There was this "Sammelan' that Maoists organized recently somehwere in the capital. The letters in the banners were written in both english and nepali. I am not sure if they wrote correct 'spelling' for the nepali words, but the english words were grossly mis-spelled.
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Although some high school drop-out YCL cadres may not have discerned the differences between “insuring” and “ensuring,” I, however, would like to thank them for their blatant abuse of simple english words. At a time when the proposed Constituent Assembly election is being derailed from every possible angle, nothing seems more fitting than insuring this election. Indeed, insuring is a way of ensuring.

We purchase insurance to protect us against a fall in the value of an asset we own. For example, I purchase auto insurance to protect myself from the fall in the value of my vehicle from unforeseen damages, financially at least. My insurer takes the risk of paying my bills in excess of the deductible in the event that my vehicle is damaged. But for taking my risk, I have to pay a certain price, called premiums, to my insurer even when my car is running at its best. So, by paying premiums every month, I transfer my risk to my insurer. At a time when we can protect the fall in the value of every imaginable assets we own, sometimes of assets we don’t even own, why shouldn’t we be able to protect the nation from the fall in the value of our democratic systems as well?

Just like an insured vehicle owner will not have to mourn over the loss if and when his vehicle is damaged, an election-insured nation will not have to feel devastated if and when free and fair elections become only a distant possibility. Just take our own case, the estimated total loss due to postponement of the election that was slated for November is more than $10 million. That is a huge price to pay for the incompetence of our leaders, brazenness of YCL cadres, and cry-baby attitude of the Maoists. But that is not all: we have now lost faith of the public and the international community as well. The excitement and optimism that had permeated through the masses after the success of the April revolution have already been sapped by unrealized hopes of having Constituent Assembly elections one day. Certainly, an insurance contract against this postponement could have at least mitigated that financial loss.

One might argue that there aren’t any insurance policies in the market that insures elections to insure our elections. That is true, but I don’t see why there won’t be any if there is a market for it. You might ask, if there is a market for it, then why aren't insurance companies going into it. True, but this market has not developed yet. That's why the threshold will be higher for any insurance company to go into this line of business. Once they jump into it, not only can insurers develop contract/policies for nations, but they could also develop individual policies for political parties. Definitely, this is a huge untapped market. I would argue that it would be beneficial for even parties like Maoists to purchase insurance against a certain number of seats that they have "asumed* they will win, as most likely they will have a hard time even garnering more than a dozen seats should there be a free and a fair election.

Then, can a poor and a fragile nation like ours pay insurance premiums to conduct a farce election that no one knows will bring even half the changes that our politicians are harping all along? This, I think, is something that a country or a party should decide on a cost-benefit analysis. If a country thinks that a fall in the value would seriously jeopardize the nation and its democratic process, then I think it is worth every penny. At a special and critical juncture such as the current existing situation, even if it means we will be in serious debt for a number of years, we should insure our elections. Only then will we ensure it.

Hi Guest 4

Very interesting thoughts. Not sure if it was intended to be that way, but I found some great satire in your write-up - thanks for sharing. At the risk of sounding fatalistic,cynical or elitist, I am sometimes tempted to think we get the government or system we deserve. I think we have a long way to go before we have sufficiently re-aligned power in Nepal to produce a stable system. That's the most difficult price to pay in the present context if you ask me.

:)

Appreciate your comments Cap.

The write-up should reflect a little bit of satire and much of boredom. :) But as I thought more about the concept of insurance in political process, economy and myriad of other things, it only got more fascinating.

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I take it back that there are no insurance policies to ensure elections yet. In fact, if I may say, the concept of insurance in political systems is well beyond its rudimentary stage, thanks to derivative markets. Since this market is quite developed in the US, I will mostly focus on how US politicians can ‘purchase’ insurance against their loss in elections.

 

There are several websites where you can bet on which candidate is going to win each party’s nomination. Although people there, I assume, bet on candidates primarily for speculative purposes, there is no reason why candidates can not insure their loss by betting against themselves. You speculate or  insure by means of political futures

 

By buying or selling political futures, you enter into a contract with an obligation to buy or sell the underlying asset (standardized as indexes so that the settlement will be in cash at a later date) at a specified price in the future. For example, if I buy a 1 contact of X future for $60 which expires 6 months from now, then all it means is that regardless of the price of 1 contract of X 6 months from now, I am obligated to buy X at $60. If the price increases in the next months, I make profit, and if the price decreases, I bear loss.

 

Each major candidate has his/her own index just like Dow Jones or S&P has its own. Change in index tells us about the performance of the ‘asset’ (candidates) attached to the index. So, if Dow Jones index today was up +300 from yesterday’s close, it tells that there was some good news in the market today. Similarly, if Clinton index goes up by +30 today, then it could mean that the latest CNN/Gallup poll showed Clinton to be leading Obama in Iowa by double digits. Depending on whether your predictions come true or not, you make or lose money.

 

Let’s say the current index for Clinton is 60 and Obama 40, the sum of which should be 100 at all times (assuming there are only two candidates and only one candidate wins the nominations). Each contract has a notional value of $10 times the value of the index. So, one Clinton contract costs $600 (60*10) and one Obama contract costs $400 (40*10). If I am betting that Clinton will win the primary, then I buy Clinton contracts. If the Clinton index today was up by +4, then I earn $40 (10*4) at the end of the day. The market is settled daily until the expiration date, which in this case, would be the last primary election day. On the expiration date, if Clinton takes the nomination, $600 invested in Clinton contract becomes $1000 and $400 invested in Obama becomes 0. It is obvious that the more we head closer to the nomination date, the surer we become of who is going to take the nomination. So, if it becomes clear that Clinton has won the nomination then the Clinton index would be very close to 100 and Obama would be very close to 0. And if you still think that Obama will win and you buy Obama contracts, and by some miracle he does, then you earn close to $1000 for an insignificant amount you invested earlier. Depending on what your prediction is, you make or lose money.

 

If I am Obama, and I have a feeling that Clinton is going to take the nomination, then, to insure myself, I buy Clinton futures. If I lose the nomination I still get much of the cash back (depending on how much I have invested) since my predictions come true, and if I win the nomination then that loss should be insignificant anyway. Moreover, that loss amount is the cost of my insurance; I have to pay ‘premiums’ for purchasing insurance. (Of courses, there could be campaign finance rules and regulations that might restrict the candidates from investing in risky market). So, this way, by buying Clinton futures, Obama can insure himself against his loss in the nomination process and so can Clinton. Similarly, each political party can insure itself in the presidential elections too by buying opposing party’s futures.

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*I am not sure how the indexes are calculated for each candidate, but I believe the idea is similar. The indexes mentioned above are not real and only used to demonstrate a point.