Danes feel Obama is greater than Jesus

[--Pete]

Hi,

Your premise is that the insurance market messed up somehow, but actually I think that in order to have a legitimate insurance market you need some government regulatory authority to insure that contracts are enforced. Otherwise, the bad guys can masquerade as good guys, under sell the good guys, then renege on fulfilling their contractual obligations. You need some level of government authority to keep the playing field fair and level.

All true, but all moot. Yes, we need governments to make and enforce laws. That's hardly 'regulating' the insurance industry, that's simply anti-fraud legislation. While an extreme free market advocate may consider these laws to be 'restrictions' ("Buyer beware" and all that crap), most people would consider them a necessary part of an orderly society. And they do nothing to level the playing field of honest insurance companies -- they simply try to get the con games out of the system.

So, again, when your product is a contract, or based on royalties, you need governments to help create the market in the first place. Otherwise, these industries are quickly wiped out by the pirates.

Well, say rather to protect the market. But that is not much different than laws against theft of physical properties. Without recourse against shoplifting, retailers would go out of business.

Not entirely. A big problem with the insurance market is that its roots are still in state regulation. Each state has its own rules, so a multinational, or international company needs to follow 50 different sets of market rules. There is much that can be done to reform the entire insurance market (and not just health insurance), however, it would take all 50 states surrendering their insurance regulatory fiefdoms or a US Congress with a backbone strong enough to sell this reform to the American people.

Again true, but somewhat moot. The present system does not seem to work in any state. I don't see how replacing fifty similarly flawed systems with one central, probably equally flawed, system is going to solve the problem. The problem, after all, is not the inefficiency of government, or the greed and mismanagement of health insurance companies, or the rapidly rising cost of health care. The problem is the lack of health care for a large part of society. Any solution that puts the cost of health care $500 above what a person can afford instead of $5000 above may be good in theory but is meaningless in practice to that person.

So, even under regulation, the worst excesses of monopolies can be expressed.

Well, yes. Inefficient regulation can be no better, and often worse, than no regulation at all. Ask Russia. But that does not imply that useful regulation does not exist. At most it implies that good regulation is a difficult exercise.

Sometimes monopolies cannot be avoided if the desired goods or services are only offered by one company.

Isn't that a tautology?

"A monopoly can seldom be established within a country without overt and covert government assistance in the form of a tariff or some other device. It is close to impossible to do so on a world scale. The De Beers diamond monopoly is the only one we know of that appears to have succeeded. - - In a world of free trade, international cartels would disappear even more quickly." -- Free to Choose, Milton Friedman

I've read Friedman's book. He makes some good points and gives some examples of how regulation screwed things up (primarily Russia, India, and rent control IIRC). However, he ignores many factors and takes a very simplistic (too simplistic IMHO) approach. His contention that the best values are what will survive in the marketplace is based on fair competition. When a large, established company is competing with a small start up and it consistently undersells the start up while taking a loss and consistently outbids the start up for materials, supplies, and often personnel, the competition is not fair (in terms of product price and quality) and the large company will win. God *is* on the side of the big battalions.

And, as for international monopolies, you need look no further than Microsoft. Which is also a great case study for underhanded business tactics, and for the power of advertising over the appeal of quality.

--Pete