>not even China can escape having a rust belt
“Movies will be free after the revolution!”
Movies take the work of hundreds, sometimes thousands, of people. How will we decide where to allocate our resources for the best results?
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Centralized committee!
Yes! The State Administration of Press, Publication, Radio, Film and Television smiles upon you!
The thing I like about the idea of mandatory safety insurance is that it introduces a new actor with new incentives into the problem.
Let us return to aircraft.
The State has determined that every airline company must carry two million dollars in insurance per passenger per flight, to be paid out in the event that the plane is destroyed and they die. It has set certain rules, for instance that the insurance company must be sufficiently well-capitalized and it can’t just waive paying out because the company did something stupid.
Executive Todd has plans to reduce the maintenance on Tumblr Airlines aircraft. He will be at the company for five years. There is a 90% chance that if he does this, there will be no crash, and he gets a million dollar bonus and leaves. There is a 10% chance that a plane will crash before he leaves and he’ll only have a personal fortune of ten million dollars and a mansion on Hawaii left, which he can retire to.
So Todd orders that the maintenance should be cut.
However, Blue Hellsite Insurance, Inc., Tumblr Airlines’ insurance company, depends for its funding entirely on carefully calculating risk and then charging a bit more than that, on an ongoing basis. To do so, as part of their contract (and thanks to provisions passed in law by the State), they can set insurance agents out to inspect processes, planes, and so on.
BHI’s reaction to a plan that results in a 10% chance of a plane crash is “you WHAT?!” Whereas the risk isn’t necessarily quite so visible or quantified to all others in the organization, or else they may have motivations to ignore it for the same reason as Executive Todd.
So BHI come back and say that either Todd’s plan isn’t going to fly, or the insurance rates are going to go up.
So what was an invisible cost that could have gotten kicked down the road to a successor is transmuted into a stubborn operating cost right now.
Tumblr Airlines makes less profit (upsetting shareholders), raises ticket prices to compensate (thus pricing the risk into the market and making them less competitive), or else doesn’t go through with the plan.
The State could even require that the portion of the cost which is the risk premium is printed on the ticket, informing consumers of roughly how dangerous a given flight is. This is actually an enormous information gain by consumers, who as non-experts find it very difficult to not only judge airline safety, but obtain inside information about aircraft maintenance procedures.
@e8u What about Todd the Insurance Executive?
An astute observation. I actually left off that part in order to conserve length.
This entire scenario still depends on state intervention, which is why AnCaps and most Right Libertarians will not be in favor of it, even though it loosens the details of regulation to the markets and allows riskier behavior (but just prices it more).
Here’s what the State needs to do to cause this to happen:
- Require mandatory insurance on certain classes of products.
- Determine the rules governing the insurance so that the insurance will actually pay out.
- For instance, wrongdoing on the part of the airline does not get the insurance company out of paying the insurance. (It could, however, allow them to pursue damages against the airline without breaking these necessary conditions.)
- Ensure the insurance companies are sufficiently well-capitalized, so that it does not become common practice to make insurance shell companies which immediately fold rather than pay out. Criminal liability may need to be introduced here.
- Create a court system in which it is reasonably feasible for regular people to actually collect the insurance payout. (It isn’t necessary that they collect the full payout, just enough that they’re willing to initiate and complete the necessary legal procedures. Some money could go into an ethical offset fund instead.)
I would say that there have to actually be enough competing insurance companies, but the market will take care of that, since this should be a reasonably profitable field. And the insurance company itself is a longer-term investment vehicle than the airline, since its practice of distributing risk changes when investors will get paid.
So, the question then is, is a system of competing insurance companies with competing insurance regulations more or less efficient and effective than a system of top-down, politically-driven regulation where government decides the details of regulations?
And that question is an empirical one. In systems as complex as economies, we can’t just assume the efficient market hypothesis. After all, this plan is in many ways in response to the existing market distortions of limited liability corporations and destruction of value being easier than creation of value.
Do it right, however, and you can also chip away at information asymmetry - the risk pricing by a moderately profitable insurance company that actually has to pay out if the product is dangerous or defective, as a share of the product’s price, communicates a lot of information that the customer previously often didn’t have.
The hard part about assessing the counterfactuals to Chinese repression is that a minor flare up of civil strife can easily kill fifty million people; balancing things like that against the insidious ongoing costs of poor resource allocation is hard.
