The end of sexual discrimination in Europe!

[Asher]

The auto insurance industry is reasonable competitive, which dispels that.

I don't think it is.

I found exactly ONE insurance company who would give me a quote when I was 19 trying to become the primary driver on my own car in Toronto. There was no competition there... Which explains why they could charge me $8000/yr.

[Kuciwalker]

Again, pure theory. There are limits into how fast people can move to Alberta, and how many people are willing to.

Yes, and those limits are real limits that can't be legislated away. Those limits SHOULD be felt by the companies trying to set up/expand operations there. Those are true costs, and the economy works best when prices reflect true costs: that way people will typically only do things whose benefits outweigh costs.

[Asher]

Part of it is philosophical as well. In areas where car ownership is almost a necessity, it is not palatable to exclude a large swath of the population from owning it because private companies (which people are forced to be clients of, by law) decide they don't want to make it affordable for them. I understand the spreadsheets, tables, and risk models I'm sure which justify the obscene prices for young males to drive.

The problem is the impact of this goes far beyond the economical and it starts impacting the social, and the people directly. The government has motivation here to ensure no large swath of the population is excluded from a virtually mandatory activity in society due to private business.

[notyoueither]

Kuci, you clearly do not understand the context of the province at all.

No, I recall your descriptions perfectly.

Prices are how the economy transmits information on costs. Labor rates were high because the cost of "labor in Alberta" was genuinely large. The free market then results in more people moving to Alberta, etc. and eventually the cost should fall. But until then, it is best for companies and individuals to make their purchasing decisions based on the true costs incurred.

I do not beleive the insurance industry was charging according to their true costs.

I believe they were charging certain demographics what the market would bear. There is a very high demand among young men to drive relative to many other demographics.

The industry got their answer for their behaviour. They practically put out large, neon signs begging for more stringent regulation and they got it.

[Asher]

Yes, and those limits are real limits that can't be legislated away. Those limits SHOULD be felt by the companies trying to set up/expand operations there. Those are true costs, and the economy works best when prices reflect true costs: that way people will typically only do things whose benefits outweigh costs.

But only the oil companies can afford to pay those wages, which lets the young males afford their car insurance. Not everyone can.

Can the kid who needs to get to McDonalds for his 4am shift afford car insurance? You argue that he simply shouldn't drive...so he can pay a $30 cab fare each morning.

[Kuciwalker]

Part of it is philosophical as well. In areas where car ownership is almost a necessity, it is not palatable to exclude a large swath of the population from owning it because private companies (which people are forced to be clients of, by law) decide they don't want to make it affordable for them. I understand the spreadsheets, tables, and risk models I'm sure which justify the obscene prices for young males to drive.

The problem is the impact of this goes far beyond the economical and it starts impacting the social, and the people directly. The government has motivation here to ensure no large swath of the population is excluded from a virtually mandatory activity in society due to private business.

The exclusion wasn't the result of private businesses; they were only the intermediary. The exclusion was a direct consequence of payouts on injury claims: THE GOVERNMENT ITSELF had decided that the cost to society of young men driving is larger than the benefit to those young men. Then it changed its mind and decided the cost of injuries from car accidents was lower. That was the only necessary step.

[Asher]

The main failing here is it's not a competitive market. Insurance is forced on people.

If the government forces people to buy insurance, the government is also well within their rights (and probably should) heavily regulate that market.

It's not possible for people to simply choose not to have insurance. You'd have to choose not to drive. And for MANY people, it is not an option not to drive.

[Kuciwalker]

But only the oil companies can afford to pay those wages, which lets the young males afford their car insurance. Not everyone can.

Can the kid who needs to get to McDonalds for his 4am shift afford car insurance? You argue that he simply shouldn't drive...so he can pay a $30 cab fare each morning.

Because of the value (and therefore price) of oil, the most valuable possible use of a 21yo's labor was working for the oil companies. Any other company that wanted to hire a 21yo shouldn't do so, if it were less valuable than the work he would be doing in the oil fields. Therefore society as a whole is better off when other industries that compete with the oil industry for his labor contract.

In addition, it turns out that it costs society a lot (in terms of injuries and deaths) to let the 21yo drive. Thus, a company that wants to hire him should demonstrate that the benefits from him driving are greater than the costs to society. They do this by paying him a higher wage.

[Kuciwalker]

The main failing here is it's not a competitive market. Insurance is forced on people.

No, this is not correct reasoning. There can be a perfectly competitive market in providing a good people are required to buy.

Say every person in Alberta were required to buy a barrel of oil every month. Would this somehow result in them being charged above-market rates? Of course not, because there are many firms competing to sell the oil.

