Insurance Companies as Competing Governments: Whose Idea Was It?

By Richard Boren

The article ( Insurance Companies as Competing Governments: Whose Idea Was It? ) below was first published in Issue 167, 4th Quarter, 2015.

[Editor’s Note: As some of you may know, I operate a small retail tire store and auto service center. Several problems in the store involve questions regarding the sale of used tires and the proper way to repair punctured tires. If a customer brings in a tire with plenty of tread, but which was manufactured ten years ago, is it safe to install? Should a tire be ‘plugged’ from the outside or must it be inspected and repaired from the inside? These are questions the tire industry is struggling to answer. Many leading tire associations look to the federal and/or state governments to offer legislative and regulatory solutions. When I suggested to the editor of a tire magazine that the insurance companies should set these standards, he responded: “Where did you ever get that idea from?” Well, I got it from several decades of studying and thinking about voluntaryist solutions to societal problems.

In a state-free market economy it would only be natural for insurance companies to establish safety and procedural standards for those that they insure. Among other things they would probably fund organizations like Underwriters Laboratory and Consumers’ Union to test products and to establish minimum requirements for obtaining insurance. Thus, rather than the state dictating the rules regarding tire aging, tire repair, (and thousands of other standards, such as the way to store explosive fertilizers or the use of seat belts and air bags in autos), it would be the insurers of these products and procedures that would be responsible. After all, they would have a large amount at stake should an insurable event occur and cause them a loss.

In a voluntaryist world, by definition, all products and services would be provided via private, voluntary action. Gustave de Molinari (1819-1912) was probably the first person to envision the role that private defense and protection agencies might play in a state-free world. (See his 1849 monograph, THE PRODUCTION OF SECURITY, partially reprinted in Issue 35 of THE VOLUNTARYIST.) However, Molinari made no mention of the role of insurance. That idea appears to have first been expressed more than 100 years later by someone else, as will be described below.

When I received a copy of an email from subscriber Richard Boren in September 2014, I had already been thinking about the pivotal role that defense and insurance companies would play in a state-free society. Richard had written that email to Hans-Hermann Hoppe, the author of a book, DEMOCRACY, THE GOD THAT FAILED, he had recently read. That book, first published in 2001, placed heavy emphasis on the role of insurance companies in a free society. In it Hoppe gave credit to Morris and Linda Tannehill for their “brilliant insights and analysis” in that regard, as expressed in their 1970 book, THE MARKET FOR LIBERTY. The purpose of Boren’s email to Hoppe was to suggest that perhaps the Tannehills were not the true source of the ideas he so greatly admired. I suggested to Richard that he write an article on the history of the insurance concept, and he offered me the following.]

I first heard the idea that insurance companies would play an important role in a state-free society in 1975, while taking Course V-50 at the Free Enterprise Institute (FEI). The concept had been taught there for over 10 years, which is to say about five years before the Tannehills published their book. My instructor was Senior Lecturer Jay Stuart Snelson (1936-2011). He did a superb job of teaching concepts innovated by Andrew J. Galambos (1924-1997) and others in what was labeled the Science of Volition. Galambos had founded the Institute, a profit-seeking venture, in the early 1960s. I was so taken by what I learned there that I took classes continually for four years, all but the first taught personally by Galambos. FEI operated under Galambos’ direct management until the mid-1980s when he was sidelined by Alzheimer’s disease.

Prior to reading Hoppe’s book, I had never heard of the Tannehills but was inspired to purchase their book. What they had written about insurance companies sounded a lot like what I had learned from Galambos. I tried to find out more about the authors but hit a dead end. I could find no mention of them anywhere, other than references to their book. It didn’t appear that they had written anything before THE MARKET FOR LIBERTY, or anything since. Apparently the book was quite successful in libertarian circles when it first came out. I asked myself, “Who comes out of nowhere, writes a well-received book, and then disappears?” The answer, as far as I know, is pretty much limited to J.D. Salinger and Harper Lee. I began to suspect that the Tannehills might not have existed, and were the pennames of someone else. However, thanks to the help of Brian Doherty of REASON, I learned that the Tannehills were real, as evidenced by an interview with Linda Tannehill in the March 1991 issue of LIBERTY MAGAZINE. But still, their appearance out of nowhere to write a book of great substance, including the blockbuster insurance idea, was suspicious. Who in that position doesn’t remain active on the scene? Was the work really theirs?