Yeeeeeah kinda hoping there’s no new Chinese Civil War that ends up killing fifty million dudes and destroying one tenth of the global GDP, sending the economy of Earth into three decade long depression.
The thing I like about the idea of mandatory safety insurance is that it introduces a new actor with new incentives into the problem.
Let us return to aircraft.
The State has determined that every airline company must carry two million dollars in insurance per passenger per flight, to be paid out in the event that the plane is destroyed and they die. It has set certain rules, for instance that the insurance company must be sufficiently well-capitalized and it can’t just waive paying out because the company did something stupid.
Executive Todd has plans to reduce the maintenance on Tumblr Airlines aircraft. He will be at the company for five years. There is a 90% chance that if he does this, there will be no crash, and he gets a million dollar bonus and leaves. There is a 10% chance that a plane will crash before he leaves and he’ll only have a personal fortune of ten million dollars and a mansion on Hawaii left, which he can retire to.
So Todd orders that the maintenance should be cut.
However, Blue Hellsite Insurance, Inc., Tumblr Airlines’ insurance company, depends for its funding entirely on carefully calculating risk and then charging a bit more than that, on an ongoing basis. To do so, as part of their contract (and thanks to provisions passed in law by the State), they can set insurance agents out to inspect processes, planes, and so on.
BHI’s reaction to a plan that results in a 10% chance of a plane crash is “you WHAT?!” Whereas the risk isn’t necessarily quite so visible or quantified to all others in the organization, or else they may have motivations to ignore it for the same reason as Executive Todd.
So BHI come back and say that either Todd’s plan isn’t going to fly, or the insurance rates are going to go up.
So what was an invisible cost that could have gotten kicked down the road to a successor is transmuted into a stubborn operating cost right now.
Tumblr Airlines makes less profit (upsetting shareholders), raises ticket prices to compensate (thus pricing the risk into the market and making them less competitive), or else doesn’t go through with the plan.
The State could even require that the portion of the cost which is the risk premium is printed on the ticket, informing consumers of roughly how dangerous a given flight is. This is actually an enormous information gain by consumers, who as non-experts find it very difficult to not only judge airline safety, but obtain inside information about aircraft maintenance procedures.
some kinds of common knowledge are a massively valuable public good, and a centralised authority is typically the most efficient way of providing it.
It’s related to that idea that we all have time and love to comparison shop between everything. It’s basically saying “you’re going to get screwed by that crucial detail you didn’t know was important beforehand.“
and that you have the time and resources and are still alive to pursue damages through the court system against those with deep pockets who have screwed you over.
I’d be interested to learn more about different models for decentralized accreditation services – consumer safety, etc. You see a little of this with professional guilds and etc I guess? But I’m not sure how much money you’d need to throw at meta accreditation to get good trust levels, or how much duplication of work you get in a free market of accreditation services, etc. It really does seem like a central authority is a good way to go…?
I think the tricky part is enforcement and incentives. Structural engineers were complaining about the cladding long before buildings started burning down, and fire fighters were shocked when they tried to put out the fires, but in order for that to translate into it not being sold, purchased, and installed on buildings there needs to be someone who says “no” when the architect says “cheap!”
The thing that gets me with the Libertarianism thing and safety regs is that, precisely because of all the losses of information in the process and limited information resources available to buyers, I feel the regulation process really does have to bottom out somewhere with “men with guns come and say no, you can’t do that.”
And I know they hate that, but their plans often effectively give out huge subsidies in the form of unaccounted-for externalities, information asymmetry, and so on, to capital.
“Make them all buy insurance” requires a strong state to come through and force the issue and also make sure that that insurance will pay out. But if you don’t do at least that, then you allow people to engage in arbitrage against peoples’ lives (more than they do now). One could argue, even, about smoothing out lifetime earnings with loans to help pay for safety, but financial markets are waaaaaay too frictional for that and the future is too unknown.
So I don’t feel too bad about the building safety codes.
And some of the Asian countries prove you can have the building safety codes and even earthquake standards without the part that causes housing prices to quintuple.
And then he’s shocked and horrified when people accuse him of being a reacto
The head-slapping part of this is that it assumes that the difficult part about running a government is all the gosh-darned records processing, and not the bit about maintaining the consent of the governed.
States don’t fail because they can’t process paperwork efficiently enough, they fail because the people decide that an alternative offering is more compelling.
(or more uncharitably: this is the most ignorant post X has ever made, and will remain so until X posts again).
