Climate crisis on track to destroy capitalism, warns top insurer
Climate crisis on track to destroy capitalism, warns top insurer
Action urgently needed to save the conditions under which markets – and civilisation itself – can operate, says senior Allianz figure
Don't threaten me with a good time.
Oh no! Not capitalism!
Here is a relevant excerpt from The Ministry for the Future (2020) by Kim Stanley Robinson. The context is a meeting between experts of a fictional UN agency looking for weak points in capitalist governments in order to implement carbon capture laws to reverse climate change that has already killed millions in a heat wave in India.
from chapter 15
Jurgen: Insurance companies in a panic at last year’s reports. Pay-outs at about one hundred billion USD a year now, going higher fast, as in hockey stick graph. Insurance companies insured by re-insurance. These now holding short end of stick (tall end of stick?). Can’t charge premiums high enough to cover pay-outs, nor could anyone afford to pay that much. Lack of predictability means re-insurance companies simply refusing to cover environmental catastrophes, the way they don’t insure war or political unrest etc. So, end of insurance, basically. Everyone hanging out there uninsured. Governments therefore payer of last resort, but most governments already deep in debt to finance, meaning also re-insurance companies. Nothing left to give without endangering belief in money. Entire system therefore on brink of collapse.
Mary: What mean collapse?
Jurgen: Mean, money no longer working as money.
Silence in room. Jurgen adds, So you can see why re-insurance hoping for some climate mitigation! We can’t afford for world to end! No one laughs.
Long story short, central bankers of all nations force governments to adopt China-style capitalism-subject-to-socialism so insurance companies can continue to exist. The socialist components tie the issuance of money to provable carbon capture such as by pumping supercritical carbon dioxide underground. Also, billionaires eventually realize civilization is ending though persistent assassination attempts by survivors of worsening climate disasters; they find the assassination attempts don't occur when they fund projects to mitigate sea level rise by halting glacier movement and promoting ice formation through massive pumping of water. It's science fiction, yes, but one of the more hopeful kinds.
This bloke’s very clear, capitalism depends on insurance and climate change is making a lot of areas and risks uninsurable. Must be scaring billionaires silly and the rest of us should be too!
Insurance is the biggest racket in the world. They literally looked at mobsters running protection schemes on local businesses and said "I bet that's scalable." It's why I will never have sympathy for people like Brian Thompson. He chose to do gangster shit and he got whacked. Them's the fuckin' breaks, pal.
*the climate we can live in
There will always be a climate, long after capitalism and the silly species who utilized it are gone.
Factually accurate
What a horrible article - capitalism won't suddenly get destroyed because insurance companies won't be able to operate anymore with some regions having houses devalued. In fact, it's quite the opposite in reality: capitalism THRIVES and NEEDS crisis, that's why you have regular boom & bust cycles to get rid of overproduction, wars, etc.
Capitalism can only be destroyed by the working class, it won't miraculously go away on it own after some severe crisis, and especially not after a nothingburger crisis as insurers having a harder time.
capitalism won’t suddenly get destroyed because insurance companies won’t be able to operate anymore with some regions having houses devalued.
It will. Banks, 100% need insurance, in order to lend money on property. Even if they sell it themselves, or risk is factored into interest rate. Property values in west are high mainly because it has been so easy to get loans. But the total interest rate + insurance + property tax + maintenance represents the carrying cost of owning a home, that when it gets too high, reduces value of homes, and reduces reposession value to bank, and their loan safety, that requires even higher interest rates.
Western banks operate on fractional reserve lending (Trump promises to permit them a lower fraction) where widespread losses require a bailout to avoid bankruptcy. There is a limit to financial credibility, that is some small amount of straw over the current camel's back. Repeat of 2008 crisis is a great amount of straw.
While that might cause a crisis, it's in the best interest of the state, central banks, the capitalist class who are the most influential to preserve the capitalist system and do everything in their power to do so. They're not going to sit idly by - there will be restructuring responding to the crisis, maybe even austerity and bailouts like in 2008 (which, mind you, didn't end capitalism) - things might get tough, there might be a shock but it by no means would magically bring something like socialism.
Capitalism is a system that's entirely about social relations: who sells their labor, who owns production and how do these production owners use their accumulated value - this is what has to collapse for capitalism to be destroyed. Financial instruments like insurance exist within this framework, they're not capitalism itself, they can develop and change and they do so regularly in response to crises.
As insurance / financial people they're accustomed to seeing things from that perspective - society as a financial machine. They're describing what they are seeing in their area of expertise and (sensibly!) staying out of areas where they don't have expertise.
Oh no, woe is me, whatever we shall do without capitalism 🎻
Some good news!
To be replaced with a new kind of feudalism. Company towns will come back, only they'll be whole cities. Our nations will be carved up by ultra wealthy lords, each will take ownership and control of their own company city. The Lord will be both our employer and the sovereign of the city. We will essentially be their property. We will work for them, buy from them, and follow all of their rules. They will demand a cult-like religious devotion. That's our future.
Is there any point to saving up for retirement if capitalism dies before I'm even 55?
The economy is so insane right now for some stuff its cheaper to spend money straight away because the product will be discontinued sooner or later and you can rely on next generation product being worse quality and more expensive.
In the same logic i reason that any money i save will lower in value over time (its purchasing power getting drained trough inflation). So saving money, costs money..
In the same vein, any money not spend at the end of capitalism loses its economic value so as a direct answer to your question. If you where certain of this future, there is absolutely no point on saving up.
However i would not recommend spending all your money purely out of fear to waste its potential value. In general one should aim to spend enough to satisfy the needs of your family and save the rest for backup. If capitalism does not end up fully dying while the world does go to shit the potential value of that little money to buy food may be exponential to the usecase you have for it now.