# Are there too many restrictions on our economic liberties? **URL:** \ **Category:** Great Debates\ **Created:** [June 13, 2003, 2:20pm UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563 "2003-06-13T14:20:55Z")\ **Posts on this page:** 14\ **Page:** 3
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 17, 2003, 6:19pm UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/41 "2003-06-17T18:19:19Z")
> [@](#): > > \*Originally posted by John Mace \* > **You have failed to defend your premise** No defense is necessary when you don’t argue the premise in the first place. My premise is that the market is distorted by mandatory auto insurance. Do you dispute that? > [@](#): > > \*\*When I remodelled my house, the gov’t had all kinds of req’ts concerning how many electical outlets had to be installed in each room and where they could and could not be placed. And yet I was able to get bids from many electrical contractors (all, BTW, req’d by the state to be licensed) and got a huge spread of quoted prices. \*\* What’s your point? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [June 17, 2003, 6:36pm UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/42 "2003-06-17T18:36:15Z")
My point that many things are mandated by the gov’t, and that doesn’t necessarily distort the market. Your premise is that a gov’t mandate distorts the market. When I gave you several examples of gov’t madated items, you claimed those items were commodities. You have failed to show that Auto Insurance is fundamentally different from those other products and that it is, in fact, not a commodity. You claimed there were “barriers” to entry but have not shown how those barrires keep the number of insurers so low that competion between them does not exist. Furthermore, you haven’t shown that if such “artificial barriers” exist to stifle competition that the best answer is not to remove the barriers, but to introduce more gov’t regulation. And somehow that new gov’t regulation is supposed to be non-market distorting? I don’t follow your reasoning, is all. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 17, 2003, 10:32pm UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/43 "2003-06-17T22:32:42Z")
> [@](#): > > \*Originally posted by december \* > \*\*I’m afraid your comments are not all correct, **FI** Insurance Commissioners come from many backgrounds: politicians, insurance executives, academics, consumerists, etc. I don’t know what you mean by “ties and interests.” \*\* What I am talking about is influence such as is wielded by the NAIC (National Association of Insurance Commissioners), as demonstrated in this report in the Florida State University Law Review: [Regulatory Federalism and the National Association of Insurance Commissioners (.pdf file)](http://www.law.fsu.edu/journals/lawreview/downloads/263/rand.pdf) > [@](#): > > Because financial services integration presents such daunting regulatory challenges, current structures and processes of state insurance regulation, including the NAIC, raise serious concerns about the efficacy of the state system of insurance regulation. Many state insurance departments are hopelessly underfunded and understaffed and are sometimes unable to carry out basic regulatory functions adequately, much less oversight of complex international insurance networks. **As a result, the states have increasingly turned to the NAIC for assistance.** The NAIC is perhaps well-suited to the model law drafting functions, which were its original mission. As a private, nongovernmental organization with no power of its own, the NAIC is inadequate to perform the more complex tasks it has taken on and which financial services integration will demand of it. **Most critically, the NAIC is closely identified with the insurance industry. Although it pays lip service to the goal of protecting consumers, its actions often present a different reality.** The stability of the insurance industry, and the protection of the consumers who rely on it, are at stake. Regulatory reform is essential. ---
**Author:** ![Ms2001](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ms2001/32/18463_2.png) [@Ms2001](https://boards.straightdope.com/u/Ms2001)\ **Post date:** [June 18, 2003, 12:02am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/44 "2003-06-18T00:02:48Z")
> [@](#): > > \*Originally posted by Apos \* > **I don’t see it that way. Without those laws, IP wouldn’t have gotten made in the first place. “Liberty” does not include telling someone "you MUST do X, and then give it away for free."** Clearly, IP gets made without a profit incentive: see free software, fan fiction, fan remakes of Raiders of the Lost Ark, and so on. IP laws have some beneficial effects, but so do the other market distortions mentioned in the OP. They help certain groups and harm others. > [@](#): > > **People who produce IP have a right to set a price for what they do just as much as anyone else, and set whatever terms they want for selling it.** Yes, but the government steps in and tells the consumers what they can or can’t do with the IP they just “bought”. The terms aren’t set by the seller, they’re set by the government; and they’re modified by changing the laws, not by presenting a new contract which the buyer can choose to accept or decline. I’m not here to debate the merits of copyright; that’s been done over and over in more appropriate threads. I’m only pointing out that copyright (and trademark/patent law) is as much an economic restriction as, say, minimum wage: “You can’t photocopy that paper and sell it” vs. “You can’t pay your janitor $3.00 an hour”. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [June 18, 2003, 12:36am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/45 "2003-06-18T00:36:43Z")
