4 ms·
I once read a passage on how insurance companies would be the biggest driving force in a completely free state. For example, you would insure your house against
by cheez 16y ago
I once read a passage on how insurance companies would be the biggest driving force in a completely free state. For example, you would insure your house against theft which would make it economical for them to create a kind of police force.
Not saying I'd like that, but interesting to see how other things already operate that way.
- notahacker 16y agoAt the risk of letting this discussion degenerate into a debate over the libertarian definition of "free"... It would also make it economical for insurance companies to quite literally be thieves, and uneconomical for individuals not to pay protection money to the most powerful (and likely also most expensive) insurance company.
- sethg 16y agoAside from the problem of outright extortion, even the savviest financiers can underestimate low-probability risks (as the recent mortgage debacle shows). You would have cycles of price wars among insurers trying to attract customers by lowering premiums, until one larger-than-expected crime wave (or even a hiccup in the bond market) leaving major issuers unable to pay out their claims.
- joe_the_user 16y agoAside from the problem of outright extortion, even the savviest financiers can underestimate low-probability risks (as the recent mortgage debacle shows). While savvy investors may indeed underestimate low-probability risks, I take issue with any claim the mortgage bubble showed this. The sad end of that bubble was an extremely high probability event. The main thing the debacle showed was the willingness of many people to believe fallacious arguments which made reference to claims about low probability events. Even there, the willingness of investors to believe that standard "this time it's different" line has been shown over and over again.
- stretchwithme 16y agoYeah. Actually, the savviest investors were the ones betting that the bubble would pop. Of course, the majority thinks otherwise or there would have been no bubble. Savvy in this case was simply looking at the facts and not letting popular opinion keep you from acting. And, for some, having friends in the government to bail out the fools who bet on the bubble growing forever so you can get paid.
- OstiaAntica 16y agoThe "underestimation" of mortgage risk was deliberate, the bankers were motivated by short-term bonus payouts.
- wisty 16y agoThat's hard to say. People are often really scared by things like climate change (uncertain, huge impact), and less scared of everyday disasters. http://www.schneier.com/blog/archives/2009/11/fear_and_overre.html http://www.schneier.com/blog/archives/2009/11/fear_and_overr... Or table here: http://www.schneier.com/essay-170.html http://www.schneier.com/essay-170.html
- far33d 16y agoYou mean the mob?
- VladRussian 16y agoi think he meant government.
- cheez 16y agoSadly, this is already the case in the "War on Drugs". In another sense, we already do this but there is no competition. A free society is not exclusive of a strong government to protect property rights and handle externalities economically. It's when they take liberties with their charge when things get bad.
- johngalt 16y agoThe original fire departments operated in this manner.