Saturday, August 15, 2020

Fighting Idiocy One Claim at a Time

As we hit 90 days of rioting in major American cities, one idea has stood out to me for its idiocy.  Peak idiocy was undoubtedly the looting in Chicago about a week ago, when a BLM activist said the looting was reparations.  

“I don’t care if somebody decides to loot a Gucci’s or a Macy’s or a Nike because that makes sure that that person eats. That makes sure that that person has clothes,” Ariel Atkins said at a rally outside the South Loop police station Monday, local outlets reported.

“That’s a reparation,” Atkins said. “Anything they want to take, take it because these businesses have insurance.”

Calling looting reparations is peak idiocy, but the other line in her statement is the one I want to focus on because we hear it all the time.  Looting is OK “... because these businesses have insurance.” All that does is hurt the small businesses, in this case likely black-owned businesses.  We've heard this line repeatedly since the rioting and looting started just as we've seen black small business owners getting beaten by BLM thugs or shouted down.  The looters' claim that those people are fine because those insurance fat cats will pay for the damage is just not true. 

“These were black-owned businesses, put together by people of color… and you came down here and destroyed it, and then you tried to use it in the name of Black Lives Matter,” Moses continued. “This won’t solve anything. This is all strictly for your glorification… you come through here and set fire to people’s livelihoods. Stop it now.”

Sympathizers also try to downplay riots with the supposed excuse that “businesses have insurance.” This is misleading, and not a miracle cure for the costs of lawless property destruction.

Not that it is a big distinction, but major retailers like a Walmart or Target may well have a policy that protects them from riots and looting to some degree, but most businesses don't.  Those companies that do have insurance are likely to have their rates go up (just as everyone experienced with their first car accident).  The businesses without insurance will probably be destroyed by the looting, and if they're not destroyed, paying to repair the damages is likely going to increase their costs too, which drives up their prices.  

This means no matter what, rioting results in higher costs for consumers, fewer jobs and lower wages for workers, and other steep costs that will hang over future generations.  Just as Detroit was ruined by the '67 riots (as were other hard-hit cities), all these cities will be destroyed by the riots of '20. 

I've long said a simple way to evaluate if someone knows anything about economics is to ask them about taxing businesses.  You can substitute the insurance here.  If someone advocates higher taxes on businesses, they're deluded.  They're asking to be taxed more themselves, they just don't know it.  Businesses collect taxes for the government and forward them, but those taxes are paid by the people buying the products or services.  Included in the price of every item in a store is this thing called overhead.  Every cost the business has: electricity, labor, building rent or mortgage, maintenance, the insurance being cited, and tax get added into their overhead.  

The person who advocates raising taxes on businesses probably believes the company is making tons of profit and sitting on it.  As reported here in January of '19, it's just not true. 

The public in general, but especially leftists, seem to have terribly inaccurate ideas about company profits.  The American Enterprise Institute published a study back in 2015 in which people were asked as a rough guess what percentage profit companies make.  The average response was 36%, which is only 5 times higher than reality.

According to this Yahoo!Finance database for 212 different industries, the average profit margin for the most recent quarter was 7.5% and the median profit margin was 6.5% (see chart above). Interestingly, there wasn’t a single industry out of 212 that had a profit margin as high as 36% in the most recent quarter. 

That January '19 post was really about how we know Medicare For All won't work because it's based on such bad assumptions.  It started with the observation that insurance companies aren't sucking down huge profits, either.  The top health insurers averaged 4.1 percent profit in 2017 (per Yahoo Finance). I find it hard to believe the business insurance industry would be very different from health insurance. 

So, No, Ariel Atkins.  Those companies aren't protected by insurance.  Claiming Black Lives Matter is clearly a lie because the black lives you're hurting by looting those business clearly don't matter to you.  Your justifications are pure bullshit.  You're not good or helpful or doing positive things in the remotest sense of the words.  You're simply a common street criminal. 




  1. Even the real barbarians had better sense than to totally destroy civilization. Bleed it? Yes. Demand tribute? Yes. Take over and become civilized? Yes.

    This level of random waste and stupidity? This is sub-Saharan African African Zimbabwe wealth distribution Somali pirate level of stupidity and waste.

  2. Hurricane Katrina was a boon to mankind because it forced people to recreate things they already had. You should go home and set fire to your house and burn it down. Every month. This is the broken window fallacy:

    The person who advocates raising taxes on businesses probably believes the company is making tons of profit and sitting on it.

    Functionally for the victims, it barely matters what they believe. Functionally it barely matters if they are deliberately evil, or just miseducated by government schools; either way they are a hazard. Fixing their miseducation is the job of their prison psychologist. Does it matter for the victims if Hitler was a cat-stroking Bond movie supervillian, or just a misinformed super-patriot? What does it take to hold a human being responsible for their actions?

  3. Restaurants pull maybe 3% profit. None of your fave places, the ones you went to when y'all were courtin', they all gone. 'You want fries with that' will survive. But the good food will return, if we're allowed to do so. It won't be cheap! It'll be the high margin places, linen tablecloth places, that come back first. Bet ya a six pack!

  4. A lot of insurance policies have an "out" clause for Acts of War. I imagine many businesses will discover that they are not insured against riots.

  5. What’s the over/under date on when they switch to moaning about these communities being under served.

  6. We had one here in Columbus; a nice restaurant in the Short North neighborhood. Peaceful demonstrators broke all the windows, then went inside and destroyed the place entirely while the owner cowered in a corner, watching. He wasn't armed, and I strongly suspect he's on the way to becoming a reformed Lefty.

    Commercial news media made the mistake of interviewing him shortly after the peaceful demonstrators had left the area, and the talking head asked him what he planned to do next. He just stared at her in shock, then said, "What should we do? My wife and I just opened, and everything we own was tied up in this restaurant. Everything, including a second mortgage on our house. Now we have nothing."

    "Weren't you insured?" asked the talking head.

    "Yes, but it turns out that the insurance won't cover damage caused by rioters or civil unrest. So although the building is insured, we are not. We have nothing left. Nothing."

    I really feel for these people.

    As far as insurance goes, there are several industries in the United States that cannot be over-regulated. The insurance industry is one such. Because of the bookkeeping practices that are legally unique to the insurance industry, there's no real way to tell what kind of profit they're making. Just judging from the office buildings they own, I'd say they're making plenty - but who am I?