There’s some interesting history with that. it’s absolutely amazing how often the federal government gets involved in breaking monopolies that are about to get wrecked for other reasons. It’s a long hijack I don’t wish to get into here, but suffice is to say that, yes, monopolies will always die without government intervention or backing in some way.
The market demanding it would depend on its affordability. Consider the number of National Guardsmen needed to handle a disaster. Consider how infrequently disasters strike. Now consider that each insurance company would require its own troop. Pretty expensive, right? So, you think there would be much of a market for this?
If you do, consider flood and earthquake insurance. In things like fire insurance there are mostly individual claims spaced over time. For these there are massive claims which happen at once, unpredictably. It is just not worth the risk for insurance companies, unless offered at massive expense. I live in the Bay Area, and very few people get earthquake insurance, because it is way expensive with high deductibles.
Do, Libertopia would have nothing like the National Guard. Anyone losing his home or life in a flood would probably get told, like Sam says, to not live so close to the water, and tough.
I think SO is a good answer. As for AT&T, I worked there before the breakup, and they spent a lot of time worrying about regulators. In fact the famous Long Distance Control Center in NJ was designed to be just fancy enough to impress regulators but not fancy enough to think that the ratepayers money was being wasted. And my center, the first two years I was there at least, was funded because of the intricacies of return on investment for Western Electric.
As for the SO market share, the fact that even monopolies have limited lifetimes due to technology or other changes in no way excuses their economic inefficiency while they had monopoly power. That Microsoft is losing it doesn’t reimburse those who lost money and time to viruses which occurred because of their poor OS design.
I think “insurance” is an adequate libertarian response* to the question of how we can expect a rebuilding process to occur after a major disaster, but there’s another aspect of disasters that people are overlooking and that’s the immediate crisis. The destruction of infrastructure, the destruction of social order because of the loss of infrastructure, and the difficulty in meeting basic human needs of food, clean water, and shelter. Insurance as a response to this issue is laughable. “Before we send the helicopter to rescue you, we’re going to need you to sign this form.”
Now, to an extent the libertarian can posit legitimate government action here - the principle function of a libertarian government is to maintain order, so it’s perfectly acceptable to send in troops to prevent looting and other human-caused mayhem. But this is an answer to only a tiny sliver of the riddle, and the plain truth is that the aftermath of a major disaster is an perfect illustration of a situation where the ability of a national government to bring massive resources to bear on a problem can alleviate the situation in a way that no local government preparedness or private charity can hope to. The ability to respond to major disasters is a strong argument for a central government that goes beyond the minimalist libertarian state.
*If you can’t afford the premiums on the Gulf Coast in Libertaria, then you shouldn’t be living there. Live somewhere you can afford. Why should you expect people living in safer places to pay for the higher risk of your house being destroyed?
Not sure if you are endorsing or criticizing the use of AT&T as a free market monopoly. Point being, they are an example of the government creating a monopoly.
The SEC took up the issue of MSFT and didn’t break them up. People should be aware that just being a monopoly is NOT against the law (in the US). The law concerns anti-competitive practices. Now, a monopoly can (theoretically) more easily engage in such practices, but a company needn’t be a monopoly to incur sanctions from the government for same.
I’m trying to figure out where you would live in the US that isn’t potentially a disaster area. Hurricanes along the east and gulf coast, Earthquakes in California, floods along the Mississippi and other rivers, tornadoes in the mid-west, blizzards in the north, terrorism in DC and NY: not seeing a lot of free space for the prudent libertarian.
Obviously you should purchase whatever insurance is appropriate to you personally, but I’m at a loss to see why there is an objection to a federal agency to handle disaster relief. It just seems like pure faith-based ideology to me.
Hurricanes don’t cause disasters. Building in flood plains does.
(Again, I repeat that I am not a libertarian. Also, I believe that FEMA should exist.)
Okay, we got the ineffectual bumper sticker logic out of the way now… :rolleyes:
Now you’re confusing LIbertarians with Republicans.
Are you rolling your eyes because you believe that the existence of hurricanes in the US Southeast means we need FEMA? If so, please make the argument.