In the “Acknowledgments” section of their book, the Tannehills expressed gratitude to “Skye d’Aureous” and “Natalee Hall.” I learned that these were the pseudonyms of Durk Pearson and Sandy Shaw. I knew these names because of their prominence in the health-food, life-extension book and lecture business.

And then I learned something else. In the late 1960s, immediately preceding the 1970 publication of the Tannehill’s book, Mr. Pearson was a student of Andrew J. Galambos. In fact, Pearson was described as a “precocious” student by Alvin Lowi, Jr., who had close business and personal ties to both Galambos and Pearson.

The insurance-as-government concept was central to the state-free society that Galambos wanted to develop. He lectured for hours on how to build such a society, and Pearson could not have been a Galambos student, let alone a precocious one, without learning about the central role of insurance. Could it be that Pearson gave those ideas to the Tannehills?

Galambos recorded all of his lectures on audiotape, and made the recordings available to new students so that he wouldn’t have to deliver the same course over and over. He gave Course V-50 for the last time in 1968. After that, new students either heard that recording or attended the live presentations by Jay Snelson, as I did. Galambos also promised to write a book containing the ideas of V-50 and of a more advanced course, V-201, but never did. However, he pre-sold the book to a number of students (I am one of them) and promised that in the event of his death or other inability to write, his trustees would publish a transcript of his lectures to satisfy the book obligation. Galambos died in 1997 (after many non-productive years due to his disease) and in 1999 his trustees published Volume One of his book, consisting of a lightly edited transcription of the 1968 rendering of Course V-50. These are the ideas that Durk Pearson would have heard in person.

Galambos was an excellent lecturer, seemingly speaking without notes. V-50 was a 16 session course, with each session lasting about three hours. Anyone who can hold an audience’s attention for that long must have been doing something right. Nevertheless, a transcription is not as good as a carefully written book, but it had to do. The transcription of V-50 was released as an 800+ page book titled SIC ITUR AD ASTRA (This is the Way to the Stars). The title reflected astrophysicist Galambos’ desire to be involved in proprietary space travel. He would quip that he was “trying to make the world safe for astrophysicists.”

Galambos, in endeavoring to create a bona fide science of volition, insisted on developing and using a precise, uniform vocabulary. In the same way that physicists have standard, universally-used terms such as “mass” and “energy,” Galambos developed precise definitions of such words as “freedom” and “property.” He distinguished between “state” and “government” and gave credit to Albert Jay Nock and his book, OUR ENEMY THE STATE, for sensitizing him to that distinction. Galambos defined “state” as “any organized coercion which has general accreditation and respectability by the people; a monopoly of crime.” Then, rather than abandoning the word “government” in favor of something with no negative connotation, he attempted to rehabilitate it by defining it as “a person or organization which offers services or products for sale for the purpose of protecting property, to which owners of property may voluntarily subscribe.” He said, “Please note the indefinite article: ‘a’ government, not ‘the’ government. It’s not a monopoly. It is not unique.” He counted lock makers and fence makers and private detective agencies as government. But, he added, “… the highest form of government available in this world is the insurance company. If all else fails, and you do lose your property, they’ll pay you the financial value for which you have insured it, and that is a government service.”

He called insurance “one of the great inventions of all time. It compares in importance with the invention of the wheel.” In his book, over 7,000 words are devoted to the concept of insurance companies providing services traditionally assigned to government. Galambos pointed out that an insurance company has a proprietary interest in its customers’ well-being, meaning that a customer’s loss would be the insurance company’s loss. The insurance company was a “totally impersonal organization operated by total strangers” but highly motivated to prevent the loss in the first place, and, in the case where there was a loss, to apprehend the person responsible and recover that loss.

In explaining this to students, Galambos emphasized that under the state the highly regulated insurance industry offers nothing like what it would in a state-free society. The service provided by insurance companies competing in a voluntary society would be vastly better than under state supervision. Many more insurance options would be available, and most people would insure a wide variety of things, out of habit, without thinking much about it.

