Monday, July 16, 2012

Skimming The Pool

There are two ways to make money: One can make money by producing, or by skimming.

It is the nature of business that a producer can only get a portion of what they produce. Imagine that I created a product that believed you could resell for $1000. Well, you wouldn't pay me a thousand dollars for that product because you want to make a profit. Considering the time, effort and risk involved in reselling, your top bid for the product might be only $500.

Producers can only get a portion of what they produce. It is the nature of production that producers produce wealth for themselves and the people around them.

Skimming is a different game. The skimmer doesn't produce. The skimmer take from society.

Insurance, and government, are creations of the skimming mentality.

An insurance company starts off in a good fashion. It hires actuaries to analyze the risk associated with a group or activity. To make money, the insurance company falls into a skimming mode. Salesmen use disinformation to exploit fears and convince customers that they need to "pool their resources" to cover the big scary risks.

The insurance makes its billions by skimming off the pool.

The Medical Savings and Loan starts with the same analysis of risk. The goal of the program is to establish a culture of risk management. So, the first job is to educate people about their risk. Rather than taking a large amount of money from clients to cover risk, the program creates a network of Health Care Advocates who educate people about their risk and gives people direction in saving money to cover their risks.

The advocates will work on a fee for service basis and, like traditional producers, their livelihood will depend on their ability to create value for their clients.

By realigning the health care sector so that there are fewer groups skimming profits off of health care would create a health care sector that produced greater wealth all around while reducing waste.

In the culture war, the left plays the game of gaining favor by stoking wealth envy. The reactionary right gains power by defending the wealthy.

A better approach is to recognize that there's more than there are different paths to making money. A producer makes money by creating wealth. The act of production naturally spreads wealth. Skimmers make money by leaching off the system.

A wise society seeks to aid the producers while thwarting the skimmers. Such a society would balk at things like pooled insurance which creates a massive parasite culture and favor alternatives like the Medical Savings and Loan which aligns health care so that each element of the program works on a fee for service basis and is rewarded for the ability to create value.

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