A loyal S&M reader asks:
Why should driving without insurance be a criminal offence? Surely it's no business of the state to compel us to enrich private companies. And the individual is the best judge of what risks he wishes to take or not. It's not a criminal offence not to buy home contents insurance. What's different about car insurance?
The answer is that if we were free to buy car insurance or not, the people who wouldn't buy it would be those for whom insurance is expensive: young people, bad drivers, or those with a record of accidents or driving offences.
Worse still, these would be the sort of people who are disproportionately unlikely to be unable to compensate other drivers, should they hit them - which is where the parallel with home insurance breaks down. As they are likely to be young, or to have spent their money on an expensive car, they are less likely than the average to have the cash with which to pay compensation. And they are less likely to be able to borrow the money too. People who are reckless drivers are likely to be reckless in other areas of life. Which means they will disproportionately be bad credit risks, perhaps even bankrupts.
And then there's the moral hazard problem. Emboldened by knowing they will be unable to pay others for their accidents, these people will become even more reckless drivers, and so even more likely to have prangs.
Forcing these people to buy insurance ensures that they pay others for their recklessness, whilst handsome no-claims bonuses and excess payments reduce the moral hazard problem.
Indeed, the problem might be that the penalties for driving without insurance are too small. The sort of people most likely to drive without insurance are precisely the reckless and those with short-term time horizons who are most heedless of criminal penalties. Perhaps we need savage punishments to deter them.
This raises a broader political point. Perhaps a minimal state would lead not to responsible people governing themselves well, but rather to the feckless and irresponsible predating upon others. It's not just welfare claimants who are parasites. Maybe a libertarian world isn't so attractive. after all.