Great Invention

Communism is just Insurance spelled backwards


I think one of the coolest inventions of the last 1,000 years is insurance. It’s such a clever invention. It doesn’t use gears or physical reality of any sort. It’s the prescription for a type of agreement — pay me something, and if your ship is lost I’ll pay for you to get a new one.

At first it was all about ships. Groups of shipping merchants in Rotterdam covering costs when one of their members lost a ship. Now it’s about everything: homes, cars, life, investments, beautiful legs, etc.

Communism, at its idealized heart [not the totalitarian governments that have masqueraded under its name] is also about distributing goods and services in such a way so that success and failure are shared. Communism proposes that assets be redistributed based on a simple balance of fairness: “From each according to his ability, to each according to his need.”

Insurance distributes assets the same way – to each member according to his need.

But insurance collects not from each according to his ability, but from each evenly, or evenly according to his risks. Leaky old ships cost more to insure than well-sealed new ones. The weak pay more than the strong because they’re statistically more likely to fail.

Insurance and Communism are variants of the same class of agreements – agreements which are designed to pool resources to help the unlucky. Insurance leaves intact the profit motive, from which much development springs. But unlike insurance, communism also serves the inherently weak – the equivalent of the leaky old ships.

Insurance works much better than communism with almost every class of asset except people.

If you’re an uninsurable person with a big medical problem, private insurance looks like an incomplete and personally sucky way to distribute medical assets. 

What we need is a two-value monetary system, with money on the x-axis and human good (or reduced human suffering) on the y-axis. Then we can build stable, innovative systems for helping not just the unlucky, but the weak as well.

With a 2-value system we can see the shape of the spaces where money and human good interact, and use that information to guide (but not prescribe) decisions. 



~ by bracketbracket on February 14, 2009.

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