Tuesday, June 13, 2006

Been Busy, Lew Rockwell, and Homeowners Insurance

I've been pretty busy lately, what with work and life and all, so I haven't had time to do much blogging. For those that stop by on a regular basis, thanks for doing so, and I hope in the next day or two to get back to cranking out stuff here.

In the meantime, you've always gotta be excited when a new Lew Rockwell article is published on LewRockwell.com , as there was this morning. Check it out. Here is an excerpt:

Unexpected events occur in life. Preparing for every possible contingency is not only too expensive; it is crazy, as in obsessive-compulsive. We don't drive around in steel tanks because we prefer the lower expense and ease of smaller cars. We prefer driving to the safer alternative of staying home because we need to get somewhere and we willingly take the chance.

In the case of hurricanes, homeowners might actually prefer to pay less for an already expensive roofing job by employing a less experienced or less thorough worker or by requesting cheaper materials. If the roofer bangs in the nails well enough to hold at most times – even if the roof gives way in a hurricane – that is a risk that might be economically worthwhile for the homeowner. Indeed, most homeowners are interested in cosmetics; the underlying construction is something that people would otherwise gladly scrimp on.

Is this a market failure? Not necessarily. Life consists of tradeoffs. Whatever resources are expended in one area cannot be expended in another area. Provided the homeowner is bearing the full liability, choosing shoddy construction is certainly his right. If he makes a mistake, no one pays but the homeowner.

However: liability is a big proviso. Most homes are not owned outright; rather the owner holds a mortgage that is marketed as a financial instrument. And how does the owner of the financial instrument assure the quality of his investment? The critical institution here is insurance. It is the insurance company that provides the market service of bearing the liability in the case of unexpected disaster. It is up to the insurer to make the calculation concerning the likelihood of this or that contingency: whether it is fire, hurricane, flood damage, theft, or whatever.

It is for this reason that homeowners spend far more on construction and upkeep than they otherwise would. Homeowners may only care about landscaping and paint color, but the insurer cares about the thousands of tiny issues that appear in the inspections that take place before the bank approves a mortgage.

What if the inspection is not thorough? Well, there is a competitive market for inspections as well. Insurers work with mortgage lenders to find the best ones. An inspector who does not do his job will be pushed out, while those who do more thorough inspections and catch more issues than insurers and mortgage lenders care will gain reputations.

This is not speculation. This is how the market works every day, when it is allowed to. (emphasis mine -LJ) Homeowners are constantly jumping through hoops that they otherwise wouldn't care a flip about, solely because banks and insurers do care. And it's even true for those homes that do not carry a mortgage. Homeowners insurance is a way for every homeowner to slough off the liability of financial losses coming their way through unexpected events like extreme weather.

11 Comments:

Blogger Brian Duffy said...

Wow, back to back articles from the Angry Libertarian Lew Rockwell. I had detected similar anger in your writings. But little did we know that you’re a Rockwell sycophant. Wow angry Libertarians. The good thing is that by your (libertarian) nature you can’t organize, you’re too individualistic.

So the world will be safe; libertarians have great ideas, but can’t organize, and liberals can organize, but don’t have any ideas. Very interesting. Some how I see a lesson in this young Jason. LOL

8:16 PM  
Blogger doinkicarus said...

Insurance and assurance contracts are pretty much the benchmark by which a free society can function. I'm working on this...

12:07 AM  
Anonymous Libertarian Jason said...

Duffy -

In typical collectivist fashion, you enagge in ad hominem attacks, so as to avoid addressing the merits of the arguments at hand. I mean, I know you are anti-capitalistic, and anti-free market...but c'mon...at least _try_ to argue in a logical fashion.

As far as Rockwell being "angry"... How do you know this? Do you have advanced psychological training which allows you to telescopically diagnose people?

I'm not angry. Cynical, yes. Angry, no. Sue me. It's better than being a hypocritical conservative.

-LJ

7:05 AM  
Anonymous Libertarian Jason said...

Doink -

I look forward to your thesis. I find myself thinking about similar issues with increasing frequency as of late. Perhaps you'll jar some of my own thoughts loose.

-LJ

7:06 AM  
Blogger Brian Duffy said...

Hey;

I am laughing so hard right now. I'm reeling in the line brother! O boy the hell you give...I am really enjoying your response...this is great...relax, there are many shades of grey!

Stay in the fight brother. Libertarians...an army of one!

2:28 PM  
Blogger Brian Duffy said...

Jason;

Getting serous for a moment. The truth of the matter is that I have been reading Rockwell for years, in addition to the Mises Institute web postings. I truly enjoy his writing and actually sourced him while I was working on my masters. One of the areas that I concentrated on was government deconstruction and downsizing.

However, the one area that dissuades me from reading his weblog is his attacks on conservatives. As open minded as one can be I try to understand where he is coming from and at times I have agreed with his argument, and as you can expect there are times I do not. However my time in special operations has taught me to read between the lines and what I see in Rockwell is his attempt to create political and ideological separation for the advancement of the LP. Now this has its pluses and minuses, but bolstering the LP is the main effort.

However, the world of politics is not black and white. Yet very ardent ideologues tend to see things this way. So he flames the fire to get a response out of libertarian minded folks and along the way maybe creating some subtle interest in the LP. But fighting to increase liberty and reduce the leviathan has to be done in consensus building. Something the LP has failed to do, and I would say something Rockwell fails to grasp. There are many, many conservatives who are disenfranchised with the Republican Party. The unfortunate thing is that through politics the Republican Party co-opted the name conservative, but is anything but.

If the LP wants to increase its presence then there has to be reaching out to big “C” Conservatives. I agree with 90 percent of LP philosophy and would vote in a heart beat for a LP candidate. But I know this from reading Reason and listening to Neal Boortz. Boortz does more good for the LP because he articulates libertarian philosophy in every day usage. And more importantly Boortz tries to bring people into the LP; Rockwell on the other hand creates separation.

2:57 PM  
Blogger Brian Duffy said...

Oh yeah, remember one thing I read your weblog, not to heckle you, but to join in the fight for liberty.

2:59 PM  
Blogger Francois Tremblay said...

"Wow angry Libertarians. The good thing is that by your (libertarian) nature you can’t organize, you’re too individualistic."

Wow. What an ignorant cad. Yes, we do "organize"- we have plenty of organizations. We're just not popular enough to matter in this world. And as long as the state persists, it will stay that way. As long as people like you persist in fueling the social warfare that the state imposes on us, and refuse to see each other as individuals on their own right, it's gonna stay that way! Period!

11:51 AM  
Blogger Brian Duffy said...

You just validated my theory. You are a Canadian that has to debate in the US.

I fart in your general direction you Canadian!

Brian Duffy

9:05 PM  
Blogger Francois Tremblay said...

"You just validated my theory. You are a Canadian that has to debate in the US."

I haven't been in the US for years, and I've never "debated" there. So who the fuck are you talking to?

10:11 AM  
Blogger Brian Duffy said...

You, you whiner, worry about your own pathetic country. Canada is so worthless, if not for the great Irish descendents your whining country would be nothing more than a piece of floating refuge.

Webster’s:

Canada: a leach to sucks off of the United States of America.

9:35 PM  

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