Until not so long ago it was possible to buy unlimited coverage against the risks that scared you.
After things became too complicated and fraud a too widespread occurrence even the Lloyd’s gave up and started to introduce caps on insurance policies.
In fact Lloyd’s of London was the only place – that I knew of – where risk was understood, at least in part, in a ‘functionalist’ manner.
Risk is something that can be seen in two ways.
As yet another opportunity for making profit or something that has to be mitigated for the profit of the entire community.
Let me deal with the latter ‘option’ first.
Somehow I don’t buy it that Bismarck was primarily motivated by the well-being of the workers.
But what the German industrial barons of the day needed in order to catch up with the British ones – the Albion was the industrial power house of that time, o tempora…- was more and more people willing to leave the relative safety of the country-side and come to the city to work in the newly built factories.
In order to appreciate the huge difference between these two situations we must remember that in those times families were a lot larger than they are now and that their members used to help each other in times of need. But this could happen only if the members of the same family remained in close vicinity and worked on very flexible schedules – agriculture or family owned shops. You cannot go help your ailing mother if you work in shifts and live two hundred miles away from her.
So, in order to ‘lure’ more and more people out of the fields, and in a very short time, Bismarck had to offer them a ‘safety net’.
OK, let’s accept the idea that, maybe, there are some risks that the society, as a whole, should concern itself with.
But how to fulfill this ‘social need’?
How to identify which risks should be dealt with in a collective manner and which should be left alone. Then how to manage the whole process?
‘State-wide’ or through privately owned/operated initiatives?
Does it really matter?
I don’t think there is a universally valid recipe here.
The Bismarck’s social insurance system worked in Germany.
Lloyd’s has functioned almost seamlessly for 3 centuries. In England.
Both systems, one centered mostly on profit and the other on the safety of those who took part in it, worked because they spread out both the risks and the profits.
Current systems, where only the risks are being mutualized while the benefits tend to become more and more centralized – by ‘design‘, by corruption or both – are no longer functioning properly.
Take ‘Obama Care’, for instance. Most people, including Donald Trump, agree that something has to be done about ‘public health’ but the whole thing isn’t yet working properly.
Instead of fighting among ourselves on whether the state/government should have anything to do with risk management how about considering for a moment where our current infatuation with ‘profit‘ has brought us?
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