Archives for category: Basic Principles

IMG_3535

One does not normally insure against chosen and regularly incurred costs, like fill-ups and oil changes in cars . . . or haircuts, waxes, and contraceptive devices on people. When insurance companies’ policies do cover regular, pre-injury/-illness purchases, they are not economically engaging in an insurance contract. They are offering a payment system, a kind of premium savings plan.

Why would they do that? Sometimes to attract customer with a convenience — an expensive convenience they expect to make money off of. But also for another reason: because they are compelled by law.

The corruption of the insurance industry by government policy has been ongoing for decades.

Especially in medical markets.

How? At a fundamental level.

Economist Friedrich Freiherr von Wieser (Social Economics, 1928, p. 149) noted that there are three kinds of “binding compensatory contracts”: exchange contracts, insurance contracts, and social contracts. Wieser noted that insurance contracts sometimes look like social contracts, sometimes like exchanges. But the resemblance to explicit social contracts is that they mimic the widespread effects usually aimed at by social contractors, but through private exchanges. An ingenious invention. Insurance provides a public good by private means. The core nature of insurance contracts Wieser explains thusly:

Its purpose is to distribute the effects of loss over many private economies. It has attained great importance in developed economies. But it has to do only with the security of the economic body, not with its creation.

Wieser did not examine this form of contract in detail. He also, in developing economic theory, put aside discussion of the social contract:

One should expect that it be adopted to the integration of the social economy. Nevertheless in its effect it has been overshadowed by the exchange contract, which although as a rule is made only between two parties, has manifested itself the coördinating instrument that binds individual economies into the national economy.

This manifestation of unexpected and unintended coördination puzzles many people. Which is perhaps one reason why, as Wieser’s student F. A. Hayek suggested, we witness much social distress regarding — and political pressure to undermine and control — market order. The coördination provided by markets is “spontaneous,” as Hayek metaphorically put it (“inadvertent” is more exact), and its mechanisms and processes mysterious, in no small part because of its inadvertence. Folks balk at accepting an unplanned order.

This is especially true of insurance contracts, which often seem “unfair.” For example, I was a very good and safe driver as a young man, ages 16–28. Never an accident. Never even a complaint. But an appreciable number of my peers drove recklessly (but not “wrecklessly”!), skewing the actuarial tables that make insurance bets doable, so my insurance rates were high. Young women, on the other hand, had far lower rates — despite my personal knowledge of many dangerous young female drivers.

But I understood the unfairness, and rallied through. Meanwhile, during that same period, feminists pushed through in my state regulations that forced insurers and their customers to pay equal rates, disregarding the sexes. Young women tend to have more medical issues, especially regarding pregnancy — which, one should note, are usually the result of free choices, not wholly accidental events — and thus are greater risks for insurance companies, requiring higher rates.

But . . . unfair!

For some reason, feminists did not push for a forced equalization of auto insurance rates.

So, consider what that regulation did: it increased the pool of insured people, bracketing out of consideration reliable data upon which insurance businesses calculated profitable rates. So, it decreased the information content of insurance rates — prices, really — and made the business decisions less efficient, and less capable of adding efficiency over the course of time.

And by equalizing men’s and women’s rates, it swept into the mix a mostly non-insurable expense: pregnancy and birth. One insures for things out of one’s control. And, except in case of rape, one can choose not to engage in sexual intercourse, the activity that causes pregnancy. So, under modern regulatory requirements, more and more people are swept into the pool with more social contract problems associated with such pools: that is, “the tragedy of the commons.” When some gain at the expense of others, they tend to opt to do just that. A common resource subject to individual exploitation tends to degrade, as has been understood since the time of Aristotle, but clarified by William F. Lloyd, Garret Hardin, and Richard Stroup. In the case here made as an example, what would normally be unforeseeable and insured-for is now intermingled with eventualities placed under a woman’s or couple’s control. Thus they are able to game the system and free ride off of it. Basically, shifting their avodiable medical expenses onto other people who do not choose to produce babies.

This jiggering with the insurance industry basics changes its very nature. But not without costs.

And it is certainly not limited to just the one example. Tax policy, regulation and now subsidy have been contriving to turn medical insurance contracts wholly into social contracts. And politicians and activists have succeeded in convincing many simpletons and distracted citizens into thinking insurance should cover events that no honest business would cover — events such as already existing disabilities, or expenses that are wholly voluntary.

Remember: One cannot “insure” against the present; one cannot “insure” against controlled outcomes. It is only future uncontrolled events with assignable probabilities that make sense to insure. Only these eventualities that can make for stable, long-term and sustainable and efficiently provided buffering of the effects of loss or injury.

