Too high liability for protection insurance

[FlyingAxe]

Someone asked me a question over the weekend:

What if, under the anarchist system of protection insurance, all insurances find a particular person uninsurable? I.e., he is too high liability for the companies, because, for example, he lives in too dangerous a neighborhood (e.g., a Black person living in a White supremacist neighborhood). And the premium required to pay for his protection is too high for him to afford, while no charity organization in town is willing to pick up the bill.

My answer was: first, in the case when all these things pile up, the person has to move to a safer neighborhood or live with a reality of no protection. That sucks, and his rights to live in peace should not be violated, but such is the reality. Also, what’s the alternative? Forcing all the citizens of the town to pay for his insurance or, worse yet, accept some sort of monopoly of a protection agency that will cover him too?

Second, under the government, the situation may not be any better. When Blacks moved in to many communities in Brooklyn, NY or Roxbury, MA, many Jews had a choice whether to move or continue living there despite the increasing crime rates. Most moved to Boroughpark, NY or Brookline, MA, but some communities stayed. They made a decision to live in a place of greater crime, and there is a lot of crime (lots of assaults, robberies, rapes, etc.). So, a) it was their decision to stay, and they must pay the price in terms of reality of things, b) though they are supposedly protected by state police, it’s almost as if they were not.

I was wondering if anyone has anything to add to my answer. (The other part of the question was: what if he is too rich and too prone to being robbed? My answer was that he has to pay more for protection.)

[Minarchist]

I think the entire insurance scheme that some an-caps favor is unlikely - there are other more practical ways of organizing a stateless legal/security industry IMO. As for your uninsurable man…well, if he’s uninsurable he won’t be insured? What else is there to say…

[FlyingAxe]

Do you have a better business model for private protection/legislature service?

The whole essence of the question is that under anarchy, some citizens will remain unprotected because they are too poor and/or because they live in unfavorable conditions. That is why, the argument goes, a minirchist system is better: it will not leave any citizens unprotected in principle. (That, by the way, also includes children, old people, and the homeless, whose protection scheme under anarchy is also not entirely clear to me.)

[gotlucky]

@FlyingAxe

What if, under the anarchist system of protection insurance, all insurances find a particular person uninsurable? I.e., he is too high liability for the companies, because, for example, he lives in too dangerous a neighborhood (e.g., a Black person living in a White supremacist neighborhood). And the premium required to pay for his protection is too high for him to afford, while no charity organization in town is willing to pick up the bill.

Let me pose a slightly different question:

A man lives in an area prone to dangerous forest fires. Naturally, the insurance is incredibly high, too high for him to afford paying. Think about the questions you were asked but with this scenario instead. Why would it be okay for this man to force other people to pay for his reckless decisions?

The whole essence of the question is that under anarchy, some citizens will remain unprotected because they are too poor and/or because they live in unfavorable conditions. That is why, the argument goes, a minirchist system is better: it will not leave any citizens unprotected in principle. (That, by the way, also includes children, old people, and the homeless, whose protection scheme under anarchy is also not entirely clear to me.)

It will not be able to protect everyone. Even so, do we really want to subsidize risky behavior? Look at the quote in my tag. Is that really what we want? To fill the world with reckless people? At the expense of those who don’t take unnecessary risks?

[Meistro]

The high insurance would inform him of the risks he was taking with his life and encourage him to GTFO of dodge.

[FlyingAxe]

Right. That makes sense to me.

Here’s another question, though. Can we think of any other reasons why a person would be uninsurable? Also, can we be sure that in every situation in which a poor person can’t afford insurance, a charity will take care of it (or the insurance companies will protect him pro bono)? Under minirchism, the only protection agency is forced to protect pro bono (or, rather, the society is forced to pay for this protection). I understand the morality issues involved in this, but some may argue that this is worth it to make sure that the powerless are protected.

Is there an economic way to answer them? Is there an economic reason why in most cases, those who absolutely cannot afford a protection premium will be taken care of by charities?

[gotlucky]

Here’s another question, though. Can we think of any other reasons why a person would be uninsurable? Also, can we be sure that in every situation in which a poor person can’t afford insurance, a charity will take care of it (or the insurance companies will protect him pro bono)? Under minirchism, the only protection agency is forced to protect pro bono (or, rather, the society is forced to pay for this protection). I understand the morality issues involved in this, but some may argue that this is worth it to make sure that the powerless are protected.

We cannot be sure that charity will solve everything. But neither does the government now. See here for some info about Welfare before the Welfare State.

Is there an economic way to answer them? Is there an economic reason why in most cases, those who absolutely cannot afford a protection premium will be taken care of by charities?

