Belts and Suspenders

For a good part of my career I worked on insurance issues.  That came about because of some odd events, described below.   First, there was a suggestion by one of my doctoral advisors who argued that if we were going to become a part of the club we owed it to send them a copy of any paper which mentioned their work.    I sent one of those papers to Aaron Wildavsky, at Berkeley (an issue not related to insurance).  He responded quickly.   But then for about five years he would send me preliminary manuscripts of books he was working on.  I was so flattered that I would read up on the issue and write him a substantive critique, perhaps 15 pages of notes.  Soon after I had written the response, one of SCs professor's told me that was the way Wildavsky would explore a new area.  He would cobble together a manuscript and then send it out widely.  One of the books he sent me in preparation was the beginnings of his thinking about risk.  He published a series of papers and then a wonderful book called Searching for Safety which described the essential mix we need to have between anticipation and resilience in thinking about risk.

In the late 1980s the independents in California were facing a crisis on D&O coverages (indemnifying the actions of boards of directors) because of some bad decisions by the insurance industry earlier in the decade.  It was what is called a very "hard" market.   I assembled a group of financial types to explore solutions.  We soon found that even with the number of our institutions we could not generate enough premium volume to interest companies.  A national group formed and as it developed I  soon became the founding chair of the new board.

Finally, in the early 2000s I joined the Advisory Board of a reciprocal Casualty (auto and home coverages) Company where I served for more than 15 years.  I had managed our joint program for Worker's Compensation coverages until the legislature created something called open rating which made our cooperative venture no longer viable.   A host of terrible companies swooped in to offer coverage at ridiculous rates and several of our members got burned when after a year they got a seeming bargain they suffered huge premium increases as the fly by nights withdrew from the market.

Insurance is an odd business because it attempts to manage risk based on a small number of principles. People who study risk (actuaries) look at two major variables - frequency (how often something happens) and severity (what is the cost of the loss).  They then try to price the relationship of those variables so that the money they take in with premiums and investment income (before they have to pay out losses) will actually exceed losses and administrative costs (that is called a combined ratio m- a ratio above 1 makes the company profitable).  Auto accidents happen with relative predictability and are relatively minor in cost compared to the sinking of ocean liners which can be very expensive but don't happen often.  Essentially the only other variable in the transaction is how much risk you want to share with the company - those decisions are called deductibles or retentions.  

Even with those limited number of variables, most consumers don't think much about the contract they are entering into.   When American insurance companies began to sell life insurance in Japan in the latter part of the 19th Century, agents were in great risk because many of the clients thought that by purchasing life insurance they would escape death.  An example closer to home comes from son Peter who works for a major casualty insurance company.  He frequently gets calls from indignant policy holders who wonder why their rates have gone up.  When he looks up their records he finds that have multiple accidents.  When he explains that, they ask plaintively "Isn't that is what insurance is for?"  NOPE.

So what does all this have to do with the title of this post.  As we have come out of the COVID pandemic I have increasingly wondered how many of the conventions we accepted during the pandemic will become permanent.   And I am reminded of Franklin's maxim - "Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety."

As the pandemic developed I discovered several things which bothered me.  First, many public officials (including California's Governor and our former President) put on the emergency windbreaker and began to speak mostly nonsense about how well they had this problem in control.  In reality, there was a reason this was called a novel virus. Those politicians refused to acknowledge that we were in a learning curve.  At the same time, we quickly adopted some precautions which seemed odd at best.  We were in San Miguel a year ago March and we soon found city workers going around the Centro in hazmat suits spraying down the sidewalks with some unknown substance.   Some friends and neighbors began to adopt an almost religious fervor for isolation.  Because of my own situation, having at least a partially compromised immunity system, I consulted all of my physicians.  The best advice I got came from my Mexican doctor - "become a hand washing nazi (Apple now actually includes an APP on their watch which counts how many seconds you wash your hands and yes I have continued to work on that standard); maintain reasonable social distance; wear a mask where you might come in contact with strangers and; finally (and I thought most importantly) avoid social media.  (I wish I had done that even more than I did - I saw too many hyper discussions of spittle distance - a term I had never heard before March of 2020).    As a militant individualist I tried, sometimes successfully, to not react to what I thought were extreme reactions.  Occasionally I could not resist.  At one point I was in a market in SMA and saw some hand wipes, which were in short supply in the city.   There were six packages and I wondered whether it was appropriate to buy one or two packages, when I decided to get only one, a San Miguel swell (It is a distinctive type in SMA - that fits the epithet of a person who thinks they are "all that an a couple of chips") immediately swooped in and grabbed the remaining packages. I asked her (Not at all innocently) "trying to snap these up before the hoarders get them?"  To which she shrieked "This is a health emergency!!!!!!"

