This House Would Nationalize Trade Credit Insurance

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Of course, before we start, take a look at https://en.wikipedia.org/wiki/Trade_credit_insurance in order to know and have a basic understanding of what this motion will be talking about.

Now, biases first. Biases shouldn’t be too much of a problem in this debate. For one, all debates with no explicit wording regarding geographical context should be interpreted by affirmative teams as happening in liberal democratic countries. That’s one. Two, even if there happens to be a crazy YOLO geographical context challenge from negative teams, they won’t matter much. The number of trade credit insurances (ALL of them, throughout the whole world!) are countable by our fingers. Even if Team Negative decides to throw a question of the acquisition process of the government in third-world countries, the circumstances over there don’t differ by much with the ones happening on general liberal democratic countries. Even if they do, the circumstances would likely affect the relationship as well as the performance of public-private sectors as well, rendering that challenge useless. Whatever could, might, and would happen in third-world countries, or anywhere else around the world for that matter, will be the same as what could, might, and would happen in liberal democratic countries. In regards to the context of this motion.

So, this motion will be talking about a forced (or maybe leveraged) government purchase over a particular private sector. Expect both teams to agree on the nature of governments and private sectors, but regarding their relationships and about the nature-atmosphere of a nationalization, we are expecting to see some clashes, though. Both teams are also expected to agree on the general nature of insurance practices. The clashes we expect would likely appear on the difference in governments’ and private sectors’ specific activities and thresholds (for everything). Clashes are also expected to circulate around the effectiveness and efficiency of this proposal (of course), the degree of importance trade credit insurance poses towards economy, and the different aspects both Neg and Aff might have in their perspectives of a country (‘s healthy economy).

Anyway, here is a summation of the things both teams have to accept (as well as the expected clashes)

  1. Governments are less profit-oriented than private institutions. And as insurances become less profit-oriented, they decrease their risk appetite and threshold for acceptable losses (however, this doesn’t mean that these institutions will be extremely parsimonious towards potential debtors post-nationalization – they still might approve credit lending out of sympathy). Whether this would mean improvement towards overall country’s economy or not, though, that is the debatable nature of this motion. Consider the interests of other actors involved in this motion, too. Not only the economy. How this motion affects these other actors is not fixed and is also debatable in nature.
  2. The way this motion will be implemented is through either a forced purchase (at a government-dictated price – an early bailout, so to speak) or through a leveraged purchase. However, Team Affirmative could still think of other models, so it is likely that our guess will be off the mark. Team Negative could also be proposing their own counter-model, on top of that. Should such a scenario happen, then the debate will turn into a model-vs-countermodel appeal with both teams trying to convince in terms of their own effectiveness and efficiency. Otherwise, then the debate should be your standard average proposal-and-value-judgment debate of a model vs scrutiny of the model. Nothing new here.
  3. Trade credit insurances pose a potential threat in the advent of failure. However, both teams will likely disagree on the urgency – namely the extent and magnitude of threat, and subsequently, the course of actions governments should attempt to take.

One last thing, a fair warning. Beware of analyzing and expanding this debate too far into talking about bailouts. We are aware of the 2009 financial crisis leaving quite the trauma in our memories, but this debate is not about that. Yes, bailouts is (and should be) part of the discussion, but it is not the main issue here and should not be given the most focus and attention.

Team Affirmative

  1. Because of past painful experiences.

On September 16, 2008, AIG (American International Group – they are one of the variants for AIA, and they have ever been the main sponsor for Manchester United Football Club – that name should be familiar) received an $85billion, two-year loan from The Federal Reserve in order to prevent bankruptcy and further stress on the global economy.

In return, the Fed owned 79.9% of AIG’s equity, the right to replace management, and veto power over all important decisions, including asset sales and payment of dividends. It replaced management and has veto power over all important decisions, including asset sales and payment of dividends.

But this is not the main point of this argument. The process and circumstances after the loan is one thing, but the nature of severity contained by the urgency is within the massive potential failure should they fail.

More information on American International Group Bailout Litigation here and here, but for further understanding on the nature of this, you should Google other articles (and other similar cases as well – go figure, Lehman Brothers; 2009, remember?)