As a requirement of attending classes at FEI, Galambos required students to sign a non-disclosure agreement. This policy has been attacked by some of his detractors – people who never took a course from him. I will not discuss it here other than to say that the point was to help ensure proper use and dissemination of knowledge, not to suppress it. Durk Pearson would have had to have signed such an agreement, and would have been in violation of it if he had disclosed the insurance concepts to the Tannehills without Galambos’ permission. Although the evidence is circumstantial, and I am speculating, I suspect that this is what happened. Galambos would never have given permission for anyone to publish his ideas before he had done so himself. So, since Pearson couldn’t legitimately write about the ideas, he used a pseudonym and gave them to the previously and subsequently unremarkable Tannehills.

Carl Watner reports having correspondence with Morris Tannehill in 1969, a period when Tannehill must have been thinking about and even writing the book, but there was no mention of insurance. It’s hard to imagine someone coming up with a big idea like that and not mentioning it, especially since Watner was not yet convinced of the state-free solution, and the idea goes a long way toward making that feasible. Once someone hears the idea and “gets it,” it is a fairly mechanical process to think of numerous applications. Readers of the Tannehills’ book will see that, as will those who are fortunate to read Galambos.

But where did Galambos get the insurance idea? I always assumed it was his, but came to learn that was not the case. As a working astrophysicist, in the early 1960’s he began giving freedom-oriented lectures to his colleagues and his following grew. One way of reaching students with his original course, Course 100, was to have his friend and colleague Alvin Lowi, Jr. listen to each session, take notes, and then deliver that session to another group a week later. In one of those other groups was Peter B. Bos, an MIT aeronautical engineering graduate with a blossoming interest in libertarian issues.

According to Bos, he never took a course from Galambos, his exposure coming through Lowi. Like every person considering the idea of limiting or even eliminating the state, he had the usual questions about how the state’s putative function of the protection of life and property would be performed. At some point he had the insight that there was no need to invent something new because the answer already existed in a well-established, well-capitalized industry: insurance. For anyone who has ever tackled any project, there’s nothing better than realizing that the thing needed to solve a problem already exists and can be taken off the shelf and used. It was a “Eureka!” moment for Bos.

Bos realized that when it came to protecting your life and property, there would be no better ally than someone who would suffer a loss if you suffered a loss. Bos saw that insurance companies had a proprietary interest in your well-being – something the state does not. In fact the state does not even have a legal responsibility to keep you safe. However, if you are insured, then your insurance company must pay you if you come to harm. Therefore, the insurance company, in its own interest, has a motivation to keep you from having a loss of life or property in order to keep itself from suffering a monetary loss. There are many things an insurance company might do in this regard including, but not limited to, the production of physical defense. To Bos, the insurance company was the ideal replacement for the state because it has an incentive to do the things that make up the main reason for the state’s existence – the protection of life and property, but which the state routinely doesn’t deliver.

As witnessed by Lowi, Bos presented this idea at the 1963 FEI Alumni Meeting with Galambos in attendance. Galambos, who was in the middle of his own fundamental shift from promoting a society with a limited state to one that was state-free, soon incorporated the insurance idea into what became Course V-50. Perhaps fortuitously, Galambos himself was licensed to sell insurance and investments, and did so, but gave up that business to devote full time to FEI. He went on to develop Course V-30, Investments and Insurance, in which fundamental concepts were brilliantly explained. Galambos clearly had a deep understanding of insurance. However, the idea that competing insurance companies could and should take the place of the state came from Bos. But Galambos never gave Bos credit for the idea, and it was not until 2008 that Bos learned that Galambos had used it. Bos has written a book, THE ROAD TO FREEDOM (which should be available by early 2015), that incorporates his ideas for building a free world, and naturally insurance plays the role he envisioned.

Galambos’ failure to give credit to Bos has not been explained. Not to have done so was a violation of the very things he taught. An answer might lie in his recordings and papers from that era, should they ever become available for study. As it is, however, the trustees of Galambos’ estate have withdrawn SIC ITUR AD ASTRA from sale. They have also refused to fulfill the rest of the book contract by publishing the transcript of what Galambos called his most important course, V-201, The Nature and Protection of Primary [Intellectual] Property and delivering it to those who paid for it. However, the most important material is gradually being revealed at, created by Frederic G. Marks, Galambos’ onetime attorney and confidante. I highly recommend it.

