Posted by
Dave Smith on Sunday, July 12, 2009 10:48:12 PM
In response to
this editorial in the Chronicle, I sent the following letter:
re: "Nowhere but up: Without rate restrictions, Texas homeowners remain at the mercy of the insurance companies
In its criticism of recent proposed rate hikes by Texas Allstate Lloyds and Farmers Insurance, the Chronicle
proposes that government insurance regulators should be empowered to
"weigh[] the financial data" of the insurers and determine if price
increases are "justified", referring to profits of insurance companies
as "ill-gotten gains".
Why stop with insurance? Perhaps the
state could establish newspaper regulators. They could "weigh the
financial data" of Hearst Newspapers, and determine if increases in the
price of an issue of the Chronicle or the rates charged for advertising are "justified". Are profits made by the Chronicle also "ill-gotten gains"?
Rather
than seeking to impose price controls (and thus restrict supply), a
better approach is to increase the competition in the marketplace.
Competition in a free market serves the consumer by increasing the pool
of suppliers -- leading to more responsive service, lower prices, and
more choices. Government interference in the setting of prices
promotes the opposite effect.
Sincerely,
Dave Smith