Spoilers for AIG’s case. From the second website hyperlink. To boost its profit margin, AIG had become a major seller of “credit default swaps” (CDS).These swaps insured the assets that supported corporate debt and mortgages. If AIG went bankrupt, it would trigger the bankruptcy of many of the financial institutions bought these swaps. AIG was so large that its demise would impact the entire global economy. For example, the $3.6 trillion money-market fund industry invested in AIG debt and securities. Most mutual funds owned AIG stock. Financial institutions around the world are also major holders of AIG’s debt.

  1. Because the term “credit” is sensitive.

And therefore sensitive issues should be covered and be under governmental control. Supposing that this explanation is part of and contained within the elaboration for Team Affirmative Argument 1, then use the other perspective for this assertion.

What would likely be contained within Team Affirmative Argument 1 is the practical explanations: how large this potential harm is, what would happen if this was not done, take a look at our history, etc. etc. The other way this argument could be developed is by going with the philosophical path:

  1. What are the (other) (sensitive) things controlled by the government?
  2. Where does the government derive those rights from?
  3. When do those rights manifest and take place?
  4. What (or who) establishes those rights?
  5. Or, in other words, how is it justifiable? What made all of that (referring to the questions) justifiable?

Answer those questions related to the philosophy behind government span of control, and you’re set. (By the way, are you familiar with the clash of social contract versus body autonomy?)

  1. Because proper knowledge and information.

The distinctive feature of being public and private (one of, actually; there are others) is the nature of data possession. We expect Team Affirmative to have properly established precedence for this assertion by answering question (c) in Team Affirmative Argument 2 with the answer “when one has more knowledge, understanding, an insight over the other – that’s when the right for one to take and assume control over the other manifests – just like how the strong protects the weak, that is also how the enlightened protects the benighted”.

Anyway, this Team Affirmative Argument 3 fortifies that answer by analyzing more aspects and perspectives for the elaboration. The government has access to various data regarding credit. The sources from which the government harnesses this information would be the private trade credit insurance companies. However, there is a catch. Competition among these private trade credit insurance companies would naturally compel them to withhold some sensitive (or, even worse, crucial) information. One of them would be their own risk appetite and their threshold for fraudulent claims (and bad debt expense).

The point, is, private institutions are compelled to share some information with the government (sometimes so that the government can publicize them, because the people can sometimes have some sort of vested interest in that company, its life condition and expectancy mainly; other times, the government just want to obtain that information, just because reasons) – but they are not required to share EVERYTHING. This Team Affirmative Argument 3 takes the stance of governments saying “Okay, you are not required to share everything because you have your own body autonomy. Guess what? We’ll just buy you whole including your all high and mighty body autonomy at once.”

MegaSableye: “Erm.. personal comment. Okay. I know this. I have an exact and proper understanding of this issue. I am perfectly aware of the nature of this explanation. I major in accounting with minors in financial statement analysis during my study in university. The thing I would like to say, is, it would be kind of hard to understand and grasp a basic knowledge for this issue – I’m not that good of a teacher myself in explaining things even when I have proper teaching apparatus like a whiteboard and a boardmarker, so I’m not that confident that I can properly inform you regarding this point with having ONLY THIS ESSAY as a medium. Try asking some friends studying accounting (if you have any) to explain you about the basic concepts of financial statements – that would include what kinds of information they contain and what parties have interest in acquiring those information and why – and then, the ‘bad debt expense’ entry – what kind of ledger that is and what journals might affect its balance. If you Google.. I don’t know if the internet could help, but in my past experience I couldn’t understand a single thing about accounting when studying from the internet. At least the books were more helpful. I used ‘Introduction to Accounting’ by ‘Warren, Reeves, and Fess’ back then.”

Team Negative

  1. Problem-solution mismatch.

The nature of looming potential harm inside this massive credit failing does not automatically translate to a requirement for government acquisition. This, is.. interesting.

The way you should put emphasis on this point depends on the balance Team Affirmative puts in explaining the urgency and the process of the motion. The catch is in you analyzing their explanation of urgency properly. It would be an insta-win for you if the government said something along the lines of “previously, Lehman Brothers caused chaos.. bla bla.. massive credit failure.. bla bla bla.. then we have Greece with their credit solvency problem.. bla bla.. requiring government intervention bla bla bla… so now, before things get worse, we do this bla…..” that would be perfect for you. Team Affirmative, if you are reading this, make sure that you do not – I repeat, DO NOT – use those EXACT words.