So, did the insurance-as-government idea originate with Peter Bos, then flow to Galambos, to Pearson, and then to the Tannehills, with the latter getting the credit? Among other things, Galambos acknowledged that ideas could be independently discovered, and in course V-201 he proposed a number of tests for independency. It was one of those tests – whether the person claiming independent discovery had a track record in the subject area – that caused me to look into the Tannehills. In fairness, they didn’t explicitly claim independency, but neither did they cite an antecedent, so the inference was that their book offered new ideas, and that’s how it was accepted by the esteemed Dr. Hoppe. It’s likely that we’ll never know, but absent evidence to the contrary I’ll credit Peter Bos who, by disclosing the idea in 1963, appears to have been first.

Addendum (August 1, 2016)

This is a retyping by Richard Boren of Peter (Piet) Bos’ 1962 paper, “Some Ideas on the Proprietary Management of Government.” The original was labeled “rough draft” by the author, and was retyped for the purpose of incorporating his handwritten edits, some of which are quite faint in the original.

The text reveals that Bos is not a native English speaker. Born in the Netherlands, as a young boy he suffered greatly during the Nazi occupation, seeing firsthand the evils of a totalitarian state. After the war an American family sponsored his immigration to the United States, leading to a degree in aeronautical engineering from MIT, and a successful business career.

In this draft his repeated use of the word “objective” may show the influence of his primary philosophical inspiration, the work of Ayn Rand. The influence of Galambos is clearly seen in his use of Galambos’ definition of property. Neither man had yet broken free of the idea that there must be a state (Rand never did) and both of them were at that time trying to find ways to limit the state’s coercive power.

In this document we see Bos’ early formulation of the idea that the insurance industry, already established and financially strong, could perform the fundamental function of government—property protection—even on a national scale. Bos disclosed this idea, which perhaps had evolved by then, to Galambos in 1963 during a Galambos alumni meeting. It later became part of Galambos’ recipe for a fully privatized society, but without credit to Bos, giving the impression that Galambos had violated his own teachings about primary property. However, Galambos was licensed to sell securities and insurance and even taught a deeply insightful course on the subjects. It is not known whether Galambos got the idea of applying insurance on a grand scale from Bos, developed it independently, or whether both men deserve the credit. Absent additional evidence, we cannot know.

In this paper Bos discusses the role of insurance companies in national defense while overseen by the state to prevent them from initiating coercion. Galambos took things one critical step further by eliminating the state. He redefined “government” as “any person or organization which offers services or products for the purpose of protecting property, to which the owners of property may voluntarily subscribe.” He identified insurance companies as the organizations best-positioned to do this, as competing “governments.”

Bos knew Galambos only slightly and never took a class from him, hearing his ideas in lectures given by their mutual colleague Alvin Lowi, Jr. Bos was never a Galambosian, preferring instead the ideas of Rand and her disciple Nathaniel Branden, and it wasn’t until 2008 that Bos learned the role that insurance played in Galambos’ teachings. Bos had found his own path to the belief that society should be state-free, and reveals his prescription for accomplishing that in his 2015 book, The Road to Freedom and the Demise of Nation States.

(Rough draft) 10 – 18 – 62 Piet B. Bos


The concept of taxation as a revenue collecting method for financing of Government (State) has always contributed to the decay of many known civilizations due to the inherent evils of such a concept. Taxation in all cases amounts to non-objective coercive confiscation of private property and regardless of the methods of the taxation selected, always consistently penalizes the most productive individuals. Therefore, a concept of financing and operation of Government consisted with the market operation in a laissez-faire society is a very important consideration in the establishment of an enduring society.

Government in a moral society has as its only function the protection of private property of the individuals comprising this society. As such, the only monetary requirement for government consists of the financing of the apparatus for the protection of private property. The protection of property can be broken down into local protection and protection on a national level from infringement by other countries which is known as national defense. Examples of protection on the local level are the courts, police and fire departments, etc. The question amounts to how to finance these services in a non-coercive objective manner consistent with the market operation. It is obvious that a system is desirable in which each individual (or corporations) pays an amount proportional to the services received by him, but this immediately poses another question – how to evaluate the amount of services rendered to each individual.

