Insurance Problems; P.L. Poirot

INSURANCE PROBLEMS PAUL L. POIROT "YOUR MONEY, or your life!" The tax collector seldom phrases his request exactly that way; and, though crime is increasing, not many Americans have been in vited to consider the proposition at gun point. Even fewer of us, I suspect, ever have volunteered much serious thought to the rela tionship between life and proper ty. Fortunately for us, however, we seem to tend by instinct to ac cum ulate private property in vari 0us forms and to defend our prop erty as though our .lives depended on it. Perhaps they do; in which case, it would seem wise to give the matter some further thought. And what better point of focus than the business of life insurance itself and the closely related field of old-age retirement insurance, sometimes referred to as social security! How does one go about insuring his life? 30 There is a traditional procedure. It involves saving-consuming less than one's earnings - for a time, so that a certain level of consump tion may be maintained later when earnings might have declined or ceased entirely. If several persons agree to cooperate in such a pro gram, the individual risks of dy ing sooner or later than normal may be shared or pooled.

The concept or idea of property is likely to be dormant or poorly developed among grasshopper-like creatures that consume everything just as fast as they appropriate or produce it. But the moment an individual thinks of saving some thing, that something and the sav ing reflect some purpose in his life - become a part of his life, so to speak. And at this point, he is in a position to think of the con nection between his life and his property. Thus it is that purpose, saving, life, and property become 1966 INSURANCE PROBLEMS 31 intimately related in the mind of the individual and blend into a single concept. A man's purpose, then, is what gives him an insur able interest in his life. And prop erty might be said to be the economic essence of insurance. That certainly is the basis upon which the life insurance industry has functioned, traditionally: sav ing and investing in productive enterprises likely to yield goods and services for later consumption and the fulfillment of one's pur pose in life.

Now, compare that traditional concept and method of life insur ance with the "social security" idea - the compulsory taxation of those who have a purpose in life for the benefit of those who lack such purpose. It hardly seems nec essary to observe that the mere will to live is not much of a pur pose; to live for what? Nor can a person's poverty or great need be logically classed as a purpose. Such a negative attainment is not a sufficient reason for one's want ing to live or to insure his life. And how can a person who has no use orpurpose for his own life be of any possible use or service to anyone else? This is the hopeless contradiction and inconsistency of the whole idea of compulsory So cial Security. The program com pels human beings to work and sacrifice for nothing worthwhile so it is entirely fitting and proper to refer to it as a something-for nothing arrangement. Destructive Nature of· Compulsion The compulsory processes of government are well adapted for the conversion of something into nothing. Nor should it surprise anyone that the compulsory Social Security program involves neither saving nor investment in produc tive property, which we have seen to be essential features of any realistic form of life insurance.

Lives without purpose can see no need for property of their own nor any reason to respect or de fend anyone else's private prop erty. So, it is entirely logical once the first false premise of the "social security" ideas has been embraced - to base the func tioning of the program, as it is based, upon the expropriation of the property of those who have earned and saved according to their respective purposes. This process of destroying the property and defeating the life purposes of those who have either is the very antithesis of life insurance. It· is antisocial in the extreme, for it discourages. the thrift and saving upon which increasing produc tivity depends. Without savings and produc tion, an individual can neither at tend to his own economic security 32 THE FREEMAN May nor practice chari ty toward any one less fortunate than himself. Perhaps "social security" of a sort may be found within a den of thieves; but stealing one another to death ought not to be confused with life insurance.

A Tragedy of Errors One of the great tragedies of our time is the extent to which compulsory Social Security is con fused with life insurance. Top ex ecutives of private life insurance companies may be found testify ing to the "actuarial soundness" of the compulsory Old Age, Sur vivors, and Disability Insuranc'e program. Insurance salesmen ad vise prospective clients to build their private insurance programs upon the "solid foundation" of their Social Security benefits. Nor does the typical willing customer for traditional insurance appear to see any inconsistency between such a saving and investment pro gram and the Social Security pro cedure of plundering property. Even college professors, including teachers of economics, have been known to volunteer themselves subject to the Social Security tax that destroys property and pur pose and thus provokes additional appeals for handouts. The individ ual, who voluntarily subordinates his own life's purpose to the pleasantries of collective living with out purpose, fully deserves what he'll get from that kind of "social security."

The great mystery of our cen tury must be why anyone who believes in compulsory Social Se curity would simultaneously try to save and invest in a private pension or retirement annuity or life insurance program. The suc cess of the one type of program is contingent upon the discredit ing and destruction of the other. To the extent that Social Security and related subsidy programs suc ceed in confiscating private prop erty - either openly and directly, or by the hidden processes of con tinuing inflation and erosion of savings - then private insurance programs and other claims pay able in fixed numbers of dollars must tend to become worthless. By the same token, if the sales men of private life insurance and other pension and retirement an nuity and savings programs hope to continue to find willing cus tomers for their wares, it behooves them to labor effectively now and forever to halt the processes of confiscation and death inherent in Social Security and similar dis eases of compulsory collectivism.

Otherwise, buying insurance will be just as bad a risk as paying Social Security taxes. ~ 20. Meliorist Economics CLARENCE B. CARSON THE FLIGHT from economics pre pared the way for government in tervention in what would other wise be economic matters. It in volved, primarily, claims that an abundance of goods and services existed, either actually or poten tially. If this were so, it would be possible for government to inter vene and redistribute these, for force can be used to confiscate and dispose of property. But such claims would not provide justifica tion for action. Even the exis tence of abundance does not indi cate that redistribution is in or der. However, along with the flight from economics has gone the de velopment of a pseudo-economics, Dr. Carson is Professor of American History at Grove City College, Pennsylvania. Among his earlier writings in THE FREEMAN were his series on The Fateful Turn and The American Tradition, both of which are now available as books.