“Spreading the risk …” (A repeat of Vol. IX, Art. 24)
When one considers that Marco Polo, John Cabot, Vasco da Gama, Ferdinand Magellan, Christopher Columbus, Amerigo Vespucci, and so many other early mariners, used the world’s oceans to gain access to, and develop, unknown regions throughout the globe, it comes as a surprise to realize that today’s maritime industry is nowhere near as aggressive in the pursuit of progress.
Many years ago we had a sandlot baseball team in our neighborhood. Our first baseman was somewhat better off than the rest of us because of his father’s occupation. His Dad was a bookie. He was a gentleman in every sense of the word, and he was accorded the same respect we gave to our own Dads.
For a nickel, our first baseman’s Dad would take a bet on the day’s “number”, and a $ 50 payoff would result if the number chosen “came out” in the evening paper’s race results. The “number” consisted of the very last digit posted for the day’s bets as totaled for the first three, the first five, and finally the full slate of the day’s races at the nearby racetrack. We wondered, though, how our first baseman’s Dad could afford to pay the astronomical sum of $ 50 to a winner who gambled only five cents. $ 50 in those days, after all, was a month’s pay. Our first baseman explained it to us this way: “My Dad lays off most of the bet,” was how he put it. “Well, does he take the bet or doesn’t he,” we asked impatiently.
“Oh, he takes the bet alright, but he only keeps about one penny’s worth,” was the reply, “… and the rest of the money and the biggest part of the risk is what he passes on to other bookies. When someone hits the number, you see, not only my Dad but a number of others up the line share in the payoff. It’s called ‘spreading the risk’. They do it the very same way insurance companies do it.”
Ahh. Insurance companies. That was hard to relate to back then, but as we grew older and had to insure our lives and our fortunes, we developed a thorough understanding of the methods used by insurance companies to “pool”, to “reinsure,” or to be more accurate, to “spread the risk”.
Ahh. To “spread the risk”. Now that isn’t hard to relate to. On a number of occasions we’ve had reason to refer to the shutdown of the 29 West Coast ports that took place a few years ago. How many of those 29 ports are container handling ports, do you suppose? Could you name them? That’s right. Not very many, and certainly nowhere near enough.
In our previous commentary, Vol. IX, Art. 23, we talked about the 2,400 premature deaths, the 2,380 hospital admissions, the 360,000 missed workdays, and the 1,100 missed school days, all because of the heavy concentrations of pollution around the handful of California container handling ports. The common sense used by bookies and reinsurers, if used in the maritime industry, would have directed a large proportion of this “goods movement” to unused ports, thereby reducing those shocking numbers. “Spreading the risk”, you see, lowers the risk, and reduces losses.
[Mariners of yesteryear would turn over in their graves if they knew of today’s callousness.]