Oh, Eliezer, honey kun,
Culture is a wave, government is a wave, nations are a wave, and they’re all a web.
Libertarianism is not the default policy position into which society falls if it isn’t interrupted. Democracy is not the default policy position into which society falls if it isn’t interrupted.
They are both high-level ideological constructs that require constant reinforcement and social, cultural, and material support to maintain.
Socialist countries have a really bad track record of human rights abuses and a strange set of failings that are either specific to them or unusually prominent compared to the general zeitgeist, so you can draw decent conclusions like “don’t break systems a lot of people depend on, just cuz” and “freedom of press is actually really important” and “science shouldn’t be controlled by the state’s ideology ever”
instead people realize that Marx was wrong about something and the Soviet Union killed people and then go become tankies but for capitalism
I guess the real question is, “is it possible to avoid these known horrible bugs in Communism/socialism, or is it time to go look for something else and try to make that work?”
The vast majority of Communists I’ve encountered in person or online don’t seem to be trying to avoid the known problems. They either ignore/don’t know/pretend to not know about the historical issues, or they consider eg. genocide a feature rather than a bug.
It’s certainly possible to try avoiding these bugs, or dramatically improve the current social order, or to try and build some other system entirely, but then/instead you get people like @redbloodedamerica openly celebrating fucked up shit because capitalism is good and cool and therefore bonded labor is good and cool also, hence, tankies but for capitalism.
Anarchists say they’re against it, but I’ve never seen them lay out how they would prevent it from happening except to claim they wouldn’t have a state - but Catalonia had death squads, perhaps not Stalin-tier death squads, but apparently it did have them. I think the way to socialism now, the way to actually convince people, is to stop telling people to embrace a Communist revolution and instead buy up a huge tract of land in a country with a weak central government and demonstrate a real, working, unoppressive, prosperous model.
I don’t actually think they have that model, so I don’t see myself supporting Communism over Boring Welfare Capitalism any time soon.
All the NTSB recommendations are technically trade offs that have costs; consider American Airlines Flight 191 which crashed on take off killing everyone on board and two people on the ground after an engine separated from the wing due to improper maintenance procedures had cracked the pylon.
While 273 people may have died, the improper shortcuts taken during engine maintenance saved 200 man hours per aircraft! Why, the meddling FAA banning this procedure may have done more harm than the original crash!
Nah it’s alright fam,
If we assume that the GDP per capita is $55,000, and that the typical passenger has 35 working years remaining, we can just have the state bill the company and its shareholders $525,525,000 and put them into debt bondage and sell off their assets if they are unwilling or unable to pay.
Now you may object to the state rolling around and charging huge sums of money as payment for accidental deaths, but I have it on good authority that everyone signed over their trusteeship to the state rather than get kicked into the ocean, entirely of their own free will. Quite remarkable, really. So I assure that this plan is entirely Capitalist.
Single-Payer Health Care Thought Experiment
Today I saw this
http://khn.org/news/tab-for-single-payer-proposal-in-california-could-run-400-billion/
I’m working on a higher quality blog post for the main site on this, but for right now I’d like to point out a novel idea. Consider this quote from the article
A single-payer system likely “would be more efficient in delivering health care,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. (California Healthline is produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.)
But the proposal expands coverage to all and eliminates premiums, copayments and deductibles for enrollees, and that would cost more money, Levitt said. “You can bet that opponents will highlight the 15 percent tax, even though there are also big premium savings for employers and individuals,” he added.
We always hear this. “Single payer health care will save so much money because of all the efficiencies that you can get from central management”
Is this true? Well it just so happens we have a real-world example: HMOs. For example, Kaiser Permanente, the entity referenced in the above quote.
(an aside for non-US readers: in the US, health care is generally privately provisioned, and fee-for-service. That is, if you want a doctor to do a thing, you give them money, and they do the thing. Most people have some kind of health insurance, and this tends to take one of two forms: HMO or PPO.
PPOs are standard, and flexible. In a PPO, the insurance company develops a “network of providers”, a set of doctors who have agreed to work with the insurance company. You are strongly encouraged to go see one of these doctors. If you choose to see a different doctor, “out of network”, your insurance will cover a smaller fraction of the cost. This remains fee-for-service, it’s just that insurance pays.
