What's the Actuarial Table For That? Or, Covenants, not Insurance

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    I feel the need to append something to this post.

    First, I do not think the Rothbard-Hoppe-Murphy idea of insuring individual private property against foreign invasion really works; by which I mean, I have heard Murphy analogize it to insuring against fire (and the like), but insurance agencies do this on the basis of actuarial tables. What is the actuarial probability of a Chinese invasion (to use one of his examples) resulting in damage to, destruction of, or expropriation of a skyscraper? Of a single-family dwelling? Of your condominium in a complex?

    (There are other problems to this – oh and I know that there are responses to the standard questions, variations of which I invoked in that post. I simply don’t find those responses compelling).

    What do I think is far more likely than private insurance agencies for an anarcho-libertarian society? Well, I’ll invoke something that modern anarcho-libertarians also invoke in other contexts: the covenant. That is, of you buy property in a given area, your contract includes covenant stipulations. Anarcho-libertarians have mentioned some potentially common covenants in other contexts. But I think one such covenant might be – and this also solves the potential “free rider” problem, “as an owner of this property, you contribute X* to helping defend it.” (I likewise think voluntary militias will be organized, and a libertarian version of the Swiss defense system developed). Indeed, a covenant is often invoked as a reason why everyone (or almost everyone) would be privately insured in the first place, rather than being a free-rider.

    Now, why do anarcho-libertarians avoid the covenant solution, which they are willing to invoke as a potential device of a libertarian society in other contexts? Because if you use it when it comes to defense, the result starts to resemble, well,minarchy, even if the mandated contribution (X) is allowed to be among a choice of private, market-based firms. It’s perhaps not quite minarchy, but the “covenant” thing itself is essentially a mandate. Of course, one need not buy property in such a libertarian community (one then wouldn’t be required to contribute directly to the common defense of the libertarian society’s property from foreign aggression), but at this point it is almost, if not quite, a tax, even if they call it a “homeowner association fee” (or “property association fee”) or whatever.

    *Where “X” is an amount contributed to a common fund, or participation in the local militia (to include the hiring of a “substitute” if one doesn’t want to join, oneself, for whatever reason), or payment of a fractional amount of the training & equipping of a militia member/mercenary, or whatever. In any case, X would be stipulated in the covenant-contract; that is, it would be mandated as part of the property contract, as with all the other potential covenants anarcho-libertarians are willing to mention as potential solutions to various problems.

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