> [@](#): > > \*Originally posted by Fear Itself \* > What I am talking about is influence such as is wielded by the NAIC (National Association of Insurance Commissioners), as demonstrated in this report in the Florida State University Law Review: > > > [@](#): > > > > Because financial services integration presents such daunting regulatory challenges, current structures and processes of state insurance regulation, including the NAIC, raise serious concerns about the efficacy of the state system of insurance regulation. Many state insurance departments are hopelessly underfunded and understaffed and are sometimes unable to carry out basic regulatory functions adequately, much less oversight of complex international insurance networks. As a result, the states have increasingly turned to the NAIC for assistance. The NAIC is perhaps well-suited to the model law drafting functions, which were its original mission. As a private, nongovernmental organization with no power of its own, the NAIC is inadequate to perform the more complex tasks it has taken on and which financial services integration will demand of it. Most critically, the NAIC is closely identified with the insurance industry. Although it pays lip service to the goal of protecting consumers, its actions often present a different reality. The stability of the insurance industry, and the protection of the consumers who rely on it, are at stake. Regulatory reform is essential. The cited article favors regulatory reform – that is, it favors federal regulation. There’s a good debate between the virtues of state regulation and federal regulation. But, the NAIC is a creature of the State Insurance Departments, not the insurance business. In fact, a strong NAIC is important to make sure that state regulation works adquately. This is necessary, since the SEUA case found that insurance is interstate commerce. If state regulation is inadequate, then the fedsl will take over. The NAIC has innumerable committees whose members are insurance department employees. They recommend various regulatory policies. IMHO NAIC committees’ recomendations have led to over-regulation of trivia, but that’s beside the point. It is true that insurance industry representatives also attend NAIC meetings and lobby the regulators. But, the NAIC should not be viewed as a crypto-industry organization. It’s run by and for the state regulators. It’s appropriate and intended that states rely on the NAIC for regulatory recommendations. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 18, 2003, 1:27am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/46 "2003-06-18T01:27:05Z")
> [@](#): > > \*Originally posted by december \* > **The cited article favors regulatory reform – that is, it favors federal regulation.** This is a good thing, right? > [@](#): > > **But, the NAIC is a creature of the State Insurance Departments, not the insurance business.** You are mistaken, **december**. According to the cited report: > [@](#): > > \*\*[T]he NAIC is closely identified with the insurance industry. Capture of regulatory agencies by the regulated industry is a much-described and much-discussed phenomenon. However, the problem of capture as it exists in other regulatory contexts is minimal when compared to the problem in the insurance industry. The industry directly funds the NAIC. Each year the NAIC assesses insurance companies a fee, based on premium volume, to file information in its centralized databases. In recent years, database fees account for approximately half of the NAIC’s revenues. In contrast, state assessments account for less than five percent of revenues. As a result, members of the industry view the NAIC as part of the industry and accountable to the industry. Furthermore, much of the NAIC’s work often appears to be in direct response to the industry. \*\* Each of these claims is documented and footnoted on page 15 of the report. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [June 18, 2003, 1:50am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/47 "2003-06-18T01:50:51Z")
