no third solution

Blogging about liberty, anarchy, economics and politics

Category Archives: Seen and Unseen

Without a State, Who Will Help the Poor?

November 16th, 2007

There are people who wonder, “What will happen to the poor without the Government to support them?” For starters, this guy:

The Erie Community Foundation, in Pennsylvania, has received a pledge of $100-million from an anonymous donor.

But a more appropriate answer would be: Just about everyone. Drive down Main Street of any suburb during holiday season and watch as drivers roll down their windows at red lights to donate to the Knights of Columbus and the retarded children. Or to the local Salvation Army volunteers who pose as Santa Claus, ringing the bell outside your grocery store. Or to the local Fire Department when they host a pancake breakfast. For over a decade (perhaps longer) Big Boy restaurants in conjunction with the Boy Scouts, has coordinated a food-drive of undeniably epic proportions. I’m sure that wherever you live, there are dozens of charity-minded individuals and organizations just like these described above.

But some people insist that individuals aren’t giving enough. To them, the answer is clear: Government needs to give more. But the only way this can occur is if Government first takes more to begin with, from each and every one of us. Entirely neglecting to notice that Government is itself, (by crowding out private charity) the root cause of the need for more charity, increasingly, it begins to appear that Government intervention is the only viable solution. But this solution is fatally flawed.

What these advocates of intervention “see” is the government redistribution of incomes. What they don’t see is at least twofold: How that income would’ve otherwise been spent (the demand for goods and services creates opportunities for work) and how much more of that income would’ve otherwise been given to charities. One point that I never tire of repeating (OK, I do get kind of tired of it) is that by-and-large, people continue to give in spite of, and in addition to the onerous levels of taxation that many of them face. And virtually none of these people give any surplus charity to the government, although they certainly could. These people are facing aggregate tax rates approaching or exceeding 50% (sum of income taxes, sales taxes, sin taxes, property taxes, etc.) of their gross income, yet they still give to charity either through monetary donations or volunteering in-kind. Clearly, the evidence suggests that most people have a very strong sense of community and charity — yet we are led to believe that without government (to whom nobody voluntarily gives), donations to charity would simply dry up? The logic required to arrive at this conclusion is simply mind-boggling.

Would you stop giving to charity if you had more money to give?  Or would you give a little bit (or even a lot) more?    The bottom line is this: There are many, many people just like you, who express concern about the plight of the less fortunate. You and the Anonymous Millionaire Benefactors, are the answer.

Critical Illness Insurance and Socialized Health Care

October 30th, 2007

In July 2007 issue of Best’s Review, if you have a subscription, you’ll find an article called “Critical Care,” which discusses the current and potential future market for critical illness insurance, either as a supplemental rider to an existing health insurance policy or as a stand-alone. One comment that struck me as odd appears on page 88:

The United States is caught in a catch-up game when it comes to critical illness sales.

Great Britain, Australia, Ireland, Japan and Canada have had much success in the market, “Those socialized medicine countries have been successfully selling it as a ‘don’t die on a waiting list’ type of insurance.”

My question is this: Are we really “lagging behind” if there’s simply no market for a “don’t die on a waiting list” policy in America? Do we want to foster that sort of environment?

To be sure, there are a number of reasons why CII hasn’t caught on here, including the regulatory environment, but don’t you think that at least part of the reason is because there simply isn’t a very great danger of dying on the waiting list, in a country where there’s practically never (unless you need a kidney or something) a waiting list?

So, socialized insurance requires supplemental insurance so that you don’t die because you have the socialized insurance. Sicko, indeed.

In Which I Blog About SoCal

October 24th, 2007

Yesterday evening I received an e-mail from my friend Jay who is “living the dream” in Tahoe City, California. Last year, on my annual winter ski trip, we hooked up with him for a night in Reno and a day at Alpine Meadows where he was working as a Supervisor/Cook/Liftie/Photographer. This spring he started working as a firefighter, and he’s been called down to the newly minted disaster area to fight the raging fires that have ridden roughshod over parts of California for the past week or so. I wish him luck and look forward to seeing what pictures he brings back, they’re sure to be pretty amazing.

I do, however, stand by my statements about social insurance programs from earlier this year, despite of course, wishing for Jay’s safe return from fighting fires to protect some McMansions, such as that of Richard Sanders, whose home “was recently renovated, on half an acre with a pool and a spa,” which had “escaped damage in the 2003 and 1990 fires.” If you think I’m singling anyone out here, I’m not. Mike Davis, a historian at the University of California at Irvine suggests that much of the new construction in SoCal was essentially built atop a powderkeg.

“About two-thirds of new building in Southern California over the past decade was on land susceptible to wildfires.”

“It gives you some parameters for understanding the current situation. Another way to look at it is you simply drive out the San Gorgonio Pass, where the winds blow over 50 mph over a hundred days a year and you have new houses standing next to 50-year-old chaparral.

You might as well be building next to leaking gasoline cans.”

Building a house in these parts of SoCal, or building a house in a flood plain is unsystematic risk which is not insurable. In plain english, I emphatically believe that those people smart enough to avoid high risk areas should not be forced through taxation (or otherwise) to subsidize the lifestyles of others. Look: there is no such thing as a “no risk” area. Life is full of risk, and we all have to choose the level with which we’re comfortable, and accept responsibility for it. If you are uncomfortable being responsible for a house in a flood plain, the proper response is to not buy a house on a flood plain, it is improper to force one’s neighbors to assume the risk that you deem excessive.

I’ve also noted that the “public” nature of such programs as flooding or fire “insurance” succumbs to morale hazard, which actually tends to increase the magnitude of damage claims. For instance, after the 2003 fires, the “resulting controversy brought calls for reform, but San Diego voters declined to fund improvements for the fire department, the smallest per capita for any large city in the country.” This is political economy 101: confident that others will pay, voters tend to demand high levels of protection, politicians tend to promise just that, and eventually the voters (when faced with the bill) decide on an inadequate level of funding.

“These smoke jumpers drop out of the sky miraculously to fight the fire for you, so there’s incentive for county commissioners and land use departments to withhold the permitting of homes,” said Ray Rasker of Headwaters Economics. He was reached in Washington, where he was presenting a study showing that 50 to 95 percent of Forest Service firefighting costs went to protect private property.

How many more times will the taxpayers (federal, local, or otherwise) be called upon to “share” the burden of a few people’s bad decisions in the name of community and compassion? If those people had any true sense of community or compassion, they would never have made me responsible for rebuilding their homes. What is happening right now in SoCal is unfortunate — but it is not in the least bit unpredictable. Quite to the contrary, the severity of the current crisis situation is precisely how we should expect events to play out when people are not made to bear responsibility for their own (probably poor) judgements.

no third solution

Blogging about liberty, anarchy, economics and politics