Terroristic Road to Nowhere

I hate writing about politics, which is probably why I do it so much, because I’m a masochist at heart..

I was reading an entry at Lawrence Lessig’s blog. The entry itself is unimportant, the important part is the comments.

I’m amazed that people are so divided on the issue of Terrorism. I guess I shouldn’t be but I am. Why can’t everyone just think like me?

Back to being serious. I’m happy that there is diversity on the issue, but I am dismayed that people can’t get on the same definitions, and instead spend hordes of time arguing over them.

Heres a way to think about the issue. In most states in the United States you’re required to carry automobile insurance. Why? Because if you’re at fault in an accident you’ll have to pay, and the states have a vested interest to ensure that everyone is protected from everyone else. For example, I currently insure myself against my own mistakes for $25,000 per person of bodily injuries that I cause, $50,000 per accident of bodily injury that I cause, and $25,000 per accident of property damage that I cause. These limits are fine for me because I have about a negative $20,000 net worth. Which means if someone sues me for an accident they’re going to have a hard time collecting more than my insurance limits because I have no assets with which to pay someone. I am protecting my fiscal interests (however meager they may be) by purchasing insurance.

Now if I were a multi-millionaire I would purchase significantly more insurance. Why? Because I would then have a lot to lose and I would want to protect my assets. But I don’t have to purchase an insurance policy, all I have to do for the government is provide proof of my ability to pay a liability claim. But I could do this in many different ways. I could like my poor self choose to purchase an insurance policy or provide proof of my ability to pay a liability claim. There are six ways to do this in the State of Ohio. I can choose to purchase an insurance policy and transfer the risk to the insurance company, or I can place monetary instruments on deposit with the state.

The important part is the transferring of risk. I can choose to keep that risk, and just show that I’m fiscally responsible, or I can pay the insurance company to transfer the risk to them. But there is only so much risk I can transfer, no insurance company would write a policy for say $1 Trillion in losses. (okay, I’m not sure about that number, but just pick a large enough number, eventually they won’t write it.)

Getting back to the point. If I’m a millionaire I can either keep or transfer the risk, but I can only transfer so much, and the more I transfer the more it costs me. The long and short of it is we’re having a big disagreement about what our risks are, and if we can transfer them in the form of heightened security and reduced liberty.

My take: We’re a rich country and we should just assume the risk. Yes there will be incidents that will have a significant cost, but nothing that we cannot absorb the risk.

There was my long ramble to get to that point. So never accuse me of taking a shortcut.