Arbitrarily designating a service charge amounts to some individual (Bureaucrat) defining the amount of services rendered to individuals (or corporations) which directly makes this system of financing nonobjective. Only the individual (or corporation) in question can objectively evaluate his own private property (his life and the non-procreative derivatives thereof), and consequently the individual’s own estimate of the amount of property to be protected will be required to objectively compute the service charge for the protection of this property. However, to rely on an honor system in obtaining this information would result in sacrificing the responsible individuals to the irresponsible ones. Furthermore, there would be no reliable indicator as to the total amount of protection required and, therefore, what the total expenses and protection (Government budget) ought to be. Again arbitrary bureaucratic (nonproprietary) decisions would dictate the total amount to be collected without the benefit of a built-in yardstick such as is present in the market operation due to the profit incentive. Fortunately, in a free enterprise society there are in existence interested organizations other than the property owners themselves with regard to property and its protection. These organizations are the insurance companies.

To protect property from disaster, etc., individuals (or corporations) resort to insurance programs which basically are voluntary risk sharing programs. The corporations who make insurance their business determine the cost of such policies on the basis of risk using statistical methods. These risks are computed on a continuous basis to ensure that the business remains profitable and competitive. To ensure his property, an individual (or corporation) must objectively evaluate the value of his life and property on a continuous basis to ensure himself against possible losses. Since risk and insurance depends directly on the amount of protection provided for the property to be insured, there is an optimum market solution of the amount of protection provided and the required total cost for providing this protection plus the cost of the insurance policies themselves. Therefore, the obvious solution is to have insurance companies finance the protection of property provided, the cost of which would be part of the insurance policy cost. The insurance companies in order to hold down the cost of operation would continually optimize the amount of protection provided with the lowest possible insurance rate. If, for example, in the case of fire protection (the financing for which could be collected from real estate insurance policies, etc.) the amount of protection is inadequate, the claims for fire damage would increase resulting in great expense to the insurance companies. This would force the management to increase the fire protection in the particular area such as to minimize total cost. If the fire protection is excessive, fire insurance would be very high resulting in loss of business directly due to the higher prices and indirectly by competition. This would force the management to reduce expenses which is only possible by reducing the amount of protection provided. This balance would be continually reviewed such that the insurance company can provide the best possible service at the lowest possible cost resulting in an optimum solution between the amount of protection and the cost thereof. Protection of property thus is provided on the proprietary management which ensures maximum efficiency resulting in minimum cost for these services. On a local level the insurance companies would provide this protection under contract with companies in the business of providing police, fire, etc. protection. The latter companies again have proprietary interests against ensuring maximum efficiency and lowest possible cost due to competition.

Some concept of separation of power may be necessary even at the local level to ensure that insurance companies will not be able to utilize the intended retaliation coercive power for protection of property for immoral purposes (for example veto power over the selection of the protection service maintained by the individuals seeking the protection in that particular area).

To provide for protection of property on a national level this idea would be equally adequate. To make this possible, protection from war disasters such as nuclear attack, must be included as part of the insurance coverage in return for national defense financing provided by the insurance companies. Necessary proprietary management decisions are required of the insurance companies with regard to the amount of financing for the national defense such that in the case of external danger, the defense will be adequate to offset the claims to property damage (property including life). Again, we find an optimum balance between national defense expenditures and cost of insurance policies. Since we are again relying on proprietary management decisions which are reviewed continually to ensure this proper balance, the total amount required for national defense will be much lower than the amount presently scheduled. In addition, the cost for national defense will continually decrease due to two basic reasons: (a) by virtue of the laissez-faire capitalistic society out-producing all of the collectivist societies by a very large margin the threat of these nations is continually lessened; (b) the unit cost of insurance will continually decrease by virtue of the fact that property is created at a very fast rate in a laissez-faire capitalistic society. This increased amount of property will require insurance itself, resulting in a lower unit cost of insurance for a given total cost of national defense.

The national defense, even though financed by the insurance companies, is the responsibility of the federal Government, which in turn is subject to constitutional law in a moral society with the consequent separation of power inherent in such a Government thus eliminating initiating coercion by the insurance companies.

