If you’re really old you may have heard the expression, “That’ll cost you two bits.” Even those who didn’t know the history behind that understood that it meant twenty-five cents – a quarter of a dollar. This was based on the Spanish real which was the equivalent of our present dollar and was the primary unit of monetary exchange for several centuries in the New World. The coin was frequently cut into eight pieces, thus two bits was one quarter of a real.
For a moment, let’s consider the underlying reason for insurance of any kind. Simply put it is intended to protect the purchaser against a specific kind of loss whether that is to a person’s car, home, health or loss of life. Essentially, in exchange for payment of an agreed on premium paid to a second party, that insurer is assuming the risk to which otherwise the policyholder would be subject.
Perhaps you’ve heard that a compromise is an agreement in which both parties walk away dissatisfied. The insurance contract is one in which both parties hope for the same outcome. Both of them hope that an event which would cause a payment under the contract never happens.
The individual who insures his car certainly doesn’t hope to have a crash so that he can make a claim. The company that insures his car similarly hopes that the insured drives in a safe manner so that no accidents occur and the company can keep the entire premium the insured has paid.
There are certain types of insurance that are almost pure money makers for the insurance company. Most companies that offer life insurance also mention that for a “small additional premium” the person taking out the contract can add a provision for death that results from an accident which would double the face amount of the policy. That sounds like a good deal to the uninformed. The fact is that ninety-eight percent of the premium collected is pure profit to the insurance companies because the number of accidental insured deaths is extremely small. But are there any forms of insurance which provide a terrific return for a small premium? There is at least one with which I’m familiar.
What if a potential catastrophe, far beyond Hurricane Katrina or Mt. St. Helens had a reasonable likelihood of happening. Unlike these localized natural disasters, this catastrophe would effect everyone and everything in the country. Food and water would be scarce if available at all. There would be no energy either to heat our homes or provide light or cooling. Society as we know it would end with mobs looting houses for any scraps of food they could find and the authorities would be overwhelmed trying to deal with the mobs that far outnumbered them. If civil authority even survived, it would take at least one year, possibly longer, to restore the basic services which we expect when we flip on the light switch or turn on the tap. But before that happened, as much as ninety percent of the American populace would be dead.
Given the scenario I just described, would you be willing to pay $100 a month to make sure that we could avoid the problem? Perhaps your budget doesn’t have that much wiggle room, so how about $50? Still too high? Would you be able to find $10 a month to stave off disaster?
On April 16, 2013 a Pacific Gas & Electric sub-station was attacked by what authorities now believe was a terrorist assault. While no lights went out which is part of the reason this story has gained very little attention, it took the utility 27 days to repair the damage to the cut telephone lines and repair the 17 transformers which were disabled. Some experts think that this was a trial balloon for a larger and more devastating future attack.
There is no question that our electric grid is vulnerable. One of the most significant worries is that a massive EMP (Electro-Magnetic Pulse) occurs, knocking out our entire grid. It could take years before the damage caused by such an event could be repaired. Such an event could be caused by terrorists. There is no lack of maniacs on a mission in our world. Or it could be a natural phenomenon – a massive EMP sent out by our sun. That happens every 150 years or so and is now a few years overdue. The last one occurred in 1859.
The good news is that we know how to prevent the devestation which might occur if such an event happened – and we don’t have to develop new technology to implement. We have the technology today. So what would it cost us to safeguard all of us from societal collapse, starvation and the end of civilization. The answer is less than two bits per person per month! The total cost would run about $6 Billion.
There is a bill known as the SHIELD Act which was introduced in Congress in June, 2013 which would require the federal government and local utilities to develop and implement effective standards to protect against an EMP pulse. The bill is the work of Rep. Trent Franks (R – AZ) but so far has garnered little attention and not a great deal of support. In part that is because local utilities are concerned about handing over too much oversight to the Federal government. I understand that concern.
But no matter your political view, there are occasions, albeit infrequently, when something is of such importance and so extraordinary that it falls outside the realm of theoretical philosophy. Then even the most ardent partisan, in the interest of true public safety, should agree to a compromise however distasteful it might be. They can argue their philosophy later – but will have no ability to do so if they are one of the victims of an avoidable disaster.
And that may not be two bits worth of information – but it is my two cents worth.