If you know you are going to get a flu shot every year, and your "insurance" pays for the shot, there is no uncertainty and no risk involved. You are not at risk of getting a flu shot. You know you are going to get one. If you have paid for "insurance" that will cover the shot, and the insurance company pays for everyone's shot, then you there is no pool of risk. Everyone has simply prepaid for the shot. This may involve some economy, since the insurance company gets its revenues up front and can discount what it has earned from holding your money; but the savings here for you are marginal. Ultimately, most of the cost of the flu shots must be born by the insured. The more things that are added to "insurance" that are not risks but certainties, such as routine doctor visits, birth control, and other predictable expenses, the more expensive the "insurance" will be, since the number of beneficiaries will approach the actual number of the insured.
All the rest, including the whole defense budget, must be borrowed. As i understand it, the. Federal Reserve is presently buying 60 of United States Treasury bonds, which means that the federal government is simply creating and printing much of the money it is spending. Sooner or book later, this debasement will create a period of explosive inflation. The mention of Medicare and Medicaid brings me to something that most people now think of as a matter of insurance: Health care. In popular and political discourse, however, what is commonly called "health" or "medical insurance" is not actually insurance at all. This is because current forms of medical "insurance" are not primarily matters of pooling risk.
Social Security is thus not insurance, but a ponzi scheme, in which present benefits are paid from present revenues, ultimately of the Treasury, regardless of future liabilities and promises. In 2012, the only national politician who had the courage, or foolishness, to actually say this, was governor Rick perry. It was probably foolishness, since perry later demonstrated that he had difficulty remembering his own political talking points. Periodically, claims are made that Social Security is financially sound at least until the 2030's. However, this prediction is based on the judgment that the "Trust Fund" represents real assets. Since it doesn't, the day of reckoning for Social Security is when it ceases to run a surplus in its own revenues and begins cashing in its Bonds with the Treasury. At that point, the Treasury loses the revenues it has been drawing from Social Security and must begin returning the sums that it previously took, using its own taxing and borrowing powers. This day may have already arrived as I write in 2012. Thus today payments for Social Security, medicare, medicaid, and interest on the national Debt currently consume federal revenues in their entirety.
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Who could object to that? Unfortunately, two realities would undermine the solvency of the system. One was that it was expanded to cover disabled workers. But there has never been any separate tax or assessments for making Social Security viable as a system of disability payments. Such payments would be drained from general Social Security revenues, regardless of how early or how many workers became disabled.
They might be supported the rest of their lives, having contributed only a nominal amount to the system. At the same time, the aging of the baby boom generation, and the drop in birth rates, meant that the ratio of workers to beneficiaries (retirees the disabled) would drop, perhaps disastrously. In preparation for future shortfall, social Security taxes were raised in the 1980's in order to run up a surplus, a trust Fund, that could be tapped in the future at need. This was a fraud, since the surplus has always simply been given to the Treasury, which issued United States Treasury bonds to the social Security Administration and then spends the money on current Federal expenses. The "Trust Fund" is therefore a room full of paper, whose value depends entirely on future federal revenues, which can only be obtained by taxing, borrowing, or debasement. The surplus gained through present Social Security taxation thus must be resupplied all over again by future federal taxing, borrowing, or debasement. Because send of this, democratic Senator Daniel Patrick moynihan (19272003 who had his moments of marvelous clarity and honesty, said that the "Social Security Trust Fund" was simply a box that, when opened, would contain nothing but a piece of paper that said, " five trillion.
The poor houses and work houses. Outdoor relief would avoid the scandals of filth or cruelty that often embarrassed the latter institutions. Outdoor relief, however, then required supervision,. "social workers who would make sure that the recipients actually were in need and were not engaged in immoral (and so socially and prudentially "unworthy activities. Foster care for orphans, of course, was the "outdoor" version of orphanages, even as it also required supervision by social workers - generating its own corresponding stories of neglect, cruelty, and abuse. The depression overwhelmed most charitable institutions, including government ones, and opened the way even to federal relief programs, such as Aid to families with Dependent Children, despite there being no constitutional provision for such things.