The defense contracting will be performed on the basis of maximum protection for minimum cost. This would reestablish the defense industry subject to the free market profit and loss system, eliminating such abhorrent concepts of cost-plus-fixed-fee (in other words, the larger the cost the larger the fee). This will reduce the cost of national defense by very large amounts and will also eliminate political favoritism (government subsidies, awards of contracts, etc.) to any one company. The defense companies themselves will be required to work under maximum efficiency due to the competitive market. This will require continuous review of management and personnel efficiency as well as production costs. This in turn will direct the defense industry to peaceful, profitable business endeavors in the astronautics field which will result in a great reduction of system cost. New ideas will evolve in much greater succession in the effort to cut down on the system cost, establishing a very creative atmosphere for profitable space exploration.

In summary, the advantages of this proprietary management operation of government with regard to revenue collection are: (1) the amount of protection and, therefore the cost thereof, determined by proprietary decisions subject to the laws of the market such as to establish an optimum balance between protection provided and cost of protection; (2) the method of financing accomplished on a voluntary basis stimulated by self interest for protection of property; (3) the amount of services received objectively evaluated by the individual himself subject to no coercion; (4) proprietary management decision in the execution of the protection of property; (5) continual review of the balance between the amount of protection and the cost of protection.

Readers of this article may be interested in this other historical essay dealing with related themes.

[Editor’s Note: The following two editorials appeared in the Colorado Springs GAZETTE-TELEGRAPH, page 11, on September 6, 1957. They were penned by Robert Lefevre. Although Gustave de Molinari’s article in 1849, “The Production of Security,” is probably the earliest description of competing defense agencies providing protective services, these sister editorials may be the earliest expression of the idea that free market insurance companies could be the major providers of defense services in a stateless society.]

Two Kinds of Protection

Protection is one of man’s basic requirements. From earliest days man has been interested in preparing against assault, whether the attack he anticipated might come from weather, beasts or other men. Man’s ability to protect himself against any and all of his enemies is responsible for his survival.

At best, this is an unfriendly world, and one must prepare in peace and calm for the storm and strife which surely will come.

In very ancient times men turned for their protection to the strong. They looked about for a bandit chieftain, mighty and resourceful, on whom they could depend for safety. They knew when they did so, that the bandit was a villain. But they hoped, by paying him in taxes or in tribute, to make him their villain. It was wise, men reasoned, to have a powerful and unscrupulous leader on their side. Such a leader could be counted on, they felt, to offset the fury of some other bandit leader against whom they would be powerless.

The search for protection among the ranks of the bandit chiefs provided men with government. And so long as a particular bandit remained loyal to his own people, men felt secure. They reasoned that it was better to pay a known and limited amount of plunder to their own bandit chieftain than to be compelled in suddenness to surrender everything they had in the dark of night to some other bandit not in their own pay.

The trouble has always been that a bandit is still a bandit, however he is paid. And bandits, like their fellows, are ambitious. Hence, with dreadful regularity, bandit leaders turn upon their own people time after time. They become dissatisfied with the tribute rendered to them voluntarily for protection. They begin by raising the amounts of that tribute according to their own selfish desires of supremacy and vainglory. They end by preying upon their own supporters in a manner not unlike the conduct of the very bandits they have been hired to combat.

When such a practice rises to its zenith, the people who pay become dissatisfied. They deem it disastrous to keep a particular bandit in power. They look back upon the good old days when their particular bandit was tractable and satisfied with smaller sums. And in the end they change their patronage.

Which is to say that by elections or revolutions they overwhelm the bandit chief of the moment to replace him by another bandit chief who gives promise of more moderate ways. But moderation is not a strong point with bandits. And so the endless story is repeated, over and over again. People rise up and do away with one particular bandit, and fly to the arms of another for protection.

Such changes in the long run provide little in the way of actual change. Only the names are different. The practice of banditry is still the general rule. And it should be noted that this reliance upon banditry is a reliance upon physical force and violence, however friendly such force and violence can be made to appear at a given moment.

In relatively recent years, a new mode of protection has made its appearance, in the market place. Foregoing force and violence, the insurance idea was born. It was and is the contention of insurance experts, that men can secure protection by translating the protection desired into terms of money. Insurance men know that people cannot be protected against the inevitable. Fire, flood, storm, drought, accident and even death are always with us. The insurance idea is that the possible amount of damage can be calculated in advance in terms of money. The person desiring insurance can pay to the insuror a sum of money which in toto will be but a fraction of the loss he might experience if one of these dread enemies should strike. Then, altho he is still subject to disaster, he can indemnify himself against the frightful financial loss such disaster might represent.

