States, Corporations & Insurance Companies

I believe our societies have come to an organizational impasse, one where states are pitted against gigantic corporations while at the same time being burdened with the duty of providing for all aspects of their citizens’ lives. This situation is proving ever more difficult to sustain because some states can no longer stand up to market forces or corporations and also because these states can no longer financially fulfill all of their social duties.

A solution, i believe, is to divide the economic sphere of society into three types of entities instead of just two. States must be split into two separate entities: on the one hand a minimal state (S) responsible for legislation and infrastructure (more or less the libertarian state) and on the other hand Insurance Companies (I) that would pick up all social responsibilities of our current states (social security, retirement, etc.). Corporations (C) would remain. This new division of power would have a number of advantages.

First, it is almost certain that private companies would be much more efficient at administering the social lives of people than governments have been so far. This is the standard benefit of the “divide and conquer” or “division of labor” strategies.

Second, the three fundamental types of institutions would be able to easily balance one another out: states would provide the laws that regulate both corporations and insurance companies; corporations would provide the funds (salaries and taxes) required by both states and insurance companies; and insurance companies would provide the work force for both states and corporations. Is could apply pressure onto Cs for better work conditions (Is would own stock in Cs and could have their members strike) and onto Ss for betters laws and infrastructure (Is could make suggestions as to how their members should vote); Cs could apply pressure onto Ss for better laws and infrastructure (as they do now) and onto Is for more qualified workforces; Ss would supervise both Is and Cs through legislation and government commissions.

Third, Is, Ss and Cs could all provide forms of continuity. Even if you have to change jobs and move to another country, you would not lose your retirement and health insurance money, the I would follow you wherever you went in the world. Likewise, changing Is would be legislated by Ss so that you also wouldn’t lose your benefits but only transfer them. If you checked all the insurance boxes when you signed up at your I (at age 18, say) you would never have to worry about going hungry because in effect the I says: we will make sure you are never in need by smoothing your income over your lifetime and supplementing it should you not be able to earn a decent living on your own.

Of course, the new entities (Is) would be much more than current insurance companies. First, they shouldn’t be corporations; their members would have to own them (co-ops) to ensure that an I is always firstly concerned with the well-being of its members and not with making a profit. Second, Is would provide life-long insurance: they would pay for your education through loans which you would pay back while working; if you lost your job, they would pay you unemployment money until they helped you find a new job; and then they would pay out your retirement money once you were done working. (Admittedly, this is a lot of power, but would be overseen anyway by the Ss – and would at any rate be better than having states both regulate and execute our social lives as they do now.) Third, Is would, of course, have to look out for the poorest and weakest with whom they will never make a profit: this feature would be imposed from without by states and also by people deciding to go with the better Is.

This whole idea is obviously copied from the tripartite division of states themselves into legislative, executive and judiciary branches that balance each other out. Just as Montesquieu wanted to divide the state up to make it less dangerous over and against its citizens, just so we now need to divide the economy up so that it serve us, rather than we serve it.


2 Comments to “States, Corporations & Insurance Companies”

  1. In theory very appealing. Questions come to mind.

    I wonder if it would be much different in practice from a state managed social support system. In my experience w/ co-ops, most members care little for the political structure/ideas behind it, being mostly concerned with how it benefits them, This often includes managers, who want a bottom line way of measuring “success”. (Granted, my experience is mostly in America, where the cooperative sensibility is atrophied.) Communication/education would be essential, of course, to assure members have a broad understanding of the benefits of membership and to reduce frivilous use.

    If the profit motive is eliminated, what incentive (beyond altruistic impulses) do the administrators have to be the best? How is the best defined when it usually depends on the often misinformed opinion of the member/consumer? In wanting more benefits for the majority (and thus enticing them to join “your” insurance co-op, how will the impulse to underserve the “weak” be bridled?

    Having numerous competitors in this insurance branch will also lead to vastly more variation in forms and data exchange, increasing administrative staff/costs. There is waste in any institution, but with the barbaric/expensive/unjust system we have here in the states, the
    “inefficiencies” of a single payer system are highly appealing to me.

    How would the leaders of this branch be chosen to best assure autonomy? Elected? Politically appointed?

    I like very much the tranfserability and continuity aspect of this model.

  2. “Co-op” might not have been explicit enough of a term. The institutions (Is) would certainly have to run like any company does – paying the best managers more, promoting them and encouraging employees to be creative, etc. – the only real difference being that profits are reinvested and not given out as dividends. I would expect top managers to be ousted by the board or by a vote of the members/shareholders. But in the end, the exact structure of the companies is not that important (whatever works), more important is that they be structured so that an employee’s primary interest is to benefit members (of which s/he is one), an element that would probably be mesured simply by number of new members (ie sales) or member satisfaction. This is a very capitalistic idea: we are privatising government’s social services, not socializing insurance companies.

    Making sure the “weak” are cared for would, of course, have to be legislated and imposed by the state. All Is would have to accept (a certain percentage?) of “non-profitable” members, and could be sued if they didn’t. This is standard government regulation: sometimes it’s necessary and even a good thing. This is where the three types of entities (and in this case S and I) balance one another out.

    There would be no appointing/electing of leaders in the branch: they would be just good old-fashioned C.E.O.s who made their way up the corporate ladder – but who can be fired not by Wall Street Shareholders but rather by the members of the Insurance Company.

    Finally, Is are similar to two different types of current companies: insurance companies and temp agencies, and either or both could gradually improve their offerings to become at some point a full-fledged I.

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