> [@](#): > > \*Originally posted by Fear Itself \* > [federal regulation] is a good thing, right? It might well be better, but, of course, we don’t know what it would actually look like. There are pros and cons. Also, it depends on whether we consider federal regulation _instead of_ state regulation or _in addition to_ state regulation. > [@](#): > > You are mistaken, **december**. No, the learned Professor has her implication backwards, when she writes > [@](#): > > The industry directly funds the NAIC. Each year the NAIC assesses insurance companies a fee, based on premium volume, to file information in its centralized databases. In recent years, database fees account for approximately half of the NAIC’s revenues. As a result, members of the industry view the NAIC as part of the industry and accountable to the industry. She’s looking through the wrong end of the telescope. The insurance industry doesn’t choose to “fund” the NAIC. Rather, the NAIC takes money from the industry, because they can do so. They have the legal power to require the filing of reports and to charge what they like for the service. Consider the analogy of the protection racket. No doubt there are small businesses that are forced to pay protection money to organized crime. That doesn’t imply that these businesses exert any control over organized crime. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 18, 2003, 2:05am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/48 "2003-06-18T02:05:29Z")
> [@](#): > > \*Originally posted by december \* > \*\*She’s looking through the wrong end of the telescope. \*\* Oh, really? And what about Spencer L. Kimball, [legal counsel to the NAIC](http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=463&invol=1073), when he observes: > [@](#): > > **The insurance regulator is conceived by far too many insurance executives, and too often he conceives himself, as a part of the industry, existing to serve the industry. Indeed, I have heard life insurance men express the notion that it would be useful to have a national regulator to “represent” the industry in the executive branch of the national government.** Which end of the telescope is _he_ looking through? ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [June 18, 2003, 2:20am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/49 "2003-06-18T02:20:49Z")
> [@](#): > > \*Originally posted by Fear Itself \* > \*\*Oh, really? And what about Spencer L. Kimball, [legal counsel to the NAIC](http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=463&invol=1073), when he observes:Which end of the telescope is _he_ looking through? \*\* Note that Spencer Kimball isn’t talking about the NAIC in this quote. He’s talking about insurance regulators in general. His comment has nothing to do with fees paid to the NAIC for statistical services. His quote doesn’t contradict what I said in my last post. I cannot speak about life insurance regulation, having spent my entire career on the property-casualty side. I worked closely with California regulators back in the days when I was responsible for the statutory workers compensation insurance rates. The regulators certainly viewed themselves as representing the citizens. Of course, their function was to serve the citizens by making the insurance industry function. In that sense, they were interested in the industry. And, the industry tried to gain influence with the regulators. I have been told that in the 1950’s, the California insurance companies had a lot of power over the California Insurance Dept. California and New York were regarded as having the best insurance regulators. It may be that some other states are more under the sway of the insurance industry. This sort of thing does happen. Kimball is right to decry it. However, I have several friends who are regulators. They are not captives of the insurance industry. I think the state insurance depts are pretty independent of the companies. Many of them do a mediocre job, but not because of company interference. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 18, 2003, 2:31am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/50 "2003-06-18T02:31:04Z")
Well, **december** I have presented several cites for my claim that insurance regulators are in the pocket of the industry (and will continue to do so, if necessary), but so far, all you have presented are anecdotes and personal opinion. If you want to persuade me otherwise, I think it is time for your to present some supporting evidence for your claim that insurance regulators are independent of industry control. ---
**Author:** ![Apos](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@Apos](https://boards.straightdope.com/u/Apos)\ **Post date:** [June 18, 2003, 3:54pm UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/51 "2003-06-18T15:54:41Z")
I disagree. If someone wants to produce IP and give it away for free, they can. And if someone wants to create IP and sell it with any restrictions on its usage, they can. I just don’t see that as an economic restriction on anything other thn theft. As I said, the right to acquire, via a “first come, first serve” basis is debatable, but the basic idea of a copyright being a protection for investment into developing a resource isn’t. ---
