This is a follow-up to the piece the other day about “coverage” – at gunpoint. It is almost exactly what the cosa nostra – the mafia, as portrayed in movies such as The Godfather – does, with the difference being that what the insurance mafia does is not only legal but legally required.
You must hand them over money as one of the many conditions of being allowed to use the car you think you own on roads you’ve paid to use (and which you are effectively forced to use, as the government has taken over what used to be the public right-of-way that everyone once had an understood right to use into something you’re allowed to use, if you abide by the various conditions stipulated by the government).
The last column dove into the wrongness – as a purely moral matter – of forcing people to buy “coverage” (and anything else, for that matter). It isn’t a transaction when force is involved.
It is extortion.
And you don’t get much for it, which is why it is very profitable – since the extortioner gets to tell the victim how much he’ll be paying. And he’d better pay up.
How much is a thing that doesn’t bear looking at, unless you enjoy feeling your blood pressure skyrocket. Well, maybe that’s a good thing in that it might move us enough to defend ourselves against these mafiosi.
Let’s consider for purposes of this discussion the average victim of the mafia’s strong-arming. He isn’t a teenager or an oldster and so he falls into the “lowest risk” category, especially if he’s married and a homeowner and has a “clean” record, which means he hasn’t been “ticketed” within the past three years for having transgressed one of the government’s various use-conditions, such as driving faster than the government says is permissible. He has a middle-of-the-road car, nothing unduly obstreperous.
A Camry or Accord sedan, let us say.
Let’s assume the victim described above pays an absurdly modest $500 annually for “minimum” (sans collision) “coverage” that doesn’t really cover anything, except any damage he may cause to someone else’s property. If his car is damaged, he pays for the repairs himself – with whatever he’s got left after he’d paid the mafia. If he does not cause damage to someone else’s property, all he’s got to show for what he spent – for what they took – is the ethereal “coverage” provided by the mafia, which had to pay nothing but got a lot in return for it.
How much, again?
Well, let’s take that postulated $500 per year – deliberately lowballed to make the point – and factor it out over ten years. The sum is $5,000. Let’s factor it over a driving lifetime, say 60 years.
It is $30,000.
That’s for “inexpensive” – bare minimum (legally) “coverage” that doesn’t actually cover anything unless you damage someone else’s vehicle. (It is like paying for a warranty on your neighbor’s roof.) A policy that “covers” you – that will in theory pay to repair your vehicle, if you have an accident – would cost at least three times that ($1,500 annually, also lowballed for purposes of this discussion) assuming an average car and assuming a driver neither very young nor very old, with few if any tickets on his record.
Now we’re looking at $90,000 paid out over a lifetime – real money, as the saying goes. It does not factor in what this money might have earned had it been invested in something that generated rather than lost money (all of it).
Even considered without that, $90,000 is a sum that could have paid for about half (or at least, a third) of a modest single family home. It certainly would have paid for a down payment sufficient to escape mortgage insurance, for instance – another mechanism of enserfing via “covering.” The loan principle would surely be paid off sooner, too – thereby saving a fortune in interest payments.
But what if . . .? is the rejoinder. Yes, what if? In italics to emphasize the hypothetical nature of the proposition. What if you win the lottery? Of course, you just might. But probably, you won’t. Just as – probably – you won’t incur a loss of $90,000 (or even $30,000) over the course of your driving life.
The insurance mafia knows this, of course.
It is the business of the mafia to know such details. It is how the mafia balances its books. Less must go out (in claims payments) than comes in (via extorted payments). And much more must come in to provide the C suite salaries of the captains, consiglieries and dons of the various families – the Geicos, the State Farms, the Progressives and the (of all things) Libertys. Most of all, to pay for the politicians that the families carry around in their pockets, as Sollozzo (“the Turk”) admiringly said of the Godfather, in the movie. These politicians being a necessary expense since the insurance mafia would otherwise be forced to live within its means – and ours – if it lacked the muscle to make us pay as much as they say.
Which, as it turns out, is a lot more than many of us ever thought.
. . .
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