An argument could be made that this was necessary in the emergency of the depression; but of course, once established, federal programs continued to exist, and only the rare, heartless crackpot ever tried to remind the nation that the continuation of such things was unconstitutional. What does "constitutionality" matter when so much good can be done? But then, the moral and prudential principles, not just of relief, but also of insurance, began to be undermined by the very forces of the political provision of goods that i am considering. Thus, in the United States "Social Security" was introduced in 1935 as part of New deal legislation. It was presented as a pension plan, where workers paid into their own account, with their contributions matched by employers, from which they would draw in their old age. A pension system is a form of insurance, previously provided by many businesses and mutual aid societies, which is subject to actuarial realities. At its inception, however, social Security had nothing to do with sound principles of insurance and was entirely a plan for the political provision of benefits. As long as the number of workers was vastly larger than the eligible number of retirees, the system could continue along; and no one would think of it as benefiting a limited political constituency, since anyone who paid in and lived long enough would.
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In part, this was deliberate. As Benjamin Franklin said, it was not proper to make anyone "easy in poverty." In a 1766 essay, "The Encouragement of Idleness Franklin said: i am for doing good to the poor, but way I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out. In my youth I travelled much, and i observed in different countries, that the more public provisions were made for the poor the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. This was all based on a moral distinction between the "worthy poor who were willing to work but were in difficulties through no fault of their own, and the "unworthy poor who were actually seeking to avoid work and sought support through fraudulent or dishonest. Private charity, which was largely religious in motivation, was very serious about this; and the able bodied were frequently required to do some nominal amount of work for the charity before being fed, for instance, in their soup kitchen. In public institutions of "relief much of the debate was about whether there should homework be provision of "outdoor relief. Welfare payments to people living on their own, or only "indoor relief.
Nevertheless, modern insurance companies often display evidence of their origin. It is not difficult to guess where companies like fireman's Fund, Traveler's, or State farm Insurance came from. Purely fraternal lodges, however, sometimes had names that sounded like professional associations, such as "Woodmen of the world.". The function of mutual aid societies has been all but destroyed by the belief of many people, and its political implementation, that the government should handle many of their essential purposes. This shift was accomplished largely thanks to the Great Depression, which damaged the economical viability of societies, many of whose members became unemployed and were unable to keep up their dues. These difficulties allowed those who had always believed in socialism, that government should provide "social" insurance for everyone, to make political inroads. Indeed, it had long been the practice of government to provide the ultimate backstop to the private institutions that, in the 19th century, provided most of the charitable aid to the poor. Government run thesis poor houses, work houses, and orphanages were, in turn, infamous as unpleasant and even cruel places.
feel protected against the consequences of possibly imprudent actions. The cost of insurance for particular threats can be determined mathematically, once the incidence of harm has been studied and actuarial tables can be compiled. Some of the earliest insurance was created at Lloyd's Coffee house in London, opened in 1688, where sailors and merchants met to chat and then began creating insurance policies for their ships. This institution still survives as Lloyd's of London, presumably without the coffee. In the United States, a great deal of insurance in the 19th century began in mutual aid societies, which offered various benefits to their members, including medical and life insurance. Such societies could be religious, professional, "fraternal or purely commercial in nature. The "fraternal" societies were "lodges" that were essentially social organizations, with ritual, costume, initiation, charitable projects, and morally edifying teachings - but without the religious identities that, for instance, still distinguish the (Catholic) Knights of Columbus. Some of the fraternal societies famously survive, like the masons, or are still engaged in conspicuous charitable works, as with the Shriners; but most, like the Fraternal Order of Eagles, may strike people as useless and ridiculous.
However, the insured enter into this relationship voluntarily, because they understand the principle by which this works. The insured are a group that are at risk of some kind of harm. They own a ship, which may resume sink. They drive a car, which may be in an accident. They own a house, which may burn, be burglarized, or be damaged in a storm or earthquake. Or, like all humans, they may be vulerable to disease or early death. By buying insurance, they have chosen to pay some money to pool their risk. Because not all the insured will actually suffer harm, the cost of the insurance will be much lower than the cost of the actual harm that will happen to a few of them.
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Lifestyle, andie mitchell, the simple breakfast change that helped this man lose 160 pounds. Daniel Clark is 21, 61, and currently weighs 170 pounds. In 2016, after getting wallpaper a job that required physical labor, he decided to get healthy to feel better at work. This is the story of his weight-loss journey. Rent-seeking, public Choice, and The Prisoner's Dilemma, note 3, Insurance and Mutual Aid Societies. A case that looks rather like the political distribution of benefits is insurance. The cost is distributed among a body of payers, the insured, and the benefits are concentrated on a small body of beneficiaries, those who have experienced a loss and have an insurance claim.