[From Mike Acree (980520.1431 PDT)]
Bruce Gregory (9980515.1618)--
> If insurance companies were responsible for
>putting out fires, I suspect they would become local monopolies.
I wouldn't have thought you had anything against local monopolies,
since
fire departments (along with the post office, the police, etc.) are
local monopolies, by law.
You seem to be missing the point. If I don't purchase fire insurance
from
the company that owns the local fire house, why would they want to put
out a
fire at my house? What is in it for them? Why would they be any more
motivated than the present folks? Or do you envision competing fire
houses
in every town, each one owned by a different insurance company and
competing
for my business? Sounds somewhat unlikely to me.
Perhaps I am missing the point: I would not have assumed you meant
_that_. Might as well ask, I would think, if I take a package to the
Post Office, why would FedEx want to deliver it? I don't call Allstate
if my policy is with State Farm. (There is a nonnegligible reason in
the case of fire departments: it may be worth it to them to put out a
fire in a house they didn't insure, just to minimize the threat to
property they did insure. One might expect a kind of mutual
back-scratching to develop quickly in any areas that did have more than
one fire company. But I wasn't leaning on this point in any case.) San
Francisco supports two restaurant delivery services rather well, though
most cities probably couldn't support more than one; so the existence of
two fire companies doesn't seem a priori off the wall. Many communities
are small enough to support only one of a given kind of business, but
the potential for competition is generally enough to keep it responsive
to consumers. But there is certainly no need for every community to be
represented, as you imply, by a different insurance company. It also
might well not happen that insurance companies provided their own fire
services; they might prefer contractual arrangements with fire service
providers; and they would tend to select companies which minimized their
cost--i.e., the damage done to the buildings. McDonald's doesn't raise
its own beef, but vertical consolidation offers advantages in some
businesses. I didn't presume to predict in this case exactly the
structure that would evolve in a free market.
I know of no insurance companies clamoring to get
into the fire fighting business. It seems like a sure money loser.
Nevertheless, I think this a wonderful example of the absurd situations
created by a mindless application to the real world of the thinking
favored
by the Chicago School of Economics.
The insurance companies have it easier so long as fire services are by
law a government monopoly. They're guaranteed a level playing field in
that respect. The only losers are the customers, who pay more than they
would for private fire protection. If there was any question, I think
the experience of Scottsdale and other cities which have privatized fire
services has been better services at lower cost. The obstacles to
privatization are rather clearly not economic: if there were really no
money to be made in fire services, the government wouldn't need to
prohibit competition by law.
Who would have thought anyone would have such an investment in
insurance
companies _not_ offering fire protection! Embarrassing to be so
clueless sometimes about the nerve I've touched.
Clueless, yes. Nerve, no.
Maybe, but I'm not convinced. From a flurry of questions and challenges
that don't appear well thought out I generally infer defensiveness.
(That means I see a fair amount on the Net, as well as in real life; in
the latter domain it is unfortunately not limited to those who disagree
with me.) The addition of ad hominems ("no one but Ayn Rand thinks that
way") and insults ("mindless," "absurd") does little to weaken the
impression of an investment in separation of fire and insurance
services--I would still say, "of all things!"--which outstrips the
quality of the objections raised (so far). I've already indicated my
own uncertainty about what arrangements might ultimately sort out on
their own; what I get from you is not so much reasons why any of those
alternatives wouldn't work as the sense that you wouldn't want them to
work. I think conservatism needs a better base--though that may be
impossible in principle, given that its defining appeal is simply to
tradition.
Mike