Volitional Science

[Note: I am in possession of a monograph on this subject, which I have been asked not to reproduce [yet], by Peter Bos, who claims to have come up with the idea of government services being provided in a proprietary fashion by insurance companies. Bos was an associate of Galambos. I believe he did originate this idea, and I'm sad that Galambos didn't give him proper credit. - SCW]

One of Galambos' major innoviations, IMHO, is the idea of Government by subscription. "What's that," you say?

Start by contrasting the idea with our current system: government by conscription. No, no one is forced to serve in the government. But we are forced to pay for and possibly even use government services without any choice. To get different federal "services" our only choice is to move to a different country. For different state "services", we can choose to live in a different state. Likewise for local "services". Our only choice about who supplies our government services is where we live. And we can't "opt-out" - at least not opt-out of the payment for these services.

The first innovation of Galambos was to get the idea of government down to a single sentence: "government is any property protection product or service to which a person can willingly subscribe" (or words to that effect).

I like this definition of government except that it leaves us without a name for our current statist-government situation, since we don't willingly subscribe to the services offered.

Galambos likes the idea of narrow definitions for words, but sometimes it's problematic. I prefer to put qualifiers on certain words to distinguish their meanings. So let's say government is any organization that offers property protection products or services. Statist-governments offer property protection products or services by conscription: everyone is forced to sign up.

So what would a world where government is provided by subscription, where customers sign-up voluntarily, look like?

One great insight (which I don't think is original with Galambos) is that the vast majority of innovation in property protection has come from insurance companies. I remember reading about this, possibly in high school. Somehow, and I don't know how, I ended up reading about Underwriter Laboratories, or as it is more commonly known, "UL". You've probably seen the "UL in a circle" symbol that denotes that a product has been tested by Underwriter Laboratories. UL has a homepage at http://www.ul.com . UL was founded in 1894!

[As an aside, check this out: UL has a license for making links to their site.]

Interestingly, I noticed when I visited the "about" link at UL.com, that UL is a "not-for-profit" company. This will require some examination.

Here's some history of the "not-for-profit" status of UL from this link:

UL's origins can be traced to 1893, when the Chicago Board of Fire Underwriters sent electrical investigator William Henry Merrill to discover the cause of fires at the Columbian Exposition. Seeing a need for a safety-testing organization, Merrill then launched UL, in a spare room at a Chicago fire station, with the backing of the insurance industry [emphasis added].

Initially, UL operated as a not-for-profit organization, but the Internal Revenue Service revoked that tax-exempt status in 1935, on the grounds that it was more of a commercial business than a scientific endeavor, according to Joseph O'Neil, former executive director of the American Council for Independent Laboratories.

UL appealed the IRS decision but was turned down in an opinion issued by the U.S. 7th Circuit Court of Appeals, which said UL "did not operate on the basis of science for the sake of science" but was "science for the sake of business."

In 1954, however, UL again obtained tax-exempt status after Congress amended the tax laws to include organizations "testing for the public safety" in the same nonprofit status as religious groups, educational institutions and charities. "There was very little explanation for the modification--no hearings, no legislative history," O'Neil said. The only clue is a UL letter in the hearing record requesting the exemption so it can "expand its testing facilities out of earnings."

Apparently UL is a "not-for-profit" company simply as a tax-dodge.

To summarize how UL is a government: the voluntary certification of products by UL saves lives and protects property. (But read the entire link here for how UL is currently under attack for sloughing off on the job.) The UL certification is a feature that many products must have to compete in the marketplace.

Here's a nice paper about private certification that runs down the situation in much more detail than I can present here.

What I remember from my high-school reading is that Underwriter Labs was created (or sponsored) by various insurance companies for the sole purpose of reducing the payout of insurance claims by making products safer.

Isn't that interesting? The majority of people would probably claim that insurance companies would reduce the payout on claims by simply not paying. Isn't that the big fear? Your car is in an accident and your insurance company finds some excuse not to pay? You need an expensive operation and your insurance company decides not to fund it? Luckily, for the most part, insurance companies are not HMO's, which really are structured to take your money and then not supply very many services. HMO's work so well as a scam because the people in them usually don't have too much choice about it.

But instead, the insurance industry (or some portion of it), chose to be innovative and find better solutions to product safety problems. And they did it without creating a single statist-government rule or regulation.

How about that?

The short answer is that unregulated insurance companies can be a replacement for statist-government. I've touched here on how it can work and I've given a real-world, successful example of it: Underwriter's Laboratories. To be sure, there are many more issues involved. I'll get to some of those in another article.

[When my wife said that "insurance" was the replacement for government, I instantly got it, because I knew the history of UL from my high-school reading. Most people don't instantly get it and so I admit this will require more explanation. Galambos only touches on it in Sic Itur Ad Astra Vol. 1, so I'll have to so some homework here to make a better case that insurance can handle everything from global nuclear war to the money supply to education better than statist-governments.

Galambos coined the term "government by subscription" but I coined the counter-term "government by conscription" to describe the current statist-government state of affairs.]