But, to repeat, tax law, regulations and now subsidy — by state and federal governments — have so twisted the industry that it now is a badly run redistribution scheme, something one would normally expect from governments pretending to enforce “social contracts.”

Wieser’s “coördinating instrument” of the exchange system, and the pricing (in this case) of insurance rates, has been scuttled by people more comfortable with the seemingly “rational” — but much more ungainly and discoördinative — government policy. Also, the instrumentality of force quickens the vindictive soul, spurring folks to demand a great cause — fairness, justice. Which allows, naturally enough, for the heady mix of self-righteousness and outright oppression (for what else is forcing others?) as well as the precious social signaling that moral crusades engender.

But because information is thereby decreased, and the tragedy of the commons introduced into the industry, society is corrupted, hobbled, injured.

The very opposite result, you might think, of medical insurance policy.

And witless Americans carry on with the fiction and lies. As if they were being smart and wise. Anyone who repeats the current wisdom about medical “insurance” — such as demanding “coverage” for a wholly voluntary aid, like contraception — is a dupe or a liar.

twv

IMG_3239

Friedrich von Wieser portrayed at top, in sketch; the current blogger immediately above.

EvergreenProtest

Power is the ability to get things done. If, in the course of fighting power you win, or your side wins, you then achieve power. If your objection to power is pure and simple, if you see all power/non-power relationships as “oppression,” then it follows that any attack upon power becomes oppressive at success. When you win, you have achieved something. You got something done. You have exerted power.

And, in politics, one achievement tends to lead to more achievement. In government, the point of “being in power” is to exert power. So the success at fighting oppression (so conceived) immediately transforms into oppression itself.

This is so obvious that one wonders how it never seems to cross the minds of the current batch of “social justice” activists now causing havoc on campuses and in the streets.

Either they would have to accept their revolutionary status as masters, as “the powerful,” whenever they get their way, or they would have to revise their theories of power, freedom, and oppression.

I recommend to them careful transactional analysis, not crude, class analysis with concepts derived from Karl Marx by way of the Frankfurt School and the Sorbonne.

twv

The origin of a thing or practice does not always and obviously provide strong clues to the reason for its growth and then for its survival. Theories of ethics, for example, are littered with monocausal accounts of “the foundations of ethics” that fail to separate the various distinct causes and levels of operation.

Take that very institution (or human endeavor, or practice) we call “ethics” or “morality” — consisting of rules, ideals, norms, and reasonings and rationales for action. Its origin may be seen in the simple need to influence human behavior, of self and others. Think of the body of ethical precepts as a toolkit. But the reasons why one ethical system flourishes and others wilt may have surprisingly little to do with the aim of the moralizers who cook up, repeat, and transmit their normative notions. And those reasons may not be the same as their explicit justification.

These distinctions can often only be seen as we pass through time, as various stages of the social life of the memes become evident. (Maybe we should speak of the ordinal, not cardinal, virtues!)

IMG_3224Similarly, the first people to adopt a belief, habit or good are very different in nature from later adopters. The distinction between early-, mid- and late-term adopters is of huge importance for understanding fashion and other consumer behavior, as well as ideologies. Businesses that do not figure in these different consumer bases will suffer. Critics who do not understand this will find themselves irrelevant. Voters find themselves . . . stuck with bad candidates and poor policies.

On a macro level, this trend in consumption allows the masses to benefit from investments that they themselves would never make, nor would ever, alone, entice from capitalists. Only the strong preferences and spending of early adopters allow the success of many goods that later circulate to everybody. In effect, late adopters and skinflints are “subsidized” by the early adopters and the prodigal.

This element of capitalist development is integral to fulfilling one of its defining functions, mass production for the masses. Attempts to “rationalize” the economy in a social engineering way often assume an egalitarian customer base, and thus start with the lower rungs of development kicked away from the ladder of progress.

“Price discrimination,” particularly what amounts to  intertemporal price discrimination (what is the exact technical term? I wonder — separate time-frame equilibria?), is key to the functioning of markets.

Many class resentments and tensions come from a lack of acceptance about this diversity in human judgment and consumer function.

And much confusion results from mixing up the nature of the origins, the persistence, and the expressed and unexpressed rationales for any human practice or institution.

twv

Illustration courtesy James Littleton Gill, My Monster Problem — and Ours

The problems here addressed are so huge that one simple blog post, indicating them as if with a wave of the hand, hardly does them justice. Clearer statements can be made later, or elsewhere — and no doubt have been, by others.


