Taxes and such

Discussions about socialism and capitalism will eventually lead to the conclusion that most Western countries including the United States are a combination of free market and government regulations, the US being slightly more free market than Europe. One current example of how this compromise can get out of hand is the insurance business in, of course, California. In 1988 California passed prop 103 which allowed the election of the insurance commission, a position that had previously been appointed. The elected official then became a politician which means he had to be reelected and the best way to do that is to provide some benefit to those who vote. He did this by refusing the rate increases asked for by the insurance companies and California had the lowest home owners insurance per cost of the home in the country. Fast forward 30 plus years and guess what. Insurance companies are leaving California, big companies like Allstate, State Farm, Farmers and AIG. Many companies just went out of business .The insurance commission is now forced to allow rate increases and they are large in order to make up for the loss over the preceding years. Many people are forced to pay premiums that are 500% percent higher and that includes agreeing to deductibles of five or ten thousand dollars. A typical policy on a one million dollar home will rise from $1,800 per year to $8,000. This is what happens when government gets involved in the market much like wage price controls. This will hold down prices but in time the prices will rise quickly to make up for lost income. California did something similar in 1978 with Prop 13 which froze property tax and allowed only a 2% rise each year. This good deal was passed on from parent to child but in 2021 Prop 19 disallowed this loop hole. People can keep their low property tax rate but if they die or sell that is no longer available. For government and private enterprise to work effectively both sides must use common sense which these days is in short supply.