Tag: risk

The grocery and the mountain

When should a community gather up its resources and provide a service to all members? And when should individuals be turned out into the world to navigate on their own dime? These debates cross all levels of government.

Some provisions are accepted as a government thing, like piped water or sewer. Even basic universals like education attract conversation about private options. Roads are sometimes (although truly not very often) toll roads. Bridges are mostly a public venture, as are parks. What takes a good out of private production and places it in the receivership of a bureaucracy?

Fear usually. Police and firefighters are in place to ensure personal safety. The New Deal was to alleviate fears against a repeat of depression era outcomes. When society risks a loss that compels a human response, society steps forward with a safety net.

Mamdani, New York Cities new mayor, sold the people on a fear of escalating grocery prices and thus the need for a government run store. This seems different than when a small community rounds up a helicopter rescue for a mountain climber who ventured up a nearby peak alone and unprepared.

So who gets to pick what there is to fear? Not everyone does this well. Here’s Mises (from Theory and History)

They recommend some policies, reject others, and do not bother about the effects that must result from the adoption of their suggestions.

This neglect of the effects of policies, whether rejected or recommended, is absurd. For the moralists and the Christian proponents of anticapitalism do not concern themselves with the economic organization of society from sheer caprice. They seek reform of existing conditions because they want to bring about definite effects. What they call the injustice of capitalism is the alleged fact that it causes widespread poverty and destitution. They advocate reforms which, as they expect, will wipe out poverty and destitution. They are therefore, from the point of view of their own valuations and the ends they themselves are eager to attain, inconsistent in referring merely to something which they call the higher standard of justice and morality and ignoring the economic analysis of both capitalism and the anticapitalistic policies. Their terming capitalism unjust and anticapitalistic measures just is quite arbitrary since it has no relation to the effect of each of these sets of economic policies.

Taking over a grocery is sure to fail financially without ensuring any additional food security for those who need it. It’s a vanity project. Wouldn’t it be like telling the mountaineer that a government representative would need to participate in the planning and execution of his climb? Yet here, the little community bears a disproportionate cost for the climbers’ foolishness.

It seems that the risk to persons and the community happens to various degrees. Whether the risk triggers community involvement has to do with its extreme and the distance between the risky step and all the other steps in between.

A book about risk

I’m quite enjoying Allison Schrager’s accounts of how people navigate risk in their lives. The book is full of stories about poker players and surfers, as well as bankers and bond traders.

Although the framework follows the model of an individual making a decision, in the background there are many communal references. This passage is about the paparazzi partnerships.

Since the best shots come down to being in the right place at the right time, photogs often form teams or alliances to share tips and sometimes royalties to increase the odds or payoffs they’ll be in that place. In 2003, Baez founded a group called PACO, “like the jeans,” combining the words “paparazzi” and “company.”

PACO consisted of ten experienced photographers. They traded tips on where certain celebrities hung out and when. So if Baez spotted a celebrity eating lunch at a trendy restaurant, he would alert the other PACO members. He says, beaming with pride, “Back in the day when we’d show up, the other guys would say, ‘Oh no, here comes PACO, because we were the best.”

Family ties show up in several of the vignettes. Somehow the prospects of his first love trump a degree from Stanford. When talking about the business executive Arnold Donald, she recounts.

It was a way to get both worlds: the liberal arts experience he wanted and the Stanford engineering degree.

During his sophomore year at Carleton, Donald married his college sweetheart, who also received a place at Stanford’s engineering school but no scholarship. Rather than take on the financial risk of student loans, they went to Washington University in St. Louis, where they both had scholarships.

And background players can even accumulate into a whole world of their own. For the poker player, there’s a benefit to syncing with the subculture.

The world of professional poker is a unique subculture-complete with special outfits and lingo-that appears foreign to outsiders. Its obsessive fan base watches games on television or in person for hours, is preoccupied with stats, and gambles on the players and games. Winning at poker comes down to luck and skill. Luck is being dealt a winning hand. Skill is knowing how and when to bet, and having the discipline and ability to infer what other players are doing.

Although not explicitly described or measured in terms of their influence, social relations, network effects, family ties, and workplace mechanics are ever-present in Schrager’s stories on risk.

Insurance Update

Come to find out, property insurance rates on a $300,000 home vary by state. They vary a lot. The annual premiums for a dwelling in Missouri and Mississippi are twice as much as Maryland and Maine. Minnesota is, of course, just average.

Insurance.com

If you haven’t thought about your insurance coverage in a while it might be an idea to dust off the policy and dig into what is covered. Some riders are negligible in cost yet nice to have when the situation arises. And example for coverage is on the water line from the meter in your basement to the connector at the street. Standard deductibles have also gone up from $1000 to $2500. The larger deductible may save your annual premium $200-$300.

Also, be sure to understand how the coverage works. With all the roof claims, often driven by contractors knocking on doors after a hailstorm goes through a neighborhood, companies have changed the payouts on roof replacements. Many companies will prorate the coverage once a roof is over fifteen years old. If the storm comes through in the twentieth year of the asphalt shingle life, then the homeowner only gets paid the value of the remaining years of life.

A periodic review is indeed essential for staying informed about external factors that may affect your insurance coverage. Even if you are content with your current provider, the insurance market continuously evolves, making regular evaluations crucial for ensuring that your coverage aligns with your needs and the prevailing circumstances.