Prevent the Next Pandemic - The American Spectator | USA News and Politics
How to Make China Pay and Prevent the Next Pandemic
Deepwater Horizon fire in 2010 (U.S. Coast Guard/Wikimedia Commons)

President Trump now acknowledges that there must be a strong response to China’s perfidy in setting loose the COVID-19 coronavirus on the civilized world. Whether Chinese officials intentionally allowed a naturally occurring virus to spread to the rest of the world to gain geopolitical advantage — as I and a few others believe — or they were simply lax in preventing the spread to other countries does matter, but not that much. Both possibilities require a strong response to prevent recurrences in the future.

Personal injury law recognizes a difference between an intentional act done for the purpose of harming others and a negligent act that may harm others but is not done for that purpose. Both require that wrongdoers compensate their victims, however. A purposeful act intended to cause harm — an “intentional tort” — may merit a greater penalty, such as punitive damages or criminal sanctions, to punish as well as to deter similar actions in the future. Either way, however, there have to be consequences, not only to compensate victims but also to deter others.

The legal theory developed by the last generation, “law and economics,” teaches that the costs of harm, whether caused intentionally or by failing to take sufficient precautions, should be borne by the wrongdoer; if not, what economists call an “externality” will be created. If wrongdoers, whether polluters or rogue nations, get away with not bearing the full costs of their actions or failures to act, others are invited by their example to behave badly in the future. Unfortunately, the converse is not necessarily true; sadly, making a person or institution pay for the harm it has caused does not necessarily ensure that similar harmful conduct will not occur in the future. More about that later.

The most charitable characterization of the Chinese government’s actions is that it failed to take precautions to prevent the spread of COVID-19 that were commensurate with the level of risk to the rest of the world. To prevent this from ever happening again, a multinational legal regime should be put in place that insures that the next time an incipient virus or other contagious disease occurs, governments will behave differently. The response should be multinational; one lesson from the COVID-19 pandemic is that no nation acting alone can protect itself in this era of globalization and widespread international travel by air.

The first step should be to require China to pay for the harm that it has caused if we can. That is necessary, but not sufficient, to deter future risk-taking with the lives and livelihoods of other people around the globe, but also for compensating victims and what philosophers call “retributive justice,” to give the survivors the satisfaction that those who harmed them and their loved ones didn’t get off scot free. But that is easier said than done. Countries are usually immune from lawsuits in the courts of another country. This legal principle, called “foreign sovereign immunity,” is embodied in a 1976 federal statute in the United States. Sen. Tom Cotton (R-Ark.) and Rep. Dan Crenshaw (R-Texas) have proposed a bill to create an exception that would allow victims of the coronavirus to sue China in the U.S. courts.

If enacted, there might just be a way to force China to pay compensation to victims. China holds over $1 trillion of U.S. government debt and perhaps that can be turned into a two-edged sword by paying victims instead of repaying our debts to China. An old common-law writ called “garnishment” is a “legal procedure by which a creditor can collect what a debtor owes by reaching the debtor’s property when it is in the hands of someone other than the debtor.”

In other words, in theory, if a case could get past the sovereign immunity hurdle, it might be possible for a court to order the U.S. government to pay some of the $1 trillion that it owes to China to coronavirus victims instead and to credit those payments against our debts to China. I am not aware that this has ever actually been done with sovereign debt owed by one nation to another, and the consequences for future international lending to the U.S. might be dire.

President Trump maintains a better course would be to raise tariffs on China (again) and use the money raised to pay victims. That approach has the advantage of creating a stream of revenue; the U.S. does not actually pay back the debt that we owe the Chinese and other holders of our bonds; we simply roll over the debt by issuing more bonds.

Another option would be to set up a “foreign claims tribunal” to pay the claims of the injured, either by voluntary agreement or by seizing the property of the guilty party. For example, following the Iran hostage crisis, the United States seized Iranian assets in the U.S. and the two countries then agreed to set up an international tribunal that has paid $2.5 billion out of the seized Iranian assets to settle 4,700 claims by victims. Similarly, Germany has paid over $80 billion to victims of the Holocaust.

Compensating victims for their injuries and financial losses would be a good thing to do if we can find a way to get the Chinese to do it. So far, however, the Chinese government calls the demands for compensation “preposterous,” “blackmail,” and “political farce.” They do have a point that international law is currently weak on the obligations of one country to act decisively to prevent the spread of contagious diseases to others. For example, the World Health Organization’s International Health Regulations, first adopted in 1951 and amended several times since, only apply to three diseases — cholera, plague, and yellow fever — and only require countries to “report” to the WHO, not to take decisive action to prevent the spread worldwide.