This is a free market idea. The growth of insurance companies since the first marine coverage to the present time, is ample evidence that the idea of protection is marketable on a voluntary basis. Unlike the bandit chieftains, the insuror does not make his coverage mandatory. He indemnifies only those who patronize him. Those who wish to be covered, pay in advance. Those who do not wish to be covered, pay nothing.

But there is a notable difference in the manner in which each of these protection agencies functions. Surpluses collected by bandit chiefs are spent in a vast and lordly fashion on all sorts of silly and irresponsible projects. Surpluses collected by insurors are invested in free enterprise, thus enhancing the market place, increasing financial responsibility and otherwise strengthening freedom and voluntarism. The bandit chiefs still rely on force. The insurors rely upon arithmetic and logic and use no force. Yet, both sell protection. To us the voluntarism of insurance is vastly superior to any kind of banditry.

Superior Protection

In the preceding editorial we have discussed two types of protection: that provided by bandits who make their protection mandatory once they have been hired and that provided by insurance companies which use voluntary, free market practices and protect only those who wish to be protected. And we have commented that to us the voluntarism of the insurance idea is superior to the involuntarism of banditry.

We might also show that with the passing of the last half century, the bandit idea, while sustained in most minds, has resulted in a mammoth debt of such magnitude that serious students are wondering if the sum can ever be repaid, whereas the insurance idea, while not universally adopted has resulted in such surplus that insurance companies are now among the largest repositories of funds throughout the world. Bandits, relying on physical force, have constantly betrayed their own payees. Insurors, relying on nothing but honesty and the voluntary way, have met their obligations cheerfully and promptly. This provides. a curious contrast.

It is clear that insurance is a successful and worthy enterprise. Grave questions have still to be answered as to the success and the worth of universal plunder even when such plundering is sponsored by our political friends.

So, in very recent times, the bandits have recognized the value of the insurance idea. And, having recognized it, they have turned to it to practice it. But in so turning they have retained their basic character. Thus nowadays, certain of our group of world bandits have sought to employ the insurance idea as their own. But they cannot rid themselves of the curse of compulsion. Thus, when our own group of political thugs undertook the largest and most expansive program of insurance in world history ­ the Social Security scheme ­ they brought to it their own ideas of banditry and made Social Security a matter of compulsion. Most were not asked if they wanted such government insurance. Instead, at the point of the tax gun, they were compelled to take it. And the money collected by our bandits was used just as any other money they collected. It was poured into any number of the numerous rat holes of political expediency maintained by the bureaucracy of banditry, so that our bandit insurance is naturally dependent upon its income from banditry and not at all upon its investments, which are nil.

Thus we see that a merger of an insurance idea with banditry is of little merit. But such a merger gives rise to the thought that it might be possible for the insurance idea, maintained without banditry, to be expanded into the areas now presumably protected by bandits. In other words, might we not ask if it is not possible that some of the vaunted protection we are still paying for from bandits could not be purchased in a voluntary manner from insurors?

If protection against fire, flood, accident and death can be purchased by those who wish such protection; why cannot those who wish it, purchase protection from the thief, the liar and the cheat? Perhaps, if we put our minds to it, we might even devise a type of protection which could be purchased from an insuror against banditry itself. Here is a thought to conjure with.

Perhaps it would not be so difficult an accomplishment as it now seems. If the protection furnished us by our bandit friends were to be placed on a voluntary basis, with each person paying for exactly the type and amount of such protection he deemed useful and wise, then the insurance idea would have, in large measure, supplanted the bandit idea. And what would be wrong with that?

It seems to us that civilization itself is voluntary association. Barbarism is involuntary association. Civilization begins with the first voluntary action. If it ends, it will end with the last voluntary action. And if we wish civilization to expand as well as continue had we not best be advised to study ways and means of supplanting compulsion with voluntarism?

Perhaps there are areas of protection open to us thru voluntary means which we as yet have not explored. Surely, it would pay us to commence the exploration. In the end, if necessary, wInsurance Companies as Competing Governments: Whose Idea Was It?e can always go back to the bandits. Why not try a superior way first? You know, it might work.

-End ( Insurance Companies as Competing Governments: Whose Idea Was It? )

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