But here is where I begin to wonder.  There are at least two realities that will come out of COVID 19- First, it is likely that in the next few years we will  experience additional pandemics, perhaps not as severe as the most recent one.   But as Niall Ferguson explained in his most recent book (Doom, the Politics of Catastrophe) the period between the 1918 Flu (which in many ways was more terrifying) and COVID was had several pandemics of varying proportions including the polio one in the mid-1950s and the 1957 Flu - which was a big deal I had forgotten about.

We need to think creatively about what we did in this very real crisis that was ultimately an overreaction and what we did well. The scientific community was, with some regulatory relaxations, able to create new vaccines (some based on very recent science) very quickly.   That confirms a bias of mine that the US oversight of medicines is expensive and not helpful. So if we modify the FDA protocols we might get cheaper drugs. But  I also look at the current requirements of the CDC (which require a COVID test for passengers re-entering the country, even if they have received a vaccination) and think that does not make sense.

The President of Purdue raised in the very question in his address to graduates in 2021.  Mitch Daniels commented "This last year, many of your elders failed this fundamental test of leadership. They let their understandable human fear of uncertainty overcome their duty to balance all the interests for which they were responsible. They hid behind the advice of experts in one field but ignored the warnings of experts in other realms that they might do harm beyond the good they hoped to accomplish. 

Sometimes they let what might be termed the mad pursuit of zero, in this case zero risk of anyone contracting the virus, block out other competing concerns, like the protection of mental health, the educational needs of small children, or the survival of small businesses. Pursuing one goal to the utter exclusion of all others is not to make a choice but to run from it. It’s not leadership it’s abdication." ( Emphasis added).  Daniel's address won my best commencement address of 2021 award (I always read a dozen or so commencement addresses each year - the entire text can be found at https://www.purdue.edu/newsroom/releases/2021/Q2/purdue-president-daniels-biggest-risk-of-all-is-that-we-stop-taking-risks-at-all.html - it is well worth the time). What we seem to need here is a careful review of what we did without the "Science is settled" hype or the assumption that there is one best way.   I hope we can figure out as a nation to do that intelligent review.  But I am not altogether confident that we can which leads me back to Franklin and the worry that Belts and Suspenders are not useful.

The BOOK - I am down to doing a final edit of the last chapter in the fifth section (Family, Work, thoughts about life, Mexico and Philosophy). That chapter is about religious values that have motivated me.   When that gets done, I will send the full draft to my editor for a review and then to my designer.  Timing seems to be looking at the end of the year to actually get Of Course It's True, except for a couple of lies into print.  I appreciate your patience.

Reflections on Guns and Internment

 For the past couple of years I have gotten together with my two brothers for a couple of days each summer.  Last summer we went to the scout camp that they went to from Berkeley and we based that trip in Murphys which is a cool town in the Gold Country.

This summer, at the invitation of my oldest brother, we flew to Twin Falls where he lives part of the year and where his medical practice was.  

We went to the Japanese internment camp near Twin Falls.  No doubt about it Minidoka and the other nine camps established during WWII are a blot on our common history.  The two I have visited were in desolate places. Minidoka is not as impressive as Manzanar, which Quinlan and I visited several years ago.  Manzanar, after the Japanese reparations bill was signed, was substantially restored.  In one sense both of these sites should be akin to Pearl Harbor - solemn places.  Both camps need to be preserved to remind us of the excesses that government can engage in - we should approach them with reverence and awareness.   One of the impressive stories out of both camps is how many young men left the camps to join the 442d which was the legendary battalion made up of former internees after FDR authorized them to join the Army.  They fought with valor in Europe - gaining a ton of decorations (4000 Bronze Stars and 4000 Purple Hearts).

