Costless?

by Don Boudreaux on January 24, 2009

in Myths and Fallacies

"It will cost taxpayers nothing!"  Riiiggghht.

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{ 9 comments }

vikingvista January 24, 2009 at 10:53 pm

With every proposed government solution said to pay for itself should come an answer to the question, "Then why doesn't the private economy do it?"

Then why doesn't a private mass transit company build the light rail?

Then why don't private investors buy shares of AIG?

Then why don't private banks loan money to students?

Then why don't private banks loan people money for job retraining?

Then why don't recycling companies pay us to sort our trash?

Then why don't power companies automatically switch from fossil fuels to wind and solar?

Then why don't workers stop applying for those low-wage no-health-benefit jobs?

Then why doesn't the community shun the low cost chain for the high cost mom-&-pop?

Then why don't private citizens buy their art?

Then why don't individuals voluntarily put 15.4% half-tax free of all the compounded income they will ever make into high-load non-guaranteed T-bill investment/disability/life insurance schemes?

The answer is usually that
1) not enough people really want it,
2) it is wealth destroying,
3) the government undercuts any possible profitable venture into those areas, or
4) the government legislates away their competition.

Gerald P. Hanner January 25, 2009 at 9:09 am

I suspect that your concise explanation of how insurance works is lost on most readers.

T L Holaday January 25, 2009 at 11:23 am

I suspect that your omission of the fact that what was being insured was the sale-leaseback transaction and nothing more was deliberate.

vidyohs January 25, 2009 at 12:01 pm

"I suspect that your omission of the fact that what was being insured was the sale-leaseback transaction and nothing more was deliberate.
Posted by: T L Holaday | Jan 25, 2009 11:23:46 AM"

Don's point was that the statement "it will cost the taxpayers nothing" was a lie.

Even giving you a possible on the truth of your reply, it would change the point or worth of Don's post in exactly what way. Does it not cost the taxpayers every single time the government dispenses money in any action no matter how minute or how grandiose?

Do you know of a mysterious source of money that the government taps into to spare the taxpayers more burden? If so, sir, please tell the rest of us what that source is and where it is located.

Otherwise just be dismissed as another socialist troll of the muirduck variety, a waste of time.

T L Holaday January 25, 2009 at 12:26 pm

vidyohs,

What is your mysterious source of AAA rated insurers?

As of last November, there were exactly three insurance companies rated AAA, and two of them were on review for possible downgrade.

Read the details Don omitted and re-think.

Don Boudreaux January 25, 2009 at 1:12 pm

T.L. Holaday:

Precisely WHAT the government will now insure is irrelevant. If it will cost taxpayers nothing to insure Metro's sale-leaseback arrangements, then such insurance should be a whopping profit opportunity for private insurers. If providing such insurance is not such an attractive profit opportunity for private insurers (a fact whose reality is suggested by the Uncle Sam assuming these responsibilities), then the expected value of taxpayers' liability for these insurance obligations is greater than zero.

Lee Kelly January 25, 2009 at 2:16 pm

Dr. Boudreaux,

This is another example of what I have been saying repeatdely on this forum over the last couple of weeks: letting bereaucrats decide how to invest an economies' scarce resources is about the most risky move I can think of. Yet Obama's $1 trillion stimulus plan proposes to do just that. Although the risk and cost of malinvestment appears to be very small, it is actually very high, only neither the borrower nor lender bear it–the taxpayer does.

If people are not lending because of uncertainty, then methods of evaluating risk need to adjust. Letting bereaucrats decide how to invest resources does not eliminate that risk, but simply forces everyone to bear it, and more, come what may.

vidyohs January 25, 2009 at 3:50 pm

T L H,

We seem to be discussing two different things. I am not educated enough in the small detail of the insurance world to know exactly what your point is and how it refutes what my street knowledge tells me.

Regardless of what else bears on the matter I have enough experience to know that when government assumes the fiscal responsibility for anything it is inevitably going to cost the taxpayer. In this case, I can't imagine that METRO will behave anymore responsibly with the goverment as insurer (if that is what we are talking about) than they did with a private insurer, as a matter of fact my experience tells that METRO will behave even more carelessly.

kompaktanlagen February 3, 2009 at 10:29 am

What is your mysterious source of AAA rated insurers?

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