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Maybe the wrong question? Legislation could fix this, making state-backed guarantees available only if insurance company is a stand-alone corporation, or some variation thereof. The guarantee is valuable socially. It's the untoward use of it as a financial refuge that isn't.

the guarantee is essential. that’s not the issue. the issue is what role private investors serve given the necessity of the guarantee. they do not, cannot, bear the downside risk. why should they skim from the upside before any downside materializes? 1/

it doesn’t matter whether they are a standalone company or not (although obviously becoming a capital source for private equity is particularly abusive). the risk is borne either by the state or by policyholders if the state absented itself. 2/

you could have regulators insist on safe portfolios, but then what’s the advantage in having regulators make investment decisions indirectly vs a state-owned corporation making those decisions itself? /fin

It’s worked well in NY. Many insurance companies avoid ny because of regulation. Also, government has enough on its plate already. Insurance is a choice, not a part of the commons. Making it part of the government won’t inure it to corruption.

it’s a question, not advocacy, but i think it worth thinking about where we want the boundaries to be and why. i don’t think “enough on its plate” is an answer, the public sector like the private can scale, different ways have different problems. 1/

“corruption” is the private sector baseline. we don’t usually call it that because taking advantage of opportunities for self-interested gain is what private sector actors are supposed to do. 2/

is it “corrupt” for PE people to notice there’s a channel for capital whose downside risks are clipped and try to make use of that? i think that’s a silly claim to make. 3/

our outrage should be directed at whatever is causing us to provide private investors with such a channel, if we don’t think whatever benefit we get is worth the cost of absorbing that risk. 4/

1) You're way out in front of your skis. This is #37,632 in priority ahead of what needs to be done. I'm all for "Stockholming" every slippery bankruptcy within the financial sector, but the entire point of that is government seizing bankrupt assets to sell back to the

2) private sector later. I no more want government to own insurance companies than I want them to own car companies....or banks. There's no compelling interest for government to own insurance companies. There is a compelling interest in prohibiting the

3) socialization of losses while maintaining the privatization of profit. That's where attention ought be paid.

The government *is* an insurance company. That's one of its major functions. What do you define the boundaries of what forms of insurance the government should provide vs leave to the private sector? 1/

And how do you think in general about the question of provision by a government entity vs provide provision under intensive regulation? When do you think one better than the other? 2/

I think it important to think that out, to escape the neoliberal default "private sector is better" even in cases where a private sector arrangement requires incredibly detailed and extensive regulation to prevent gaming for socially counterproductive private profit? 3/

I'm not trying to make this a priority in practical political terms. I'm trying to get people to think about this question, pubic ownership vs synthetic public ownership with privatized upside through bearing the downside + regulation, in a more careful way. 4/

I agree life insurers aren't currently a priority, although they may become one if the vulnerabilities the @ddayen.bsky.social and the article it cites point to do provoke a crisis and a hypothetical not-very-well masked bail-out becomes fully public. /fin

Put more broadly, do you believe more risk should be transferred to the Federal Government? I think that carries significantly more downside social risk than benefit.

The starting point is that (state) government already bears most of the risk in a severe event. (I’m not commenting on state vs federal here, private sector vs public more broadly. but the federal government likely ultimately bears the risk of state governments.)

Not at the moment. The Federal Government tries excessively hard to avoid benefitting Blue States. There's also the issue of not much remaining within the Federal Government. Most has been removed, possibly permanently.

1) I'm bleaker than you. I believe no restoration is possible, which isn't the same thing as saying the country can't recover in some way. (albeit, I'm not confident of that, either). That's assuming exogenous events don't make even a token recovery possible.

2) I believe we'll never again have a capable state. Between climate change, an eviscerated Federal Government, a destroyed legal system, a corrupted military, a rogue DHS, and sharpened loathing between Red and Blue, governance of the whole has become an

3) impossibility. I'm not sage enough to foresee all the changes, and I'm fortunate enough to be long dead while this works out (I'm currently healthy. There's no subtext there except age). My bet is on extended, intense social violence. OTOH, I've lived long enough to loathe governments I once

there’s no muddling through without one. a capable state is the sine qua non and prerequisite for prosperity and social harmony in the modern world. 2/

i’m not arguing Trump should take over life insurance. 3/

i’m asking, in general, should life insurance be a private sector industry in a society with a reasonably capable and competent state, given that it’s socially unacceptable for premium holders to bear the downside of investments made on their behalf… 4/