Comments on: Another Example of Why I Fear the Government http://enfranchisedmind.com/blog/posts/another-example-of-why-i-fear-the-government/ programming, politics, & other religious issues Mon, 15 Mar 2010 00:31:40 +0000 hourly 1 By: Candide http://enfranchisedmind.com/blog/posts/another-example-of-why-i-fear-the-government/#comment-509 Candide Sun, 24 Sep 2006 00:12:53 +0000 http://enfranchisedmind.com/blog/archive/2006/09/09/154#comment-509 We do a nice job in title insurance in the US -- we don't have the problem with delivering titles on time or inexpensively. We <em>do</em> have a problem with title insurance fraud, but even some of that is based on government inefficiency. Note that the consequence of the inefficiency isn't to make the government more efficient, but <a href="http://realtytimes.com/rtcpages/20060612_antiflipping.htm" rel="nofollow">to criminalize people</a> who would like to use a more efficient system. You complain about "why the insurance companies won’t just bribe the lawmakers". Unfortunately, if the government <em>is</em> the insurance company, then you will have all the same motivations the insurance companies do without any of the bribes! We do a nice job in title insurance in the US — we don’t have the problem with delivering titles on time or inexpensively. We do have a problem with title insurance fraud, but even some of that is based on government inefficiency. Note that the consequence of the inefficiency isn’t to make the government more efficient, but to criminalize people who would like to use a more efficient system.

You complain about “why the insurance companies won’t just bribe the lawmakers”. Unfortunately, if the government is the insurance company, then you will have all the same motivations the insurance companies do without any of the bribes!

]]> By: bhurt-aw http://enfranchisedmind.com/blog/posts/another-example-of-why-i-fear-the-government/#comment-462 bhurt-aw Wed, 13 Sep 2006 21:32:11 +0000 http://enfranchisedmind.com/blog/archive/2006/09/09/154#comment-462 I'm not sure you can avoid conflicts of interest in a goverment that actually does anything. Even if all they do is "set the rules everyone else plays by", anyone looking to game the system will be looking for ways to unduely influence the goverment so the rules it writes are not truely neuteral, but benefit the gamer. The point here is that you can't avoid the problem by having the goverment do less. That said, insurance has a classic externalized cost problem. It doesn't cost the insurance company anything if they don't pay out a claim, or prevent a fraud against someone else. In a slightly different context, there is no cost to an insurance company <a HREF="http://www.usatoday.com/money/perfi/insurance/2006-08-24-katrina-insure-usat_x.htm" rel="nofollow">denying Katrina victims settlements</a>. I hope that it's obvious that, for society as a whole, letting people whose homes were destroyed simply dangle isn't good. But the cost of this isn't paid (directly) by the insurance company, so there is no incentive for them to change this behavior either. If anything, a goverment has <em>more</em> incentive. If you can think of a way to solve this problem without "invasive and oppressive" regulation of the insurance company- which includes regulation of what must be covered and how quickly the insurance companies must pay out on claims, and can explain why the insurance companies won't just bribe the lawmakers to write in loopholes to those regulations to let them out, then maybe we can talk. I’m not sure you can avoid conflicts of interest in a goverment that actually does anything. Even if all they do is “set the rules everyone else plays by”, anyone looking to game the system will be looking for ways to unduely influence the goverment so the rules it writes are not truely neuteral, but benefit the gamer. The point here is that you can’t avoid the problem by having the goverment do less.

That said, insurance has a classic externalized cost problem. It doesn’t cost the insurance company anything if they don’t pay out a claim, or prevent a fraud against someone else. In a slightly different context, there is no cost to an insurance company denying Katrina victims settlements. I hope that it’s obvious that, for society as a whole, letting people whose homes were destroyed simply dangle isn’t good. But the cost of this isn’t paid (directly) by the insurance company, so there is no incentive for them to change this behavior either. If anything, a goverment has more incentive.

If you can think of a way to solve this problem without “invasive and oppressive” regulation of the insurance company- which includes regulation of what must be covered and how quickly the insurance companies must pay out on claims, and can explain why the insurance companies won’t just bribe the lawmakers to write in loopholes to those regulations to let them out, then maybe we can talk.

]]> By: Candide http://enfranchisedmind.com/blog/posts/another-example-of-why-i-fear-the-government/#comment-451 Candide Tue, 12 Sep 2006 00:01:07 +0000 http://enfranchisedmind.com/blog/archive/2006/09/09/154#comment-451 Actually, America's got a very nice title insurance system right now -- you pay for it when you buy the property, and they basically expect to have to do the research. People lose their titles all the time: they pretty much assume it's gone. The advantage of having private companies do it is that the people who enforce the rules aren't the same as the people who need to have the rules enforced. The role of the government is to set up the rules that everyone else plays by -- when it goes beyond that gig, they end up with a natural conflict of interest. And when all the politicians are equally invested in the scam, who do you vote for to change it? The belief that a Hero of the Common Good will arise from the political riffraff is just as ridiculous as the belief that the Yet More Efficient Private Business will arise from the free market. Actually, America’s got a very nice title insurance system right now — you pay for it when you buy the property, and they basically expect to have to do the research. People lose their titles all the time: they pretty much assume it’s gone.

The advantage of having private companies do it is that the people who enforce the rules aren’t the same as the people who need to have the rules enforced. The role of the government is to set up the rules that everyone else plays by — when it goes beyond that gig, they end up with a natural conflict of interest. And when all the politicians are equally invested in the scam, who do you vote for to change it? The belief that a Hero of the Common Good will arise from the political riffraff is just as ridiculous as the belief that the Yet More Efficient Private Business will arise from the free market.

]]> By: bhurt-aw http://enfranchisedmind.com/blog/posts/another-example-of-why-i-fear-the-government/#comment-450 bhurt-aw Mon, 11 Sep 2006 22:31:25 +0000 http://enfranchisedmind.com/blog/archive/2006/09/09/154#comment-450 Frankly, I don't see the goverment getting out of title insurance will help things in the least. Consider the case where the goverment "privatizes" title insurance or simply dumps it. You end up with one of two cases: 1) The home owners have no isurance against this at all, and are basically totally screwed, or 2) they have insurance from a private insurance company who stands to profit from denying or delaying any insurance payout (if in no other way, it'll get interest on the money in the mean time). And in either case you end up with a system that is <em>less</em> responsive to the people getting victimized- as if you disagree with how a corporation is being run, you have a lot fewer options for getting change to occur. If you think the federal goverment is hard to affect, try getting Microsoft or Walmart or ABC to change their mind or policies. So as bad as the situation is, I can't see the situation doing anything but getting worse if we take goverment out of the mix. If enough people get pissed off enough, the board of directors of the Federal goverment will change. Not so with ABC. Brian Frankly, I don’t see the goverment getting out of title insurance will help things in the least. Consider the case where the goverment “privatizes” title insurance or simply dumps it. You end up with one of two cases:
1) The home owners have no isurance against this at all, and are basically totally screwed, or 2) they have insurance from a private insurance company who stands to profit from denying or delaying any insurance payout (if in no other way, it’ll get interest on the money in the mean time).

And in either case you end up with a system that is less responsive to the people getting victimized- as if you disagree with how a corporation is being run, you have a lot fewer options for getting change to occur. If you think the federal goverment is hard to affect, try getting Microsoft or Walmart or ABC to change their mind or policies. So as bad as the situation is, I can’t see the situation doing anything but getting worse if we take goverment out of the mix. If enough people get pissed off enough, the board of directors of the Federal goverment will change. Not so with ABC.

Brian

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