Isn’t it by a legal fiction that the accused are, in this country, said to be “innocent until proven guilty”? The fiction is important.

Similarly, it is by dialogic fiction that you are instructed to regard 

  • your interlocutor as honest, 
  • open to new information as well as unfamiliar logic, and as 
  • earnest in a desire to resolve cognitive dissonances.

Further, in political argumentation, we assume that everybody wants everyone else to be healthy, wealthy and wise. We assume good will.

All these assumptions about arguers have been shown to be incorrect. 

Our biases have been exhaustively examined by psychologists, and our intellectual limitations demonstrated as surprisingly vast. Similarly, the glee with which people wish to harm some others puts the lie to any universal notion of good will. And, to add a twist to the knife, some of us old arguers have come to expect the most ugliness from the loudest professors of benevolence; we know that ill will is ever-present in politics and government, at least.

And yet the dialogic fiction of benevolence retains its importance. It provides the groundwork for change, and for the reciprocity that is necessary for a free society.

And it is not just “those others” who are nudged to better behavior. Even when only one person in a debate behaves according to the fiction of general good will, that person is improved. 

twv

A late, lamented neighbor of mine once defined “just war” as “mere war.” That was a quip.

A rather cynical one.

When I read just war theory, as a teenager, the most important point, I determined (in this rarefied and rarely consulted domain of thought), was this:

In contemplating intervention into a conflict with which one’s own country is not directly involved, it is not enough merely to determine which side is more nearly in the right. One must also have good reason to believe that, by intervening, one’s State could win and establish a stable and  just peace.

Even if you know who is in the wrong, if there is no likely way of “winning,” or if one’s intervention is not likely efficacious to establish a peace, entering into the conflict is immoral.

A recent study of just war theory and history by Laurie Calhoun suggests that most uses of the tradition, especially in recent times, have been to cover for gross, murderous immorality. Not to limit warfare.

As near as I can make out, this is largely because the tradition is almost never treated seriously or rigorously in the manner indicated above.

It is telling that I have not once heard, in recent public discussion over the Syrian intervention, one mention of just war theory.

twv


The newly sworn-in President of the United States has been saying quite a few idiotic things, and doing some interesting things, as well. I wish to look at only one of the things he has said: “Torture absolutely works.”

“Does torture work? . . . Absolutely I feel it works.”

In his favor, he had asked “people at the highest level of intelligence” whether torture works, and that was their answer, “Yes.”

And Sen. Rand Paul responded with a resounding “No,” citing more specific studies.

Now, to me the question is irrelevant. Whether torture gives us good information or misinformation or even poisoned disinformation, torture is an abridgment of human rights. Furthermore, it has a long history of harming innocents; as Rand Paul noted, recent torture procedures in rendition zones turned out to have harmed quite a number of innocent — misidentified or set up — suspects. Our whole system of jurisprudence developed around the idea of protecting innocents from incorrect punishment and outrageous moral horrors. And the method of torture is not just using pain and damage and fear to gain information, the method is also one of secret proceedings apart from normal judicial processes.

When we say torture abridges human rights, we are not merely expressing a preference, or establishing some arbitrary cultural norms. There is a reason for our rights-imputation to counter torture. For we find that not only does torture harm innocents, it abuses the guilty and — more obviously than anything else — it empowers government personnel to take license rather than uphold justice. Torture corrupts.

And one of the grounds of universal human rights is to prevent the corruption of that most dangerous of institutions, the State. To give government functionaries the lattitude to torture foreigners or citizens gives them way too much power, power that we know very well cannot be handled by frail humanity.

So, when POTUS Trump — or even Rand Paul — pretends that “does torture work?” is a relevant question, we should be very concerned. Torture should be opposed even if it does give government functionaries “reliable information.”

Further, the language of Trump is, obviously and characteristically, sloppy in the extreme. Who cares if he “feels” torture works? On important matters we must demand higher epistemic standards than “feels.”

And there is no way that this contentious issue can be responded to with an “Absolutely.” There have to be some points of contention here. Nothing I have read in the literature surrounding torture gives me enough confidence to use the word “absolute,” in adverbial form or otherwise.

Thankfully, Sen. Rand Paul expresses a reasonable desire to extend more oversight over the federal government’s intelligence community. If “people at the highest level” of this community have a hankering to torture — as their confident answer seems to suggest — we must indeed keep a close watch on them .

twv

“No Peaceful Transition,” promised the protest/riots organizers’ Web page, earlier this evening. The page later ditched the motto.