It's not possible for people to simply choose not to have insurance. You'd have to choose not to drive. And for MANY people, it is not an option not to drive.

Getting people to choose not to drive if the benefits outweigh the costs is the entire point.

[Asher]

No, this is not correct reasoning. There can be a perfectly competitive market in providing a good people are required to buy.

Say every person in Alberta were required to buy a barrel of oil every month. Would this somehow result in them being charged above-market rates? Of course not, because there are many firms competing to sell the oil.

Ask the people in Europe, who pay above-market rates.

Getting people to choose not to drive if the benefits outweigh the costs is the entire point.

No, the entire point is there's more to life than economics. The people of Alberta decided young men should not be prohibited from driving due to obscene costs. Your free market dogma wreaks havoc on society when it is a phase of extreme growth. Your argue that since oil was so profitable, everyone should just go become an oil worker. Ah, wouldn't that be grand?

Who needs teachers, amiright? Or grocery store employees. Or nurses, even.

Ah, but then we would just need to pay teachers more! And pay grocery store employees more! And nurses more! Then more people would come.

We did that, too. Kids at Dairy Queen were making $15/hr when minimum wage was $7. Guess what? Not enough people moved here to offset that demand. The entire market froze and sputtered due to the unsustainably high labour costs.

I guess I'm getting away from auto insurance.

It's simply a call society makes. We didn't want a complete free market for insurance, because the costs to society were too high and the benefits nil. No one benefits when your workforce can't get to where they're needed. Without the price controls, 50 year old drivers may save $100/year in car insurance. But they can, by and large, afford that increase. 18 year old drivers are saving thousands a year in car insurance. And they can't afford those.

Bottom line is driving is now affordable in Alberta, which means are mobile workforce. Insurance companies are still profitable. Everyone seems happy. Telling us this is a bad thing is just ridiculous.

[notyoueither]

Prices can also be rents levied by a sector that has a captive market due to government regulation requiring insurance.

The auto insurance industry is reasonable competitive, which dispels that.

I don't think so. There was not enough competition that any company was motivated enough to go find the Asher's and make a killing by insuring them for rates lower than the rest. A more common meme was refusing to offer insurance, or offering a murderous rate.

You are also missing the purpose of mandatory liability insurance. The government has set a high price on injuries and deaths from car accidents. The price is so high that many/most people who caused them would not be able to pay, and would declare bankruptcy; this means that they don't actually feel the full deterrent of the high price on their behavior*. By forcing everyone to have liability insurance, people feel the full cost of their behavior, and so they will choose not to drive if the cost to society is lower than the benefit to themselves. It causes people to internalize the harm done to others, and thus increases total wealth/happiness.

*Additionally, it means the people who should be compensated for their injuries do not receive the compensation, but that is actually the secondary concern. After the injury has happened, the transfer of money doesn't create more wealth for society; the transfer could come from the government as well.

Sure, but...

Some people are, or were, being charged out of scale to the costs of their behaviour and at obscene levels. That had social consequences and those consequences forced the government to reexamine a system that had been left without review for a large number of years.

I find your commitment to the status quo somewhat bizarre. You grant that it is OK for government to set some regulation to make behaviour come into line with costs to society, but you are against the government changing regulations when the consequences of earlier policies (and other changing circumstances) make the earlier model not as socially beneficial as it needs to be.

Saying that young men should not drive is not an acceptable response, it is daft.

The rates for young men crept up and up in relation to everyone else over the course of years.

Are you saying that the industry priced young men incorrectly in the 60's and 70's when driving and drinking (and driving while drinking) were commonplace, and when vehicle safety standards and quality of roads were much lower?

I bet payouts for injuries rose over the same period, even after adjusting for inflation.

I'll bet they did across the board as population density increased and auto safety standards (another government mandate) resulted in fewer fatalities and more severe injuries and disabilities. IIRC, a death is worth $1000.

However, these changes affect all demographics. I'm not sure how they explain young men going up out of step with the rest of us. Much more significant changes in behaviour, like drunk driving moving from something that was acceptable to something shunned, suggest a decrease in costs relative to the rest of the market (to me).

[Kuciwalker]

Ask the people in Europe, who pay above-market rates.

Are the people of Europe legally obligated to buy oil? (No.) The government taxes them. There's no comparison, except in that auto insurance is essentially a market-based tax on car ownership. But that tax is set to correct an externality, and so increases overall welfare.

No, the entire point is there's more to life than economics. The people of Alberta decided young men should not be prohibited from driving due to obscene costs.

No, the people of Alberta decided that the injuries and deaths caused by those young men weren't as bad as they'd previously thought. That's what it means to limit the payouts.

