Imagine two drivers, Fortune and Fate. Fortune and Fate are equally safe drivers who are going down the same road. Both drivers are distracted by a sign that advertises a great shoe sale. The only difference is that someone driving a motorcycle, Hurt, happens to dart in front of Fate. Fate gets in an accident. Fortune is lucky and does not get into an accident. Both performed the same act of carelessness, but only one will have to pay for the damages of the accident. Even though Fortune and Fate made the same mistake (being distracted by the shoe sale sign), only Fate has to suffer the burdens of the cost of the accident. Waldron thinks it is unfair that Fate may go broke paying for the cost of the accident while Fortune bears no burden.
In order to show why our current system is unfair, Waldron considers many possible ways to decide how the victims of accidents are compensated.
Pure individual liability is the system where people who cause accidents by being negligent or reckless pay for the cost of injury. Whatever the cost, the person who causes the injury must fully compensate the injured party. Pure individual liability is unfair because luck is the sole factor to determine who pays.
Individual liability plus optional third-party insurance is the system where everyone is individually liable by they also have the option to purchase private insurance that will cover some of the costs of the accident. The insurance company then pays on behalf of the person who caused the accident. Someone might object to optional insurance systems because those who lack insurance will pay less for the accident than those who have insurance. If only some people are insured, this means that the insurance companies and those who purchase insurance will end up bearing most of the burden of the costs of accidents.
Individual liability with mandatory third-party insurance is the system we have now in the U.S. Every individual is liable for the cost of accidents but everyone also has insurance that can pay on their behalf. Someone might object to this view because not everyone can pay for insurance, so it is unfair to require that everyone buys insurance. This objection can be met if insurance is subsidized for low-income parties. If insurance is affordable for everyone, then it is fair to require everyone to have insurance. A further objection is to claim that because this view still puts the burden of the cost of paying for accidents on individuals, it is unfair. Most people have a low limit to how much money they can get from insurance. Many people who have insurance will still have to pay a lot of money "out of pocket" because the insurance they have is insufficient to cover the cost of an accident. Even if insurance is mandatory, unlucky individuals who cause accidents still end up bearing most of the burden of paying for accidents. It is unfair that luck plays such a large role in determining who pays for accidents.
Socialized liability or a "no fault" system (such as the system in New Zealand) is a system where accident victims are compensated by a public governmental insurance fund. All drivers pay an equal amount into the public insurance fund. Such a system is supposed to be fair because both Fortune and Fate (who are equally negligent) bear equal burdens to pay for the cost of accidents. One variation would be to include fines for negligence so that people who are more reckless and more negligent have to bear more of the burden of paying for accidents. On this variation, Fortune and Fate would both pay for the accident (through the public insurance system) and both would pay an additional fine for being negligent.
Now we consider how someone might argue against a system of socialized liability. What kinds of moral considerations might be used to argue against socialized liablity?
Desert. Someone might consider whether the people who pay for accidents are the people who deserve to pay. Waldron says that consideration of desert will not support an individual liability system. Fate does not deserve to bear the cost of paying for the accident because his negligence was so minor. We all take our eyes off the road for a moment or two. Since Fate's mistake was so minor, he does not deserve to pay for the full cost of the accident. Both Fate and Fortune are equally negligent. According to desert, both Fortune and Fate should pay the same amount to cover the cost of the accident. Someone might say that desert is not a relevant consideration because desert is concerned with punishment and corrective justice, not retributive justice and tort law.
Distributional Fairness. Assume that either Fate or Hurt should pay. It's unfair to make Fate pay for reasons listed above. But it's even more unfair to make Hurt pay, since Hurt is entirely innocent. Waldron will note that neither should have to pay. It's not fair for either to pay, so we should socialize liability entirely.
Causation. Someone might object to socialized liability because then the peole who pay for the accident are not the people who caused the accident. Drivers who never cause accidents will still end up paying for those accidents because they have to pay into the public insurance system. Waldron will respond that there is nothing special about causation. Consider a several car pile up accident. In such a case, many drivers who cause damages are not personally responsible. If you are in a multi-car crash, you may be the driver who causes damage to the driver in front of you, but you are not responsible, since it is not your fault that you were caught in the middle of the accident. You may only cause damage because a different reckless driver ran into you. It seems fair that everyone who was reckless should pay for such an accident. Not only the cars who were physically in the accident, but also the drivers who created the unsafe environment should bear the cost of the accident. In short, there is no direct link between causation and liability.
Lottery to Determine Liability. Someone might think that the random outcome of the accident is used as a basis for determining liability. The risk involved with the original accident is the same risk of liability that a person in the accident has. So both Fortune and Fate share an equal risk of liability for the cost of the accident. As long as the risk of liability is the same as the risk of harm that Hurt was exposed to, this should be fair. Waldron says that while this may be somewhat fair, it is unfair because Fate will have to pay more than Fortune. They may share the same risk, but they do not share the burdens of paying for the accident.
Waldron closes with a Rawls-style argument. Imagine that you do not know whether you will be the accidental cause of an accident or the unlucky victim. Waldron thinks that when you do not know what role you play in the accident, it is rational to want a socialized liability system because you would want the worst possible position to be as good as possible. If we follow the maximin rule for choosing how risky of a system we want, it is rational to want socialized liability.