Government as insurance

The more I think about it, he more I'm inclined to see the central role of government as an insurance policy. Thus, the criticism that one doesn't get one's taxes worth of government misses the point. You don't pay insurance premiums hoping to receive a payout. You pay the premium in order to have the peace of mind that comes from knowing that help will be there if you need it.

But what about the other consequences of this approach? Police and fire services fit within the model, for the most part. It's very rare that a cop actually stops a crime. He comes into action in order to mitigate harm and restore the status quo. Likewise, one can make a case for a national catastrophic health care system. But unlimited welfare? No. Food stamps? No. Institutionalized government-managed charity would, in this model, be limited to short-term assistance.

Government has the added problem that it is, at least for some, a coerced insurance system. Keeping everyone "enrolled" has the effect of spreading the risk, but at the cost of the freedom to opt out. Then again, in a modern interdependent society the idea of opting out is more than a little problematic on the best of days, so that doesn't bother me all that much. What really bothers me is that it is a monopolistic coerced insurance system.

Insurance companies can raise their premiums for risky behavors. As a rule, governments don't: they simply prohibit the behaviors. For most othe risky behaviors--fire code violations, riding a motorcycle without a helmet, unprotected sex--there is little expectation of arrest, let alone a serious expectation of punishment. But whether or not one breaks the law, the payoff in a disaster is the same. Thus, it is "criminals," broadly defined, who get both freedom and support, and if they are engaged in risky activities they are also the people most likely to get a payoff. This is not a system conducive to either minimal regulation (as governments try to cut costs) or compliance with the law (as it doesn't effect payoffs). It also crowds out all non-governmental mechanisms for community and mutual support in daily life.

Sound familiar?

What would happen if taxes (premiums) could be better linked to risk? Probably they'd end up being so politicized that the current tax code would look simple in comparison. But what if there was real competition for some of the functions of government, based on competing insurers? I suspect that some people (especially the indigent and or retarded) would fall through the cracks. So maybe a competititve model could be coupled with a "mandatory minimum insurance" provision, similar to what we do now for drivers?

That sounds like it has possibilities. Not perfect, by any means. It still needs work. But it might be an improvement over what we have now.