The next day we went out to Hagerman to do a day course on handguns at Shaw Shooting.  Shaw Shooting has two locations - the Idaho one is in Hagerman.  My oldest brother is a gun enthusiast, my middle brother is not and I been mostly indifferent to firearms. Even with that indifference I feel very strongly about the efficacy of the Second Amendment.  It is important to remember that the Bill of Rights, including the Second Amendment, they are designed as negative not positive rights.  Most all of the language in those first 10 Amendments were intended to limit government activity, not encourage it.   The language is pretty clear - “A well regulated Militia being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.“  When the Amendment was written the context was clear, both the creation of a militia AND the individual right to own firearms was seen as a deterrent to an out of control government.    But beginning in the 20th Century some began to interpret the first clause (A well regulated Militia being necessary to the security of a free State) as defining the second (the right of the people to keep and bear Arms, shall not be infringed) - that argument has never been persuasive to me.   But it also has never meant to me that any civilian can possess any kind of firearm.

I have lots of friends who, if they could, would prohibit private ownership of any firearm.  I strictly disagree.   At one point a professor published an article arguing that firearms were not important in colonial America by claiming to have reviewed colonial probate records. Luckily a researcher asked to verify the “data” and when the first author obfuscated and then refused to offer proof went back to the same records and found the first researcher had made up his data.  The first guy was trying make the case that the Second Amendment is limited to arming militias. It was a great example of politically inspired research, which in this case was exposed.    The most recent decision by the Supreme Court (which involved a horrible law in DC) called the Heller case made a pretty clear statement that the syntax supports individual rights to possess firearms.  

I have one revolver but have never been much of a shooter - although in college a fraternity brother and I would sit on the back porch of our fraternity and hand launch clays out over the Calaveras river.  There always seemed to be a bottle  of Jack Daniels involved.    For someone who is relatively indifferent to firearms, I seem to have been pretty wordy about my thoughts!  But back to the course at Shaw Shooting….

Shaw Shooting is legendary - they train everyone from rookies like me and my middle brother to military and police.  Shooting a pistol with any skill begins with figuring out how to sight the weapon but also how to squeeze the trigger.   Our instructor was absolutely superb.  He spent an hour in the morning explaining hand gun and range safety.   After the safety discussion we went out on the range and practiced with paper targets. I  got the chance to shoot a 40 caliber, a .22 and a Sig Sauer 226 although I liked the 9MM best.    In the last part of the day we went to shoot at metal targets.   By then I was getting tired physically and mentally so my accuracy declined

At the end of the day I was surprised that the process of learning how to shoot a pistol requires both physical and mental capabilities; one might say it is a like golf with bullets.  The picture is of a cluster I achieved with a 9MM at 7 yards.  The target I was shooting at was about 5-6" - with the center white space about an inch.   Our instructor used those smaller circles as his target.  While I was relatively pleased at my clusters - he added a couple of handicaps (shooting the pistol upside down).  Even with those handicaps he could shoot out the little white circles with one clip of 10 shots.   It was a good way to establish just how far an amateur like me was from proficiency.

While I was in Idaho I started a book by a UVA professor named Jonathan Haidt (The Righteous Mind) where he created a typology of six moral scales which animate our feelings and thoughts about politics.  For example he discusses a continuum of care >>> harm and liberty >>>0ppression ; fairness >>>cheating.   Haidt argues that liberals, conservatives and libertarians value the individual variables with different weights. They also consider some of the variables more important than others.  That helps to explain why we have such a hard time talking civilly to each other.    Haidt’s matrices remind me a lot of Thomas Sowell’s  landmark work A Conflict of Visions where he argued that liberals and conservatives may use the same terms but with fundamentally different meanings.

There are many examples where we seem to be stuck in thinking about solutions to problems which most Americans would acknowledge.  The day after our class at Shaw there was another shooting in the US.  Immediately many in the political class came up with utterly predictable and completely useless statements trying to hook their constituencies but not doing anything to think about how to reduce the number of incidences like the one on that day.    Haidt's book gives one a good idea about how we could potentially improve our civil communication.   What concerns me is that with the 24 hour media cycle, social media and politicians who may well gain from keeping us apart - there may be no incentive to creatively think about getting back to civil talk.

UPDATE on the Book - I have one more chapter to edit from my editor’s comments.  I will then spend the rest of this month and July re-reading the manuscript and formatting the pictures in it. The first section of the book has a ton of pictures.   Each needs to be checked for quality and then a placeholder needs to get added to the manuscript.  The designer then places each in their proper place.