Many arguments dealing with the “don’t live there” argument have already been presented above. We discussed why some people do have to live there in spite of increased risk,
and also pointed out that since hurricanes are not the only natural disaster that can befall someone, there are few, if any places in this country where one can be truly without risk.
Admittedly, all of that does not fit on a bumper sticker.
Really? I see where the point of not setting up shops in locations that exceeds one’s risk tolerance (including in the calculus the constrained-optimization problem of managing the risk by purchasing insurance).
If you want to live on the Gulf Coast, you need to be aware, as history makes plain, that it has a history of destructive hurricanes. You can (1) take the risk or (2) mitigate the risk by purchasing insurance. If the insurance costs too much, and you don’t want to take the risk, then you have to live somewhere else. Or externalize the cost of insurance through the taxation system, I suppose.
Generally, it is agreed that externalizing costs is undesirable. (Why should people in Atlanta subsidize the risk of having a waterfront home on the Gulf Coast?)
Now, it is possible to make an argument against natural disasters that are profoundly uncertain. But hurricanes on the Gulf Coast is not such a natural disaster. They have happened before and they will happen again, including destruction. Why should a person be able to say: “Yeah, I know I stand a good chance that this house is going to be significantly damaged next summer, but insurance is so expensive. Why don’t you help me pay for it?”
Yes, this argument has been raised above. I don’t see where it’s been met.
Sure, we all face risks that cannot be minimized to zero. That’s why we save money and buy insurance. That there are some necessary expenses one must pay when living in the real world is not, on its own, an argument for their communalization.
We all gotta buy food too. Our system solves this, not by making food provision a function of the government, but by allowing trade to flourish and inviting those needing food to participate in the economy and earn their keep.
I’m not sure AT&T was a government created monopoly, but I thought my post was clear that it was a government maintained one. And one that began falling apart when there were court cases allowing competition. Worrying about antitrust is different from basing much of your company around pleasing government regulators.
I never implied it was against the law. The court case made it quite clear that MSFT did engage in anti-competitive practices, and my example was just one of the negatives coming from this.
OK, either way it didn’t get to where it was by playing in a free market.
Sorry, didn’t mean to imply you did. When I said “people”, it was a redirection away from your post and more to the general public. But I should have made that a separate paragraph to make it clearer.
The victims of Hurricane Andrew in 1992 (I speak from personal experience) who lived miles and miles inland would object to your characterization of their location as “flood plain”. The term is more correctly applied to areas that are seasonally flooded by rivers, including during exceptional (e.g., ‘hundred year’) events. Hurricanes affect all states that have contact with the Atlantic Ocean and/or the Gulf of Mexico, as well as some others inland as well. These are neither in a flood plain, nor are they ‘coastal’. Also, except for the actual coastal areas affected by tidal surge, most of Andrew’s damage was due to Category 5 winds, not flooding. It was a rather dry and swiftly moving storm.
Insurance is fine, except for some of the problems with actually getting paid, as has been mentioned. As for its affordability or not, if the insurers are playing fair, their product represents a shared risk. Insureds with some exposure to hurricanes (meaning everybody within that huge geographic region described above) expect to pay premiums for years of no claims, subsidizing others who actually experience losses during each annual cycle and awaiting their inevitable turn in the barrel. Sadly though, companies cherry pick coverage areas, often pricing local rates right out of the reach of whole demographics of policyholders, apparently hiding their desire to simply exclude coverage behind a ‘market forces’ excuse. They impose special ‘hurricane deductibles’, exclude from coverage things most prone to damage (docks, detached buildings, screen enclosures, etc.). Then, after a hurricane causes them to pay out, they demand huge premium increases to recoup all their payouts immediately with the justification that they need the cushion for the next disaster. This only makes things harder for property owners suffering through rebuilding their homes, businesses, and lives. Do we declare the entire seaboard and all adjacent states to be a “live there at your own risk” territory in Libertopia?
This has nothing whatever to do with the humanitarian aid, law and order, relief for uninsured (commonly uninsurable due to insurers refusals) losses, and rebuilding of infrastructure beyond the means of local governments that is provided by FEMA.