Since the 1960s we have been living a myth: protests that disrupt public traffic and private ingress/egress are “non-violent” and heroic. But the myth is merely a self-serving story, a crucial lie, that those on the left tell themselves and everybody else, thereby taking license to lord it over others.

We now witness the moral depravity that is at the heart of the notion.

Protesting something is staying on the sidelines and making your views known. Rioting is a mob abridging others’ rights. Most unlicensed protests turn riot because they are riot in ovo.

The mob is now a tyrant, and the worm, as they say, may soon turn — the worm, here, being the masses of truly peaceful people, who may now at last see the tyranny at the heart of the self-righteous mob.

The culture war may be going bloody this week. Someone was shot at a Milo protest in Seattl. We will see how far the violence goes.

“No peaceful transition” indeed.


Mr. Sotomayor has a dim view of the rioters:

The Young Turks seem to accept the nonsense from the folks dressed mostly in black:

But here is video without commentary:

The history of philosophy is that of geniuses getting so close . . . but missing the mark.

Hence, my appreciation of a thinker is often not “do I agree” but “can I learn” from encountering said thinker’s work.

It is not for nothing that I am apt to say appreciative things about Jeremy Bentham but not William Godwin. Is Godwin uninteresting? Never, on occasion, correct? Irrelevant. It is merely that making sense of Bentham and where he went both wrong and right is much more edifying.

Thus, often we must look for truth, but keep a special eye out for the interesting and profitable mistakes, even blunders.

The two most interesting failures in political philosophy, in the last two centuries? Herbert Spencer and John Rawls. I am not sure anyone else comes even close.

The errors of great men are venerable because they are more profitable than the truths of little men. — Friedrich Nietzsche


When a friend or sibling advises me how to be safe, I attribute the concern as earnest, perhaps even as “heartfelt.”

When my insurance agent advises me in a similar manner, I infer self-interest on his part.

In both cases, I consider the advice in a spirit of equanimity and good feeling.

But when an agent of the government lectures me on safety, I check for ready exits, and eye any official weaponry with deep suspicion.

twv

It is interesting how the Republican and Democratic presidential candidates are now both intimately embroiled in scandals regarding male-female rape. Trump, for boasting in a typically vulgar, alpha-male fashion about his sexual conquests, and Clinton, for covering up and defending her husband from multiple sexual harassment and rape charges.

alpha male baboonFor all I know, Trump has also fought off rape charges; he has certainly confessed to rapey gropings. But we do know for sure that, back in the 1990s, Hillary maligned her husband’s accusers, worked mightily against them behind the scenes. And thus found herself the de facto enemy of contemporary American (that is, feminist as well as Christian) sex mores.

There is a certain degree of hypocrisy on the part of both sides. To make much of the one and not the other seems unsustainable, morally.

Though I suppose one might make the case that Trump comes off as the more honest. The full statement of his that caused so much scandal was that rich and powerful men can get away with sexual misconduct that most men cannot get away with. Alas, this is obviously true. Hillary’s Bill is living proof of that. He got away with multiple rape and sexual harassment charges. Most folks, today, seem oblivious, utterly unconcerned, even today,  about his many trips on a supporter’s “statutory rape” plane. And we know how Hillary’s husband got away with it: Hillary and her many friends in the press worked mightily to spin all the stories in his favor.

Or ignore them entirely.

If sexual misconduct is a big issue for you, advantage Trump, but not by much. An honest horned goat is still a horned goat. Or, switch the metaphor. Make it baboon. A species known for displays of sexually aggressive behavior to signal alpha status.

It interests me that so many voters are enough obsessed with power and political advantage that they could forgive their candidate such behavior . . . if not the opponent candidate. But few of these people would forgive their neighbor for such conduct. (I hope.) But most folks apparently so strongly yearn for an alpha male in charge — or an alpha female — that they will shrug and vote for their candidate. Turn a blind eye. Cover their ears. Speak no evil . . . against theirs and theirs alone.

This suggests something very interesting. Since no single voter’s vote determines an election, this means that, from a practical political point of view, each voter’s vote is costless — and this suggests to me that most folks who vote Trump or Clinton do not care about matters of sexual probity much at all. Demonstrated preference. If you say you support something but effectively demonstrate no such support when the cost of such support is near zero, you are a hypocrite.

If voters did care about rape and sexual misconduct, they’d vote Johnson or Stein. Who have no such scandals dogging them.

So, radical feminists may be right; there is a rape culture in heterosexual America: it can be found among the voters who overlook sexual misconduct and its valorization when they cast their votes for either Clinton or Trump.