No, what you are saying is NOT related to what I am advocating. Even worse, I am having serious trouble trying to reconstruct a logical chain whereby you could have gotten there based on what I was trying to say. I know I write badly, but still...
Your departure point seems to be that government-mandated insurance is bad, but even there I am not convinced my examples were inappropriate. Rather I feel as though you are flying off in a completely different direction.
So let me try to take it from the top again. First of all, my basic premise is simply that insurance is a “normal mechanism” for responding to risk.
Now there are many kinds of risks and many kinds of insurance. Most insurance policies are based on predicting the future. I think you want to limit the examples to purely voluntary insurance, which doesn’t bother me, but the key to selling voluntary insurance is to convince the customer that the probability of the adverse event is high enough that some money should be diverted from present expenses to protect against that event. As a company would see things, that basically means deciding whether to spend less on maintaining and expanding the current business operations so as to protect future business operations. (And yes, I will even acknowledge that the government will naturally be pressured into regulating the insurance industry for several reasons. The most important one is that insurance companies have perverse incentives to exaggerate or even lie about the risks in order to sell more insurance.)
However Covid-19 is an example of an unexpected and essentially non-insurable disaster. Even worse, it affects almost every company more or less adversely. Such disasters create overwhelming pressures for governments to respond to protect the lives and welfare of their citizens. My suggestion is not that we normalize disasters, but we try to normalize the responses with TIDI (Time-Inverted Disaster Insurance) to reflect cases where the government has been forced to act as insurer of the last resort.
The situation of TIDI is fundamentally different from regular insurance, but in some ways advantageous. Looking at the damages after the fact, we can actually get a clear handle on how much economic damage has taken place. From that perspective, the insurance companies are using TIDI to help total up the damages and apportion the economic responses according to the actual damages suffered.
The main “trick” in TIDI is that the premiums would be paid after the fact, after we’ve seen how bad the disaster was. And from that perspective, the main problem is making sure the government as customer pays the premiums within a reasonable time frame. That may be the fatal flaw, however. Governments are notoriously bad about sticking to their payment schedules.
Maybe you think I’m trying to defend the notion of “too big to fail”? If so, then no. Rather I actually think that one of the most legitimate responsibilities of government is to prevent corporations from becoming too big. Every company should be free to go bankrupt at any time, but without taking the rest of the economy down with it. But yes, the entire economic system as a whole does need to be protected from collapse, and that’s another legitimate responsibility of government.
Returning to the specific case of Covid-19, I think mixing up the costs of the damages with the costs of the medical responses has made the situation much worse. An especially noteworthy bad example in Japan was a series of GoTo campaigns that were supposed to help businesses, but which actually wound up helping the coronavirus more.
No, what you are saying is NOT related to what I am advocating. Even worse, I am having serious trouble trying to reconstruct a logical chain whereby you could have gotten there based on what I was trying to say. I know I write badly, but still...
Your departure point seems to be that government-mandated insurance is bad, but even there I am not convinced my examples were inappropriate. Rather I feel as though you are flying off in a completely different direction.
So let me try to take it from the top again. First of all, my basic premise is simply that insurance is a “normal mechanism” for responding to risk.
Now there are many kinds of risks and many kinds of insurance. Most insurance policies are based on predicting the future. I think you want to limit the examples to purely voluntary insurance, which doesn’t bother me, but the key to selling voluntary insurance is to convince the customer that the probability of the adverse event is high enough that some money should be diverted from present expenses to protect against that event. As a company would see things, that basically means deciding whether to spend less on maintaining and expanding the current business operations so as to protect future business operations. (And yes, I will even acknowledge that the government will naturally be pressured into regulating the insurance industry for several reasons. The most important one is that insurance companies have perverse incentives to exaggerate or even lie about the risks in order to sell more insurance.)
However Covid-19 is an example of an unexpected and essentially non-insurable disaster. Even worse, it affects almost every company more or less adversely. Such disasters create overwhelming pressures for governments to respond to protect the lives and welfare of their citizens. My suggestion is not that we normalize disasters, but we try to normalize the responses with TIDI (Time-Inverted Disaster Insurance) to reflect cases where the government has been forced to act as insurer of the last resort.
The situation of TIDI is fundamentally different from regular insurance, but in some ways advantageous. Looking at the damages after the fact, we can actually get a clear handle on how much economic damage has taken place. From that perspective, the insurance companies are using TIDI to help total up the damages and apportion the economic responses according to the actual damages suffered.
The main “trick” in TIDI is that the premiums would be paid after the fact, after we’ve seen how bad the disaster was. And from that perspective, the main problem is making sure the government as customer pays the premiums within a reasonable time frame. That may be the fatal flaw, however. Governments are notoriously bad about sticking to their payment schedules.
Maybe you think I’m trying to defend the notion of “too big to fail”? If so, then no. Rather I actually think that one of the most legitimate responsibilities of government is to prevent corporations from becoming too big. Every company should be free to go bankrupt at any time, but without taking the rest of the economy down with it. But yes, the entire economic system as a whole does need to be protected from collapse, and that’s another legitimate responsibility of government.
Returning to the specific case of Covid-19, I think mixing up the costs of the damages with the costs of the medical responses has made the situation much worse. An especially noteworthy bad example in Japan was a series of GoTo campaigns that were supposed to help businesses, but which actually wound up helping the coronavirus more.