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Business Observer Friday, May 4, 2007 12 years ago

Matt Walsh: Ugh: Crist populism for 4 years

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We are in for a long four years. We're in deep, deep trouble when our new governor begins taking the stage with lefty Sheryl Crowe at global warming rallies and quoting Teddy Roosevelt. He did both in one week.Crist invoked the latter when he responded April 27 to an editorial in The Wall Street Journal that spanked him for his populist insurance reforms, chiding Crist for wrecking in three months the limited-government climate Gov. Jeb Bush maintained for eight years.If you missed Crist's response to the Journal, you missed a scary commentary. Now we know for sure: Gov. Crist is not a proponent of limited government and the individual's right to life, liberty and property. He's a strong government activist and collectivt - to wit his explanation of his insurance reforms. We're reprinting below the governor's response to the Journal in italics, interspersed with our response to Crist in normal text font:

Matt Walsh: Ugh: Crist populism for 4 years

Ugh.

We are in for a long four years. We're in deep, deep trouble when our new governor begins taking the stage with lefty Sheryl Crowe at global warming rallies and quoting Teddy Roosevelt. He did both in one week.

Crist invoked the latter when he responded April 27 to an editorial in The Wall Street Journal that spanked him for his populist insurance reforms, chiding Crist for wrecking in three months the limited-government climate Gov. Jeb Bush maintained for eight years.

If you missed Crist's response to the Journal, you missed a scary commentary. Now we know for sure: Gov. Crist is not a proponent of limited government and the individual's right to life, liberty and property. He's a strong government activist and collectivt - to wit his explanation of his insurance reforms. We're reprinting below the governor's response to the Journal in italics, interspersed with our response to Crist in normal text font:

Crist: "Like Theodore Roosevelt, I believe an elected chief executive, as a servant of the people, should responsibly wield the power of office to further the common good and improve the lives of all citizens. So it follows, my response as Florida's governor to our state's insurance crisis places people before profits."

When the founders wrote the Constitution, they wrote the Bill of Rights to protect citizens from government, not give government power to wield as dictators force, as with a gun at our heads. "The common good"? When lawmakers engage in lawmaking for "the common good," that always translates into "the good of society" superior to the individual, which means some men take precedence over others, leaving some as sacrificial lambs.

When Crist places "people before profits," he asserts that government power is superior to the a capitalistic system in which sellers and buyers determine on their own what is best for each other.

Crist: "When I took office this January, Florida faced a daunting challenge: either confront head-on the monolithic insurance industry, or stand by and watch her citizens and her economy buckle under the oppressive weight of a deepening crisis. For many years prior to my inauguration, insurance companies claimed the risks were too great and the rates simply too low in Florida. But during that same time, those companies had been raising rates at unprecedented levels (some, by 50 percent, others, by more than 500 percent) and shedding the higher-risk (and more abundant) coastal properties."

Crist's reference to the "monolithic insurance industry" is intended to color the insurance industry as evil. Typical of collectivists. He fails to note that Florida's insurance is not a reflection of a free-flowing, free-enterprise system; it is solely a creation of Tallahassee. And it has become monolithic because lawmakers, in collusion with the biggest in the industry, together have constructed a system that has made the regulations and capital requirements so onerous that entrepreneurs know it's easier to earn returns on their investment elsewhere. Governor, you are Pogo.

Regarding escalating rates, the Insurance Information Institute reports that from 1990 through 2006, the rate of return for Florida insurers averaged -38.1% - that's negative 38.1%.

Crist: "Indeed contrary to recent reports, the plans of Allstate, Nationwide and others to abandon Florida policyholders were set in motion well prior to my arrival. Those policyholders landed in the state-run Citizens Property Insurance Corp., which by last December ballooned to more than 1.3 million policies and $400 billion in exposure. Yet even while the private market risk-profile improved at taxpayer expense, private market rates (and corresponding profits) continued to soar. In the past two years alone, the insurance industry has banked more than $100 billion in profits."

The fact Citizens Property has become as large as it is could not be a clearer symbol of a totally dysfunctional market - in which the supply is grossly short of the demand. And why is that - because the profit margins are so great?

Yes, the national insurance industry has reported $100 billion in profits the past two years. But here's more context: Through the first half of this decade, U.S. property-casualty insurers generated a 5.3% average rate of return. That compares to a 12.3% rate of return for the Fortune 500 over the same period.

Populists always like to throw gas and a match on profits, forgetting the tremendous risks and the service its investors (many of them average Floridians) take in exchange for insuring people's property. If insurance were such a great business in Florida, there wouldn't be a Citizens Property.

Crist: "Left unchecked, the insurance industry would have set Florida on a collision course with fiscal ruin. Moreover, they would have deprived many Floridians of the American dream of home ownership and the hope of a secure, affordable quality of life. Recognizing the industry was unwilling to self-police and that inaction was not an option, I worked with Florida's leaders in a bipartisan way to enact reforms that use government's fiscal and regulatory stimulus to induce a more competitive free market."

Crist is blatantly disingenuous when he fingers the insurance industry as Darth Vaders leading the state to fiscal ruin. And this is absolutely and absurdly laughable: when he said he used "government's fiscal and regulatory stimulus to induce a more competitive free market." The insurance laws adopted in the special session were overwhelmingly government interference and force into the marketplace.

"Unwilling to self-police"? Every proponent and practitioner of free enterprise know the best police protection is a marketplace of unfettered, willing sellers and buyers. No one, especially not government, polices supply, demand and pricing better.

Crist: "Under the new law, Florida expanded its Catastrophic Fund to provide lower cost reinsurance to the insurance industry, allowing them to lower the rates they charge to policyholders. Far from an abandonment of the free market, this responsible solution lowers rates and induces free-market competition. Consumers get immediate reductions in premiums - albeit differential reductions, depending on the company and the property location - and consumers get more choices once reinsurance savings are reflected in the rate structure."

Our governor is delusional. See accompanying letter above from the chairman and CEO of USAA.

Crist: "Citizens Property Insurance Corp. was also reformed to address both the availability and affordability of insurance. The reforms will likewise result in lower rates and more competitive choices. Indeed, Floridians are already starting to see lower rates as well as new entrants to the market. Of course if the ill wind blows, there will be costs. Nevertheless, had responsible action not been taken, Florida would have been forced to bear both those costs, along with the staggering costs of economic decline that would have come with inaction."

"Responsible action"? The action that has been taken - shifting the risk of losses onto the state - has exposed Florida's taxpayers to a greater extent than ever before. That's responsible?

Crist: "While I applaud and welcome the motivation of business to profit, I will not abide profiteering on the backs of the people. Perhaps in time, the insurance industry will return to competitive free-market behavior without the need for government intervention or stimulus. In the interim, this responsible, bipartisan approach to a crisis threatening both personal quality of life and continued economic expansion was and is the only right thing to do. The 'Trust Buster' would have done no less."

Again, the populist/collectivist Crist engages in common rhetoric when he says "profiteering on the backs of the people." See previous statistics. What's more, dear governor, you are wrong. The legislation that came out of the special session was not "the only right thing to do." Nor will it be up to the insurance industry to return to a competitive, free market. For that to happen, you and our legislators must establish a framework - free of your regulatory populism - that will allow sellers and buyers to trade as they see fit, without the hand of Big Government dictating the terms.

Indeed, this is going to be a long, scary four years. As The Wall Street Journal said, in four months Gov. Crist is rapidly reversing what for the past eight years was one of the best economic climates in the nation. Pity we Floridians.

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