Tuesday, August 04, 2009

Bryan Caplan makes an interesting point on insurance claims in Nazi Germany

In 1938, Jewish businesses and synagogues through Germany were burned and looted in a massive pogrom. Historians call the incident Kristallnacht. The Nazis naturally blamed the Jews. So the Nazis were horrified when they realized that Aryan-owned insurance companies were liable for the damages!

The obvious solution for the Nazis was to let the insurance companies weasel out of their contracts. But contrary to what critics of private health insurance would have you think, insurance companies aggressively lobbied against this solution. Why? Because they greatly valued their reputation.

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