At 11:15 AM 11/22/2001 -0800, David Honig wrote:

     At 08:46 PM 11/21/01 -0800, Petro wrote:
     >       No. Libertarians are for "free markets", which are
     inherently
     >capitalistic in nature, but the reverse is not true.  There are
     many
     >*wealthy* capitalists who are all for strongly regulated markets
     and
     >high barriers to entry. One could argue that they are not
     Capitalists.
     Those are philosophical parasites.  Like a congressvermin who
     campaigns
     on liberty and once in office destroys it.

   A good recent example is Warren Buffett calling for an FDIC-style
   government insurance against terrorism.  In the sweet name of
   self-interest he proposes that the government increase existing
   insurance moral hazards by forcing all citizens to underwrite those who
   have chosen to live or work in higher risk areas.
   [1]http://www0.mercurycenter.com/premium/opinion/columns/terror20.htm
   I'M in the insurance business -- an expensive place to be in the past
   couple of months. It was made costly for Berkshire Hathaway, the
   company I run, because I did something very dumb: allowed Berkshire to
   provide insurance coverage for a huge catastrophe loss without its
   getting a premium for doing so. The risk we unthinkingly assumed was a
   loss from terrorism.
   Given the degree of my error, I was lucky: We estimate our Sept. 11
   loss at Berkshire to have been ``only'' about $2.3 billion. That's
   more, by far, than we've ever lost from a single catastrophe, but the
   toll could have been far larger. Indeed, had a nuclear device been
   available to Osama bin Laden, the loss could have bankrupted most of
   the insurance industry.
   A potential loss of almost infinite magnitude can be assumed only by an
   entity of almost-infinite resources. That entity doesn't exist in the
   private sector. Only the U.S. government fits the bill.
   Washington has accepted this proposition to a point. Congress is now
   agonizingly trying to create some sort of industry-government coalition
   that would insure losses from terrorism.
   Some proposals limit the government's liability but leave the risk for
   the industry open-ended. These proposals won't work: If unlimited
   liability is left with insurers, they will necessarily refuse to renew
   policies they see potentially leading them to bankruptcy.
   Equally bad, all the proposals now being considered will engender
   pricing based upon risk exposure: If a business is located in a
   high-risk spot, it will be asked to pay a staggering price for
   insurance. Risk-based pricing is normally equitable and desirable. In
   this case, though, it would have anti-social consequences.
   For example, the terrorism risk per dollar of insured value may be 10
   or more times for iconic or critical properties in New York City what
   it is for properties in less-populated areas. But great cities are
   central to our society. We don't want them to wither under the burden
   of hugely disadvantageous insurance costs. Their citizens almost
   certainly bear above-normal physical risks in the terrorist war being
   waged upon us; we shouldn't impose crippling economic costs on them as
   well.
   We should adopt the Federal Deposit Insurance Corp. as a model for
   where we want to head in the insurance industry. The rationale for the
   FDIC, formed 68 years ago, was clear-cut: The United States sorely
   needed to eliminate bank runs and the financial panics they caused.
   Before the FDIC, the risk from bank failures resided with depositors,
   who had no way to shed it.
   Neither they nor their banks could lay that risk off on private
   insurers for two reasons. First, the dollar amounts involved were
   simply too large; second, losses were correlated, in the sense that the
   failure of a few banks frequently caused a chain reaction, toppling
   good banks with bad, leaving a mountain of economic damage.
   Fortunately, these punishing disruptions to our economy were ended by
   the advent of FDIC insurance.
   Now, millions of business owners, individuals, landlords and lenders
   bear the economic risk of terrorist attacks. Insurers won't assume the
   risk -- we were previously dumb, but we've learned. It isn't right,
   though, that these risk-laden millions should have to shoulder this
   burden themselves.
   If we were to adopt an FDIC model for handling terrorism, the insurance
   industry would not be permitted to earn a dime from the coverage.
   Instead, a premium tax, payable to the U.S. Treasury, would be levied
   on all insurance. This would have the equitable effect of spreading the
   terrorism-related cost to the country in general, just as we spread
   defense expenditures.
   Were such a proposal enacted, it should sharply limit private lawsuits
   seeking to place blame on some party involved -- an airline, say. We
   should want the Treasury to make payments to victims solely to
   compensate them for loss of property, life or direct earnings, without
   worrying about fault. The law also should cover war losses.
   Some people will argue that an FDIC model for insurance would be a
   socialistic intrusion into the private sector, yet that institution is
   today generally regarded as having been enormously beneficial. Once,
   the problem was bank runs and economic panics; we found an innovative
   solution. Today, the problem is terrorism and its capricious effects on
   insurance costs; we need a solution of comparable efficacy.
   Warren Buffett is chairman of the board of Berkshire Hathaway Inc., a
   diversified company with insurance operations, and a director of the
   Washington Post Co., which has an investment in Berkshire Hathaway.
   This was written for the Post.

References

   1. http://www0.mercurycenter.com/premium/opinion/columns/terror20.htm