Sure. Prices. Only the free market can truly allow for efficiency of charity. The government can never know if what it is doing is most effective.

[Meistro]

Would these really be ‘protection agencies’? I mean it’s not like you get bodyguards. Or would they be ‘retribution and restitution agencies’? You can’t really prevent crimes, without a near omnipotent team. DRO’s or w/e would have an incentive to handle the uncovered because the perp would have to be exiled or w/e in order to protect paying customers. and it would be good advertising for them to say ‘we caught x people in the last month’. plus their detectives would probably be cooling their heels a lot of the time anyway. i think a lot of the charity would be directly from the professionals themselves… doctors / dentists / dros / whatever

[Helloween]

Why do the an-caps believe that “security providing” organizations would offer anything like protection against force? Wouldn’t they as much provide aggressive force as a service to their members? NSDAP is a historical example of a non-governmental “security provider”, with hundereds of thousands of members in uniforms and military style hierarchy, much stronger than the governments army, before it formally became the government itself in 1933. I don’t see how they competed with the protection of peoples negative rights as their selling point.

I’m a minarchist because I demand monopoly on the protection of every individual from the force of others. I do not want to see any competition with that, i.e. that some people “compete” by using force against others. And just as I fight to eliminate all such competition, for sure they fight to eliminate me. There cannot exist a market for force. The concept is an oxymoron. It’s strange and funny that an-caps, who are normally very intelligent, suffer from this simple fallacy.

[Meistro]

Absent the ability to coercively tax or debase the money supply one cannot profitably wage war (either in the retail or wholesale sense). War is a racket, highly unprofitable to the many, highly profitable to the few.

[gotlucky]

@Helloween

Since when was the Nazi party anything other than a political party? I have never heard such a claim before. Could you please provide a source for this claim?

I suggest you read What Law Is and A Praxeological Account of Law by forum member Clayton. Those should give you some idea of how disputes are settled, which should give you an idea why it would be unlikely that Private Defense Agencies would be in the business of initiating force (mainly because it’s so damn expensive!).

[gotlucky]

@Meistro

Absent the ability to coercively tax or debase the money supply one cannot profitably wage war (either in the retail or wholesale sense). War is a racket, highly unprofitable to the many, highly profitable to the few.

QFT.

[Meistro]

I must say I am rather bemused that someone would invoke the memory of the Nazi Party as a justifcation for the existence of government. What’s next - we should eat chicken because we might get samonella?

[Helloween]

NSDAP had its internal courts, it was somewhat of a state in the state. But why do an-cap want to see nazi parties compete against libertarian security providers? Why do you not want monopoly on peoples right to be left alone from the force of others?

[gotlucky]

You have not provided any sources whatsoever for your claims. But many organizations have internal courts. What does that have to do with PDAs? From your response here I can tell you have not read the links I provided.

[FlyingAxe]

Meistro wrote: Would these really be ‘protection agencies’? I mean it’s not like you get bodyguards.

No, they would be insurance companies that would pay you rewards in a case of a crime against you. But, since they’d rather not pay rewards, they would be interested in providing for your safety. For instance, the companies that insure movie productions from failures (e.g., as a result of actors dropping out due to injuries) are interested in ensuring the actors’ safety.

It is also conceivable that there will be bona fide protection agencies, whom you’d pay for protection, not insurance. The competition on the markets will determine which ones will be more effective.

[FlyingAxe]

Helloween wrote: NSDAP is a historical example of a non-governmental “security provider”, with hundereds of thousands of members in uniforms and military style hierarchy, much stronger than the governments army, before it formally became the government itself in 1933. I don’t see how they competed with the protection of peoples negative rights as their selling point.

American Airlines is a contemporary example of non-governmental “air flight provider” whose service sucks worse than that of Aeroflot, back in the good old Soviet times. (I happen to have flown on Aeroflot planes a few times, even though I was born in mid-80s.) Ergo, airlines should be government-controlled?

Even if there is no logical flaw in your using NSDAP as an example, they were one organization. Were there other private organizations that they competed with? Nobody is saying that once you make industry X free, all its members will be saints and prophets. Some will be evil and stupid. But that’s the point of competition — the public will be able to choose. Which brings me to the next part:

I’m a minarchist because I demand monopoly on the protection of every individual from the force of others. I do not want to see any competition with that, i.e. that some people “compete” by using force against others. And just as I fight to eliminate all such competition, for sure they fight to eliminate me. There cannot exist a market for force. The concept is an oxymoron.