In addition, unfortunately, experience shows that merely making a person or an institution pay for the harm that they cause — “internalizing” the cost of the harm on the wrongdoer — does not necessarily prevent a recurrence. That’s the sad lesson of the 2010 Deep Water Horizon oil spill in the Gulf of Mexico.

The Exxon Valdez oil spill in Alaska in 1988 was supposed to be the oil spill that ended all oil spills. In its wake, the United States passed the Oil Pollution Act of 1990 (OPA90), which embodied the legal theories of the lawyer economists of the last generation such as Yale’s Guido Calabresi and Chicago’s Richard Posner about “internalizing” the economic costs of accidents on those in the best position to prevent them. In addition to compensating victims for the harm that an oil spill causes, OPA90 also imposed large per barrel financial penalties to deter future spills. The principal owner of the well involved in the 2010 Gulf of Mexico spill paid out $61.6 billion (with a “b”) in damages and penalties, about one-third of the total value of the company before the spill. But even when threatened with these enormous monetary consequences, the spill still occurred. What lawyer-economists call “general deterrence,” the threat of having to pay large sums, did not prevent that spill.

Moreover, the key decision-makers on the drilling platform ended up in the water 52 miles from shore surrounded by burning oil, and 11 of their colleagues died. They certainly had strong personal incentives not to take undue risks. Without going into too much technical detail, it appears that decision-makers on the rig were subject to immediate pressures to get a costly, long overdue job done quickly. They took a number of shortcuts that had worked at other wells without adverse consequences, but which in retrospect they regretted and which collectively allowed the blowout to occur.

What this should teach us is that human beings — even if properly incentivized — sometimes fail to take proper precautions against harm. This lack of foresight is particularly problematic in complex situations with multiple links in the chain of causation, such as an oil spill or a pandemic. We humans find it difficult to predict the long-term consequences of our actions, including failing to shut off international air travel promptly, particularly when we are confronted by immediate incentives that cut in the other direction, such as embarrassment and the economic costs that come from shutting off international travel at the first sign of trouble. We as a species tend to avoid immediate unpleasant consequences and “hope for the best” regarding possible long-term harms, particularly when those possible future harms are primarily to others.

What is the solution? There have been numerous after-action reports about the Deep Water Horizon spill. The best is by the National Academy of Sciences (NAS), Macondo Well Deepwater Horizon Blowout: Lessons for Improving Offshore Drilling Safety (2011). It makes numerous recommendations, but the most important one for present purposes is that some decisions are too important to be made by fallible human beings on the scene who may be subject to a variety of pressures and unable to foresee the consequences of their decisions accurately. Better to agree in advance on hard-and-fast precautionary rules rather than rely on fallible human judgments in the moment.

Thus, for example, the NAS committee recommends that a cement log bore test — a $10,000 procedure that probably would have prevented the Deepwater Horizon spill — should be required in every case rather than left to operator discretion as it was under the government regulations in effect at the time of the spill.

One of the safest complex human systems, the air traffic control system, illustrates this principle. It includes mandatory precautions in the form of spacing requirements between planes, and replacing critical components of aircraft before the end of their expected useful life to prevent failures. These decisions are too important to be left to ad hoc judgments by fallible human beings with short-term interests in getting there faster or getting one more flight out of an engine before an overhaul.

Yes, make the Chinese pay for the harm that they have caused if we can. But that’s not enough. The world also needs to come together around a convention of mandatory best practices to prevent pandemics. Unless there is a reliable test to identify the contagious and prevent them from traveling, an International Pandemic Prevention Convention should prescribe mandatory precautionary measures such as cutting off international air travel at the first sign of trouble to prevent the spread rather than waiting until there is “clear evidence” of human-to-human transmission, as Chinese officials claim they did. A convention should also include a clear obligation by countries that fail to prevent the spread of contagion internationally to pay compensation for the harm that they cause. An International Pandemic Prevention Convention could be enforced by the nations of the world refusing to allow air travel (including through intermediate destinations) from any country that does not abide by the convention’s rules. This type of multilateral international response will no doubt be expensive and inconvenient, but far less so than experiencing another pandemic, the costs of which both economically and in human suffering are incalculable. The civilized world has a moral obligation to future generations to put a new international legal regime in place that will ensure that nothing like this pandemic ever happens again.

The philosopher John Rawls has written that we humans are most likely to agree on just solutions when we are behind a “veil of ignorance” and so do not know whether we will be winners or losers from the rules adopted. We do not know what countries will be the next victims of COVID-like pandemics. Now is the time to put in place an international regime of mandatory precautions that will prevent something like this from ever happening again. That won’t bring back the dead, but they will not have died in vain.

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