A Sudden Outbreak of Greed
By Arnold Kling
On its face, price gouging is a peculiar explanation for recent increases in insurance premiums. Is greed new to the world? Were insurance companies followers of Mother Teresa just a few years ago? If greed and gouging are the explanations for rising premiums, why did the St. Paul group — one of the nation’s largest suppliers of medical malpractice insurance — pull out of the market in 2001? Were the profits from all that gouging just too much for St. Paul’s guilty conscience? And consider that almost half of doctors are insured through mutual, i.e., doctor-owned, insurance companies. Are the doctors gouging themselves?
The surest sign of economic ignorance is to blame a price increase on a sudden outbreak of greed.