flabberghaster wrote
Even simpler from that, my understanding of it was: Insurance is a risk pool. Everyone pays a certain amount in to a pot of money, and then if they need money from it they get to take a little bit to pay for what they need. That way everyone pays a little bit, and then usually most people don't need it because most people don't get badly injured or very sick very often, so there's supposed to be enough money when someone does.
but wait, if you think about it, if there's just one person paying in to that pot of money, it's not likely to have very much in it if a disaster happens. If there's two people paying in to it, it should have a bit more in it, so what if you and everyone in your household paid in to one? That's more money in the pool, but what happens if something happens that affects everyone in your house? So what if we get everyone on the block to pay in? That way if any one house on the block is affected, collectively there's enough there to help. But wait what if there's like a flood and the whole block is injured or damaged? So what if we got everyone in the town to pay in? The larger your risk pool and the more people are paying in to it, the more money it has and the more the risk is spread out across the population.
So the logical conclusion is shouldn't everyone pay in to one single risk pool?
No that's socialism.
twovests OP wrote
While I generally agree with this, I think the thinking of "How can we manage risk in one domain the context of capitalism" is small, while socialism answers "How can we most effectively manage humanity's resources."
If you and 20 friends decided to mutually insure, say, your $500 cell-phones, you'd have some realities to contend with: What do we price it? How do we protect against fraud? How do we balance that with avoiding falsely identifying legitimate claims as fraud?
Your small insurance company wouldn't be able to bring worldwide socialism. But it might be able to protect against your phone dropping in a river. That's, of course, assuming your insurance is a flatly-structured non-profit that exists out of that mutual interest in risk management.
... Maybe our economy should be flatly-structured existing out of mutual interest... But... That's also socialism.....
flabberghaster wrote
I mean yeah obviously socialism would be better than capitalism for this; It's just funny that we're legally required to buy insurance because of risk pooling, but we're not allowed to ask why the risk pool can't be too big, or why someone needs to skim off the top to pay for a boat.
twovests OP wrote
why someone needs to skim off the top to pay for a boat.
quoting this because this is a good lens that resonates a ton
Viewing a single comment thread. View all comments