**Author:** ![Ms2001](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ms2001/32/18463_2.png) [@Ms2001](https://boards.straightdope.com/u/Ms2001)\ **Post date:** [June 19, 2003, 4:50am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/52 "2003-06-19T04:50:21Z")
> [@](#): > > \*Originally posted by Apos \* > **I disagree. If someone wants to produce IP and give it away for free, they can. And if someone wants to create IP and sell it with any restrictions on its usage, they can.** The problem is that those restrictions are _not_ determined by the seller, but by the government. In the absence of any contract between me (the consumer) and, say, Disney (the seller) for the purchase of a DVD, there are many restrictions on the economic activities I can perform with that DVD. If copyright law changes next year, so do the restrictions. For example, I might buy a DVD today hoping to pass it on to my grandson, so he can show it to the public when it becomes public domain, and profit by charging for admission. But if copyright terms are extended in 2015, that becomes impossible - now my grandson will have to pass it down to _his_ grandson. Or, if copyright terms are shortened, I can start making money from that DVD early, which is not what Disney expected when they sold it to me. My agreement with Disney didn’t change; the only change was the government’s restrictions. Now suppose that copyright law as we know it doesn’t exist: instead, every time you buy a DVD, you sign a contract with the movie studio agreeing not to do certain things with it, and not to transfer it to anyone else without having them sign the same contract. In that world, there are still voluntary restrictions, but A) they’re clearly enumerated at the time of purchase, and B) they can’t change without the agreement of both parties. I could buy the DVD today and know that my heirs would be able to profit from it 70 years in the future. > [@](#): > > **I just don’t see that as an economic restriction on anything other thn theft.** Aren’t we still talking about copyrights? I think you meant “copyright violation”. And obviously copyright law restricts copyright violations, just like minimum wage law restricts low wages. ---
**Author:** ![december](https://avatars.discourse-cdn.com/v4/letter/d/838e76/32.png) [@december](https://boards.straightdope.com/u/december)\ **Post date:** [June 19, 2003, 5:45am UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/53 "2003-06-19T05:45:48Z")
> [@](#): > > \*Originally posted by Fear Itself \* > \*\*Well, **december** I have presented several cites for my claim that insurance regulators are in the pocket of the industry (and will continue to do so, if necessary), but so far, all you have presented are anecdotes and personal opinion. If you want to persuade me otherwise, I think it is time for your to present some supporting evidence for your claim that insurance regulators are independent of industry control. \*\* My experience is such that my personal opinion is reliable. You can suit yourself about believing it or not. That professor didn’t know what she was talking about. OTOH Spencer Kimball is very well known and should be a very reliable source. But, let’s look at what Kimball actually said. > [@](#): > > The insurance regulator is conceived by far too many insurance executives, and too often he conceives himself, as a part of the industry, existing to serve the industry. Indeed, I have heard life insurance men express the notion that it would be useful to have a national regulator to “represent” the industry in the executive branch of the national government. This is a bit different from “being in the industry’s pocket”. It’s more of a different POV of a regulator’s job. Nor did Kimball say how common it was. Let me illustrate this with a real example – a problem faced by a friend of mine. After the Northridge earthquake, there was a shortage of property insurance in California. Many new companies wanted to be admitted to sell earthquake insurance. My friend was the earthquake expert in the California Insurance Dept. His challenge was to decide how much capital to require for a company to be allowed to sell earthquake insurance in California. On the one hand, he wanted the company to have sufficient capital to pay if there was another earthquake just as devastating as Northridge. However, this would have required a huge amount of capital, far beyond what any startup company would have. However, he also wanted there to be a market for earthquake insurance, so coverage would be available. In this sense, you could say he was serving the industry, but that doesn’t mean he was in the industry’s pocket. From his POV having a market for earthquake insurance served both the industry and the public. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [June 19, 2003, 5:08pm UTC](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563/54 "2003-06-19T17:08:48Z")
> [@](#): > > _Originally posted by december_ > That professor didn’t know what she was talking about. That’s it? You dismiss 75 pages of documented and footnoted evidence of collusion bvetween the NAIC and the insurance industry with a personal attack? What kind of a debate is that? If you disagree with her, show us some cites to back up your claim. > [@](#): > > My experience is such that my personal opinion is reliable. You can suit yourself about believing it or not. I choose not. [Previous page](https://boards.straightdope.com/t/are-there-too-many-restrictions-on-our-economic-liberties/181563.md?page=2)