First, the people flooded put in New Orleans did not have waterfront homes, unless you have a very broad definition of waterfront. They were not even particularly close to the ocean.
Second, people do not make construction decisions based on whether a hurricane will hit the Gulf Coast, but on whether the hurricane will hit their part of the Gulf Coast, and be forceful enough to damage their house. I lived in New Orleans for 3 years and a hurricane never went near me. In SW Louisiana only very few people live near the ocean, not because of hurricanes but because of the way the land is. How far from the ocean should people stay?
I live a few miles from the Hayward Fault. It will slip someday. Should I and nearly everyone else in the Bay Area move?
Third, you say a good chance, but the fact is that the chances are very small, and we are very bad at estimating low probability events. I’m not sure what the right rational move would be, but it is unlikely that the average homeowner is going to calculate it correctly. What’s the expected cost of a disaster to the average homeowner? What is the cost of moving? I wouldn’t be surprised if the moving cost were much higher.
Now insurance company execs are going to have to factor in the possibility that these storms are going to be more frequent. If I ran an insurance company I’d organize a bunch of fellow CEOs to march into the offices of the Republican deniers in the House and Senate and tell them that they had better start supporting some countermeasures or we were going to be pouring money into their opponents campaigns.
If I remember my AT&T history correctly, they started by buying up lots of local companies, with the help of the patent, of course. But not all, which was why there were non-Bell telcos even during the monopoly years. (All had natural regional monopolies, of course.) The government then stepped in and granted them regulated monopoly status - locally. But remember AT&T had to give up non-telephone products in the early 1950s - like the Western Electric movie sound technology, and gave free license to all their patents, including the transistor.
Not necessarily, but people living in an earthquake zone should make it their business to see that they have minimized the risk to a level they are prepared to accept. They should not be able to say, “I want to live where I want, and I don’t want to pay insurance for predictable dangers associated with living there. Instead, everybody gets to chip in for my exclusive benefit.”
Here’s a neat idea: What if somebody started a business that analyzed different scenarios and scientifically calculated the risks associated with each. Then they could inform other people, who are bad at estimating low-probability events, what those probabilities truly are. Maybe they could even say: our analysis shows you have at 0.5% of sustaining a $500,000 loss over the next 10 years. You pay us P (an amount we call “a premium”) and if you suffer a loss, we will pay you $500,000.
Dare to dream, of course. Guess we’re just going to have to rely on the government’s power to coerce paying for disaster cleanup (but not the power to forbid people from building in earthquake zones because … SO UNFAIR, I want to live where I want).
This does bring up a good point. Since the people of the Bay Area think a better approach is for the public to bail them out after an earthquake, can the government say, “This region is too disaster-prone, you are not allowed to live there.”
Or is this another case of “We’ll write the shopping list, you’ll pay the bill.”
Jeezusfuckingkeeeristonastick. Look, everyfuckingwhere in the USA is subject to disasters. So, all that FEMA works out to be is a very large pooled insurance.
And trust me, if you get hit regularly by hurricanes and other disasters, just having some potential FEMA aid does not make up for it.
The government helps by enforcing building codes which will reduce the impact of a quake, and of retrofitting government owned structures, like bridges. And there is insurance - but, as I mentioned, too expensive for almost anyone to buy.
I covered this already. There is a big difference between insuring things which occur frequently and randomly, such as fires, auto accidents, illnesses and death. You can collect information on them, and do a good job predicting risks. Earthquakes and hurricanes occur very infrequently, cost a lot when they do occur, and thus cannot be effectively modeled statistically. (You tell me the probability that a hurricane is going to hit a given section of the Florida coast over the next five years. The weather service would love to know.) Therefore insurance companies, to be profitable, need to charge enough to cover worst case events. Which makes it expensive. Which is why there is a government role, especially assuming there is a social benefit to not abandoning large chunks of otherwise good coast land.
My house is old enough to have gone through the last Bay Area quake, so even local quakes do not mean everything gets clobbered. You want to destroy the benefit Silicon Valley has given to the US to avoid subsidizing earthquake damage in the event of a major event? Probably not very wise economically. Maybe it should have been built somewhere else, but too late now. We probably make it up on the lack of snow days, actually.