Jack says turn over the rocks.

The benefits of a capitalist marketplace get harder to explain or justify when there does not appear to be competition. When the number of players is small then it begins to seem plausible to have the government just take over the business.

PGE is expressly allowed to have a monopoly, subject to rate regulation. The inefficiency of having 5 or 8 or 20 sets of electric lines traversing our streets is obvious. Insurance peddlers, the state included, cannot claim that kind of obvious and inherent inefficiency posed by competition itself.

If SAIF were, theoretically, given a state approved monopoly then the mechanism of regulation would be the rates themselves. The company would have to explain, at a minimum, the reasonableness of the costs in like manner to a regulated utility. Is there an agency other than SAIF who’s sole function is to represent the customers served by SAIF? No. The insurance regulators are more concerned with the soundness and security of the investments of insurance companies so as to prevent fly-by-night entities rather than directly influencing the rates themselves.

Capitalism, backed by strong enforcement of anti-monopoly laws, allows businesses to thrive or die based on business judgment and is itself a mechanism of accountability. It is illegal for two private companies to collude to kill off a third competitor so as to obtain an oligopoly and enhance their ability to act as single monopolistic entity. Surely it is no less illegal, or at least uncompetitive, for a private company to collude with the government to kill off a competitor. A quasi-public corporation that exists side by side with private entities is seemingly immune to charges of collusion and effective rate regulation at the same time. If the state cannot directly justify creating a state monopoly on workers comp insurance for SAIF then it should follow that it cannot collude (I suppose with its own quasi-public self) to slowly kill off competitors so as to become or maintain a monopoly over time.

The salary comparison becomes and apples and oranges comparison depending upon the accountability regime. In a purely private venture it is left to business judgment, in a public corporation (like with a non-profit county government) the salaries are fair game for the political process.

If Liberty’s business practices were compared against a new private entrant then we would have an apples-to-apples comparison on the salary issue. Each of the private companies could argue that they offer their customers the best value and point to their own low salaries at the top and highlight the excesses of their competitor.

I hate monopolies. They extract economic rent. Who’s to say that if SAIF were abolished or cut lose to fend for itself that a new competitive marketplace might attract new entrants? The continuing specter of a politically controlled quasi-public entity, such as SAIF, is itself a deterrent to new private entrants. The issue is a fair, predictable and competitive playing field for all.

Who knows, maybe PERS, with its competitive advantage in access to investment capital, could front the money to create one two or even three new insurance companies and then put on a great show of competition in the marketplace. They do seem inclined toward social investing at the expense of profitability and they are also inclined to take risks that no private outfit would dare take because the depositors can count on politicians to save them from the big-bad-risk that is usually associated with capitalism.

Government is uniquely powerful to hold the public at large as prisoners, either through the legalization of the extraction of economic rent or alternatively through direct taxation.

The businesses served by SAIF might fear monopoly pricing if SAIF is cut lose. This is a genuine concern. Such is life in the modern era where government would rather join the monopolists rather than ensure fair competition.