HMOs, on the other hand, take a very centralized approach. They are one large company responsible for catering to your health needs. In an HMO, you can only go to doctors at facilities run by the HMO. If you need a specialist, you must get a referral to a specialist who works for the HMO. Since everything is integrated, it’s easier for multiple doctors to coordinate and work together. However, your choice of doctor is severely limited. With a PPO, if you don’t like your doctor you can get a new one. Under HMOs, your choices are limited)
The description of HMOs sound a lot like single-payer health care writ small. You give lots of money upfront to an organization like Kaiser (you pay lots of money in taxes to the government to support health care), and in return you go to Kaiser-affiliated facilities (government-funded hospitals) where all of your care is provided to you by one entity. The centralization facilitates efficiencies as bureaucracies are cut, and your needs are taken care of as best they can.
So, approaching the problem from a different point of view: Single-payer government-provided health care is more-or-less the same as if everybody signed up for Kaiser.
This gave me a deliciously trollish idea, an argument to bring out whenever relevant. Let’s say you’re arguing with some commies who insist that single-payer is the best/only solution. Pose to them this hypothetical:
“Would you be in support of a law that gave $HEALTH_INSURANCE_COMPANY a legally-mandated monopoly in health care, at the cost of forcing them to become a non-profit organization?”
Imagine one way to implement single-payer government-provided universal health care:
1) Give Kaiser a legal monopoly on health insurance
2) Legally require Kaiser to be a non-profit.¹
I suspect that most of your commie friends would be incredibly opposed to this idea, and yet it is fundamentally the same thing as a state-run single-payer health, with two caveats
a) You aren’t legally required to opt-in. You can still pay expenses out-of-pocket instead.
b) Instead of the health system being run by whoever is friendliest with our elected representatives, it’s run by people with a proven track record of success in that field.
I suspect this argument generalizes, too. You could apply it to any realm of government service provision that you can think of. It might help a handful of the smarter, more intellectually ethical folks see things from a different perspective.
1. Kaiser IS ALREADY A NON-PROFIT. So much for “greedy health insurance corporations ruining everything in their greedy corrupt quest for more profit”
The way single payer works is that it negotiates prices with providers which it can do because it’s the only buyer. It’s the same way Singapore does it, it’s just there they set legally prices but don’t pay them. Maybe you should look at how this shit works instead of just imagining how it works.
I still laughed. TBH I don’t understand why the Repubs don’t spring for healthcare vouchers. Well, okay, I understand why but …
Seriously though, the amount of inherent ways I capitalism is garbage.
So, when bananas are regulated to the point where bananas are discarded for failing to meet arbitrary requirements, you blame capitalism. Brilliant.
I doubt it’s regulation. Probably people just don’t want to buy misshapen bananas when there are prettier ones right next to them.
I’d like to see OP’s proposed solution here. Tell grown adults, “You’re going to eat this ugly banana whether you like it or not!” and send government thugs to beat them up if they disobey?
I mean a simple solution is have companies buy them for a reduced price, have them sell for a reduced price Then people who are poorer can eat more fruits and veggies and others who dont care how they look can get a deal 👍👍 and companies can make some profit too
That’s exactly what you’d expect to happen. For some reason, it didn’t. I was speculating that there might be some weird psychological effect making it impossible to sell ugly bananas in the same room as pretty bananas for a profitable price.
But fortunately, @americansylveon came back with a source. Apparently EU regulations require that bananas be “free of malformation or abnormal curvature”, but then specifies that class 1 or class 2 bananas are allowed to have “slight defects of shape”, or “defects of shape”. Presumably that’s interpreted as a relaxation of the minimum standards? IDK how much of a defect is allowed.
Then they go so far as to regulate the number of bananas in a bunch. To which I can only say, “I hate the fuck government.”
@oktavia-von-gwwcendorff this is your sort of thing I think.
Keep in mind that in this case the cost of transportation may not make it economical to even ship the malformed bananas if flooding the supermarket results in a really high price reduction.
What I’m perplexed about is why no one builds a processing plant close to the growers and uses it to process the excess bananas into various banana products that don’t care about presentation. Banana flavoring, banana puree, etc. As I understand it this is what happens to second-grade fruit in most industries. Why not here?
Wasn’t there a post about how processed goods are taxed differently than raw goods, keeping e.g. Africa out of certain markets?
Speaking of governments and Africa and development, this presents an opportunity for a government or NGO to buy the misshappen bananas and distribute them to poor people in other countries who won’t give a damn about the shape, bringing money into the source nation’s economy. EA might want to look at this.