Your free market dogma wreaks havoc on society when it is a phase of extreme growth. Your argue that since oil was so profitable, everyone should just go become an oil worker. Ah, wouldn't that be grand?

If oil really is so valuable that no other industry can possibly justify the price of certain labor, then yes, all of that labor should be expended extracting oil.

Who needs teachers, amiright? Or grocery store employees. Or nurses, even.

All of those things are valuable, but they become much more costly when they use labor that could be used in other extremely valuable ways (e.g. extracting oil). The cost in this case is the opportunity cost. So yes, society is actually better off in this situation by having fewer teachers, grocery store employees, or nurses.

Ah, but then we would just need to pay teachers more! And pay grocery store employees more! And nurses more! Then more people would come.

Even if more people wouldn't come, your society ends up better off if people are working in the jobs that produce the most value.

[Kuciwalker]

Some people are, or were, being charged out of scale to the costs of their behaviour and at obscene levels. That had social consequences and those consequences forced the government to reexamine a system that had been left without review for a large number of years.

We've been over how the insurance companies have HUGE incentives to accurately price risk. Therefore I think that the behavior of the insurance companies really is a good estimate of how to best price risk.

I find your commitment to the status quo somewhat bizarre. You grant that it is OK for government to set some regulation to make behaviour come into line with costs to society, but you are against the government changing regulations when the consequences of earlier policies (and other changing circumstances) make the earlier model not as socially beneficial as it needs to be.

I don't have an opposition to the limits on payouts; it's perfectly reasonable to say that the government had previously overestimated the cost of injuries and deaths from auto accidents. My argument is that the limits on payouts were the only necessary step - that after that, price controls on the insurance industry were unnecessary (and potentially harmful).

Saying that young men should not drive is not an acceptable response, it is daft.

If every single young man who drove would inevitably kill someone in a car accident, it would obviously be true that none of them should die. In the real world, only small fraction of young men kill or injure people; still, to some degree this means that some young men genuinely are inflicting more harm on society by driving, than they benefit personally. Society as a whole is better off if those people choose not to drive.

[notyoueither]

If oil really is so valuable that no other industry can possibly justify the price of certain labor, then yes, all of that labor should be expended extracting oil.

All of those things are valuable, but they become much more costly when they use labor that could be used in other extremely valuable ways (e.g. extracting oil). The cost in this case is the opportunity cost. So yes, society is actually better off in this situation by having fewer teachers, grocery store employees, or nurses.

Even if more people wouldn't come, your society ends up better off if people are working in the jobs that produce the most value.

I do not think you have a very good grasp of the realities of living in a boom.

Retirees need their homes maintained, they need services. Labour is required to provide these services and do these jobs.

Cities need to deliver services to the people who live there. Trying to run a city when booms and busts are not uncommon is an unfun job. The tax system, and project planning tend not to adjust quickly enough.

There are people with low or fixed incomes who still need to live. Telling a disabled or developmentally challenged person they should just go work on the rigs is a pretty tone deaf response.

I think you're going to prescribe that they move, and I'm going to say that I feel you have a pretty fvcked up set of priorities. Our laws, economies, institutions, governments, and even corporations exist to benefit citizens. When things go out of whack, like they can in a boom-bust cycle, it behooves the system to adjust to benefit the people, not the other way around.

We've been over how the insurance companies have HUGE incentives to accurately price risk. Therefore I think that the behavior of the insurance companies really is a good estimate of how to best price risk.

This view made more sense when Dr Pangloss was relying on an all-powerful deity to have it right. It makes less sense when applied to actions of people.

I don't have an opposition to the limits on payouts; it's perfectly reasonable to say that the government had previously overestimated the cost of injuries and deaths from auto accidents. My argument is that the limits on payouts were the only necessary step - that after that, price controls on the insurance industry were unnecessary (and potentially harmful).

I disagree. I believe the industry was over-charging people who had a high demand for their service, a service which the government mandated those people with high demand purchase.

If every single young man who drove would inevitably kill someone in a car accident, it would obviously be true that none of them should die. In the real world, only small fraction of young men kill or injure people; still, to some degree this means that some young men genuinely are inflicting more harm on society by driving, than they benefit personally. Society as a whole is better off if those people choose not to drive.

Tell that to the rural businesses that can't get employees to do certain jobs and thus have to cut back on services offered to the public.

Additionally, a small percentage of any given demographic will cause death and mayhem. Therefore we would be better off if nobody drove, anything. Let's go back to our cottages and farms and live simple lives that end early. It's the only way we'll be safe.

[Bugs ****ing Bunny]

what has happened is usually a good indicator of what will happen in the future.

Glad you felt you could contribute, Captain Obvious.