Archive for economy

Safety Not Guaranteed

By | March 30, 2017 | 0 Comments

While going through old files, looking for ones to delete, I came across notes about a 2012 movie titled “Safety Not Guaranteed.” It involved three reporters who follow up on a bizarre classified ad that seeks a companion for time travel. The ad concludes, “Safety Not Guaranteed.”

Apart from the dubious possibility of time travel, the film raised an important question: How many aspects of life should be labeled, “Safety Not Guaranteed”? The answer is, “A lot.” And this leads to another question: How many of our current economic, political, and social problems are caused by our refusal to admit that safety cannot be guaranteed? The answer to this question is also, “A lot.”

● Take the economy. Our grandparents went through the stock-market crash of 1929, the subsequent bank failures, and the Great Depression. They carried this memory with them all their lives. Many of them refused to invest a penny in the stock market and saved their money. They viewed banks and bankers with suspicion.

As a result of the reforms of the 1930s, banks were limited to operating within one state. Moreover, banks were limited to being either commercial banks – what we think of as a bank – or investment banks, but not both.

The federal government insured accounts in commercial banks via the FDIC, but did not insure investment banks. The latter, like most other businesses, were on their own. If they lost money, it was their loss, not the taxpayers’. Everyone knew when safety was guaranteed and when it wasn’t. People did not always act wisely, but at least they acted with the knowledge of when their deposits were insured, and when they were on their own.

The Depression generation has largely died out, but sadly, their hard-earned wisdom has also largely died out. Starting in the 1980s, these restrictions were weakened or removed. When people – even financiers – forgot that safety was not guaranteed, we all suffered, and are still suffering.

But wait, you say – didn’t the government bail out most of these financial institutions? Didn’t that guarantee safety? Quite the contrary.

First, the government pressured these institutions to make home loans to people unlikely to be able to make the payments. That is, the government encouraged gambling with other people’s money. Then, when the housing market collapsed, the government was forced to bail out the banks to prevent a collapse of the whole financial system. In effect, the government guaranteed that there would be unsafe behavior by those who should have been responsible for safeguarding the money of depositors and stockholders.

The financial big-shots learned nothing from this terribly costly lesson. Oh wait, they did learn something. As the loss of $2 billion by JPMorgan Chase indicates, they learned that they can continue their risky behavior with impunity. We have combined the worst of both capitalism and socialism: We have privatized the profit and socialized the risk. We have guaranteed lack of safety.

● Or take health care. First, the government involved itself in financing health care. Next, the government claimed the power to regulate any behavior that may affect health-care costs. And then, the government financed “studies” showing how many billions of dollars of extra expenses are caused by smoking, or obesity, or whatever.

And now, health-care totalitarians want to ban large sodas, large popcorns, large lattes, and even salt shakers. But that’s the problem with totalitarians – there is never enough regulation; always more is needed. Freedom is seen not as a precious gift to be safeguarded, but as a bothersome obstacle to be overcome. Individual responsibility is seen not as a virtue to be fostered, but as an annoying habit to be suppressed.

I had a colleague who was a heavy smoker of cigarettes. He died at 57 of lung cancer after a six-month illness. The “studies” would attribute his medical expenses to smoking. But the “studies” would not take into account that at the time of his death, he was still contributing to Social Security and Medicare, but had not drawn a penny from them. Nor would the “studies” take into account that he did not live to 80 (his life expectancy at 57), never broke his hip, never had a stroke, never developed Alzheimer’s, and never spent time in a nursing home.

The “studies” would not take into account that he did not draw on Social Security and Medicare for the 15 years from ages 65 to 80. The “studies” would not take into account that if he hadn’t died of lung cancer at 57, he would have died later of something else. The “studies” would not take into account that no matter how healthful his lifestyle might be, his safety was not guaranteed.

Smoking caused my colleague’s tragically premature death, but it saved a good deal of money. His situation was hardly unique. Some time ago, I heard a lecture by an emeritus professor at a prestigious medical school. The lecture involved economic aspects of health care.

After the lecture, I went up and asked the man a question: What would happen if everyone stopped smoking today? His answer: Social Security and Medicare would go broke even sooner. I asked why he did not mention this fact in lectures or articles. He replied that he had tried, but he was met with strong hostility on the part of anti-smoking activists and proponents of government-run health care.

Here was a man at the top of his profession, one who was semi-retired and therefore immune to retaliation. But even he was inhibited from expressing his opinions. How much more are junior personnel afraid to express politically incorrect views? How can citizens be well informed on crucial topics when free expression is censored? How many health-related “studies” are biased, even fabricated, in order to further a big-government agenda?

We have a confluence of two factors: (1) “Doctored” health-care figures that exaggerate the costs of smoking, or obesity, or having fun in general. (2) Lack of realization that in life, safety is not guaranteed.

Government has the responsibility to protect citizens from terrorism and violent crime. But at best, government is imperfect in carrying out this responsibility. On the contrary, ill-conceived efforts at improving safety can actually decrease safety:

● The Forest Service had concerns about the safety of the firm that provided aircraft to fight forest fires. As a result, the contract was cancelled, the firm closed down, and the number of firefighting planes decreased from 44 to nine.

● The British nationalized health care to assure that everyone had access. But ballooning costs and limited resources led to rationing. As a result, 130,000 elderly people may be dying annually ‒ from inadequate care, or being actively killed.

If you lie on the ground, you can’t fall down. If you lie under the ground, you can’t get unequal care. But most people would prefer to do without this type of “safety.”

Children have a right to sleep snug in their beds, secure in the knowledge that their parents and other adults will keep them safe through the night. Adults have no such right. Instead, we have a duty to remain alert for danger, motivated by the knowledge that the safety of ourselves and our loved ones depends on us.

The insight that safety is not guaranteed is a key component of freedom. When it comes to the economy, this knowledge empowers us to take responsibility for our own finances, and not to depend on – or even tolerate – so-called experts who think they know better than we do how to spend our money. When it comes to health care, this knowledge empowers us to take responsibility for our own lifestyle, and not to depend on – or even tolerate – so-called experts who think they know better than we do what we should eat, what we should drink, and how we should live.

Though we don’t often think of it that way, we are all traveling through time, and safety is not guaranteed. We may end up rich or poor. We may live to old age or die young. We may or may not be able to influence these outcomes. But there is one outcome that is in our hands: whether we live or die free. And as history abundantly proves, freedom isn’t guaranteed, either.

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