Sunday, December 13, 2009

Thomas L. Friedman, Insurance Salesman Extraordinaire

A cheeky gent named William M. Briggs muses on the lunacy of indemnifying an insurance policy if you've been forewarned that the person who's buying it is terminal:
All that is rotten is not in Denmark. Thomas Friedman, an opinionist at a local paper in New York, had a cuppa with Wolf Blitzer on CNN and assured him that he had looked into this whole global warming thing and discovered that, yes, the blanket of air surrounding the Earth was growing thicker with gas (we can resist the joke, can we not?) and that the only solution to prevent permanent heat stroke was to, so to speak, throw off the covers by buying insurance.

 Of the kind underwritten by the ever-trustworthy and always-reliable United Nations.

Friedman’s idea is to take money from individuals who live in a few well-off countries and give it to some bureaucrats on First Avenue. They would then dole this money back out to persons unknown, such that these persons would be able to take the stuffing out of the blanket.

A fine idea, perhaps. Especially given that the UN’s historical stewardship of Other People’s Money has been such a raving success.

But, even if this isn’t so, Mr Friedman’s concern for humanity has gotten the better of him. Just as the activists had forgotten what to accelerate meant, Mr. Friedman has shown us he does not know what to insure means.

It works like this, Thomas. You fear an outcome that, if it happened, would cost X dollars. You don’t have, or wouldn’t like to pay, that much. So you seek an insurer, who estimates the probability X will occur. Using that estimate, the insurer asks you to pay Y dollars, where Y is much less than X. If you toddle along and the outcome never realizes, you are out Y dollars. But if the event happens, the insurer pays you X, and you are happy.

The outcome here is, of course, devastating global warming. The insurer is the United Nations. Problem is, we have been assured that “it’s worse than we thought” and that “the science is settled,” so the probability of the outcome is — by the insurer’s own estimate — certain. To write a policy in this case would be foolish.

That is, since the outcome already arrived, it would be more sensible to spend the money that would have gone for the policy to paying for the effects of the outcome, and thus remove the overhead costs that accompany any contract. And since those effects are local and varied, the money would be better left in the hands of local people and not given to an insurer...

Well, yes, but how then would all those "poor" countries (not to mention the UN, with its stellar track record in such cases--think Oil-For-Food) get their hands on the loot (the whole point of the excercise)?

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