Thank you for inviting me to speak today.
I'm excited because you in the insurance industry are in a good position to really understand the Libertarian contention that if you want something done right, don't bring in government.
Let's contrast the government way of insurance with the private way: As you know, without insurance, private lenders won't lend on risky propositions like housing on exposed coastlines, or on nuclear reactors. In the free market, such projects go forward only when statisticians establish premiums large enough to beat the odds and only when voluntarily-contracted re-insurance is available to hedge the odds.
When the government got involved in the flood insurance business, for example, development proceeded on parts of the Atlantic coast that had been, by virtue of their uninsurability, effective sanctuaries for wild flora and fauna. Because of government, however, ecosystems were destroyed; and when Hurricane Hugo hit, payouts hit a record high for the region--not because the storm was of record fierceness--but because so much development had proceeded where responsible insurers had previously feared to tread.
When American nuclear reactor construction stalled because the insurance industry would not write liability policies, Congress stepped in and, by fiat, put a cap on total liability for nuclear accidents. Reactors that would never have been built for lack of approval by private insurance industry statisticians proceeded. And now Northern Californians are stuck with an essentially uninsured white elephant at Diablo Canyon that has required the PUC to establish an electricity rate surcharge to keep the system from imploding financially. That's government at work.
Let's talk about annuities: When you sell a lifetime annuity your actuaries calculate the premium according to objective statistics and probabilities and ladder appropriate investments with voluntary borrowers and contractors to assure that the payout will be there when needed according to plan. When the government sells a lifetime annuity the premium is based not on statistics, but on congressional ambition. The premium is immediately spent on a program like arming a third world dictator or building a demonstration sewer project in Egypt or a nuclear supercollider experiment in Texas. "Don't worry," they say, "We've got a stack of IOU's called treasury bills." Never mind that even the IOU's don't add up to Social Security's obligations. Republican and Democrat politicians claim that they can "fix" the system if, somehow, they could only generate more IOU's by collecting more premiums--and spending them--thereby adding to the stack of IOU's, making it more equal on paper to the size of the system's liability. You and I know this is nonsense because there are no borrowers to pay those IOU's. The money was spent; not loaned.
Libertarian presidential candidate Harry Browne has a plan to avert a Social Security crisis by privatizing the system now. It's outlined in his book, Why Government Doesn't Work.
Thank you.
A question-and-answer session made up the middle portion of the forum.
A Libertarian is someone who believes that people are best off if allowed to shape their own personal and economic destinies. And who believes that government's only legitimate job is to protect its citizens' ability to do so--against force and fraud by their neighbors, by foreign governments, and by other branches of our own government.
Our government generally does a good job of the first two, but, increasingly, the various parts of government have failed to keep each other in check. The EPA does not stop the Defense Department from burying radioactive waste in cardboard boxes. The SEC does not stop the Social Security Administration from selling fraudulent insurance products. Local judges do not insist on constitutionally-issued search warrants. States do not resist federal agencies when they enter areas forbidden them by the constitution. Counties do not resist the state when it steals property tax revenues. Instead they collude to pass new sales and income taxes...to mix funding sources to avoid accountability...to create inter-agency task forces to obscure and even completely avoid responsibility when government programs go horribly wrong--as with the impending failure of Medicare and Social Security and the on-going failure of the War on Poverty and the War on Drugs. Republican and Democrat politicians work hand in hand when it comes to perpetuating each of these disasters.
Unless Republican and Democrat voters who believe in the theory of our government-limiting constitution stop voting for the same old politicians, all we can expect is more expensive health care, less freedom to save for one's retirement, and the perpetual dependency of the welfare class.
Is it reasonable to imagine that that supporting Libertarian candidates instead of status quo candidates can lead to change? Maybe. The Soviet Union only changed when people finally stopped voting for Communists.
I urge you to listen to the candidates Clinton and Dole are afraid to debate. This Sunday, Harry Browne will be on "Meet the Press" on NBC at 6:30am and on the Cal Thomas show on CNBC at 3:30pm and 10:00pm.
Thank you.