I'm here sitting grading econ papers, and I had this idea. We are talking about the good and bad that the governments can do and the book we are reading makes a point that it is necessary to have the government distribute driver's licenses because otherwise private license companies would just give licenses out to everyone who wanted one and it would make the roads less safe.
But what if we made the issuers responsible for the havoc wreaked by the people they license. They would essentially be insurance companies, and if a certain firm thinks that a person will be too expensive to insure, then that person won't be licensed. If we made it so that fines for speeding had to be paid by the licensing company, those that speed and are a menace on the road will have to pay for it. Similarly those that drink and drive.
And the infrastructure of insurance companies is already there.
I think that there are probably big problems with this line of thought, but I thought that it was an amusing idea nevertheless, and one that is based on "sound" introductory economics.
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2 comments:
Don't people already pay for speeding tickets and drunk driving under the current law enforcement system? And wouldn't it be messy to have private insurance companies trying to enforce speeding and such with private eyes and mercenaries?
Somehow I don't think it would work very well, although it would make life quite a bit more exciting, I must admit.
No. The police would still enforce speeding, but the insurance companies would pay for the tickets, and they could in turn pass that fee back on to their clients if they wanted to. It would depend on their license policy.
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