Who says that the markets will choose those companies that compete using violence, as opposed to using the same methods that all the other businesses use nowadays? It’s analogous to saying that we want all taxi companies to be government-controlled, because, in its effort to compete with other companies, each taxi company will urge its members to drive extra-extra fast, which will result in a greater number of fatalities. Therefore, the government needs to eliminate the competition between taxi companies and have one government-controlled taxi company. Furthermore, competition between individual taxi drivers should also be illegal… thus, no tipping. (Both these things existed in the Soviet Union.)

But who says that customers won’t recognize that Swift Taxi is a bunch of maniacs, and if you treasure your life, you shouldn’t go with them to the airport? And if you live in Israel, Cyprus, China, Russia, or one of Latin American countries, where getting to the airport asap is treasured more than safety, then such is vox populi…

Equal protection under law sounds nice and is very attractive to me as well. The problem is the same as with all monopolies. With no need to compete, a monopoly suffers from calculation problems, low ability or incentive to innovate or solve existing problems, etc. Just compare any governmental service to a private service. If TSA were a private company that had competitors, would they have survived for long?

[Helloween]

I don’t understand why you call a monopolist libertarian security provider “government”. It could be confused with its opposite, non-libertarian organizations which are also called “government”.

You are free to ignore an airline you don’t like. But you cannot say no to the force which necessarily must be used by a justice system. Thus, per definition, there cannot exist a market for justice systems. The criminal is not a customer, he may not choose his punishment.

Theft and fraud can be highly profitable. For sure, thieves have a demand for protection against those who insist that they should be punished for their crimes. What surprises me is that anarcho capitalists say that it is good that thieves compete against honest people, by establishing their own security providers, i.e. violent organizations, which have their own anti-libertarian laws. Groups of people would create violent organization in order to fight against the jews or the rich, because they would profit from doing so. That’s anarcho capitalistic, but it certainly is not libertarian.

Basic criminal law in many modern societies is quite libertarian already, and the court procedures apply very sound principles. That little part of the government actually works very well and does protect peoples rights. It is the rest of the government, often 100 times bigger, which is wrong, basically because it has made itself immune against the very criminal law which prohibits theft and use of force.

[gotlucky]

@Helloween

I don’t understand why you call a monopolist libertarian security provider “government”. It could be confused with its opposite, non-libertarian organizations which are also called “government”.

From wiktionary on government:

government (countable and uncountable; plural governments)

1. The body with the power to make and/or enforce laws to control a country, land area, people or organization.
2. A group of people who hold a monopoly on the legitimate use of force in a given territory.
3. The state and its administration viewed as the ruling political power.
4. (uncountable) The management or control of a system.
5. The tenure of a chief of state.

Looks to me like FlyingAxe is using the term properly.

@Helloween

You are free to ignore an airline you don’t like. But you cannot say no to the force which necessarily must be used by a justice system. Thus, per definition, there cannot exist a market for justice systems. The criminal is not a customer, he may not choose his punishment.

I will quote myself from this post earlier in the thread:

@gotlucky

I suggest you read What Law Is and A Praxeological Account of Law by forum member Clayton. Those should give you some idea of how disputes are settled, which should give you an idea why it would be unlikely that Private Defense Agencies would be in the business of initiating force (mainly because it’s so damn expensive!).

@Helloween

Theft and fraud can be highly profitable. For sure, thieves have a demand for protection against those who insist that they should be punished for their crimes. What surprises me is that anarcho capitalists say that it is good that thieves compete against honest people, by establishing their own security providers, i.e. violent organizations, which have their own anti-libertarian laws. Groups of people would create violent organization in order to fight against the jews or the rich, because they would profit from doing so. That’s anarcho capitalistic, but it certainly is not libertarian.

Source? I have yet to see any anarcho-capitalist say such a thing.

@Helloween

Basic criminal law in many modern societies is quite libertarian already, and the court procedures apply very sound principles. That little part of the government actually works very well and does protect peoples rights. It is the rest of the government, often 100 times bigger, which is wrong, basically because it has made itself immune against the very criminal law which prohibits theft and use of force.

No. Unsubstantiated assertions.

[Minarchist]

Do you have a better business model for private protection/legislature service?

I just realized that I misread the OP. I thought you were talking about the kind of insurance that covers one’s own act of aggression against someone else, which somebody (Robert Murphy?) has proposed as a scheme for stateless dispute resolution. The idea being that, in order for anyone to want to do business with you, you’d have to have such insurance. It is this scheme which I find unlikely. But I have no problem with what you’ve actually said, now I that I’ve read it properly: you’re just talking about plain old insurance for damages that others cause you, and no doubt that would still exist and play some role in the dispute resolution business.