Rebuttal should come in the form of “Mr. Speaker, the fact that past history provided us was that there has never been a SINGLE case where the government does NOT act in a time of crisis. Or, in other words, EVERY TIME the government took action, it has ALWAYS been IN THE ADVENT of a CRISIS. The moment Team Affirmative tries to pass this bill, guess what the reaction of society will be: ‘The government is trying to acquire trade credit insurance companies? Sheet! Is something happening!? What about my shares and my stocks!!??’ something along that line.”

Point is, an action from the government will trigger fear in market psychology. Fortify this assertion-rebuttal with explanations and elaborations from your knowledge in psychology and economics.

Here. Some extra perspectives for you. Characterize the traders and the news properly. Not all traders are experts in economics, not all of them are ministers. News are abundant in nature, and no single sane person can control keeping up to date with 192837 different issues at the same time. When you have super busy people, who are not experts, and do not have proper information regarding current issues, and then cannot control their news acquisition and coverage, they will tend to just focus on the “big news”. Either that, or, they will just read headlines without reading the news contents. So, a piece of news with the headline “Government to Acquire All Your Trade Credit Insurance Companies” will appear. Guess the implications.

  1. Because body autonomy over social contract.

Palisade in this argument (We’re just starting to get bored of the word ‘fortification’, so, a change in vocabulary, yeah) will result in clash with Team Affirmative Argument 2. This will turn one section of the debate into the good old ‘body autonomy versus social contract’ clash. Body autonomy has always been the weapon of all debaters. Run that. Again. And expect to have debaters on Team Affirmative running their own good old social contract (we know, we wrote them anyway, for Team Affirmative’s Argument 2). By this point, expect to have clashes regarding issues of “(+) the government was elected by the people, and in the process of doing so the people surrender some of their rights” “(-) the rights surrendered by the people do not include their rights to feel safe regarding the estimated worth of their properties” “(+) we do this because you stupid and government clever” “(-) government no clever, and even if, stupid still can carry their free will because reasons”.

We can’t help you any further past this point. The best course of action you could do is practice and join sparring sessions. Because this clash is so classic it will happen on almost all debate motions especially the ones having the tone of banning something. Clashes will also vary very much (pun intended) depending on the debaters characteristics, personality, and more importantly, knowledge regarding those two issues (body autonomy and social contract). So, yeah, we can’t help you much past this point. There are plenty of scholarly articles and/or papers etc. talking about them, though. We highly recommend you to surf around the web, find and read them, then choose the ones (explanations) that are more likely to be convincing.

One more thing. The body autonomy argument, when you assign it to these insurance companies, you are addressing a political-economic philosophy issue – when governments intervene on the business practices of the private sector, they are no longer – they betray the idea of liberal-democracy. Remember, this is not a tax, this is a bill.

  1. Immorality issue.

There is this Pareto principle (also known as the 80/20 rule or the law of the vital few) stating that, for many events, roughly 80% of the effects come from 20% of the causes. Essentially, Pareto showed that approximately 80% of the land in Italy was owned by 20% of the population. It is a common rule of thumb in business “80% of your sales come from 20% of your clients”.

Unfortunately, very, very unfortunately, this principle applies to the percentage of ownerships in insurance companies as well. By the way, we highly recommend watching “The Big Short” movie. Released in 2015. We will hereby stop this explanation right here as anything more from us will spoil that spectacle of a film to you. And we really would like you to watch it. We insist. Go download the pirated version for free on https://yts.ag/.

But, anyway, somewhere in the end of your explaining this assertion, we expect to see a “Thus, 80% plebeians, which constitutes the majority of your people, will suffer the harms of this motion just because Team Affirmative wants to save the 80% money value and economic health which just happens to belong to the 20% people, not the 80% plebeians”.

Extra Assertions

  1. (+) Governments have access to more moral and humane means and methods of collecting debts.
  2. (-) Because most, if not all, public institutions are seriously understaffed with overworked and underpaid workers.
  3. (+) Fraudulent claims as well as their appeals would be significantly deterred, due to the potential of those infractions being classified as federal offense, now that they are governmental institutions.
  4. (-) An action of this magnitude would likely send the wrong message of “it’s okay to fail” to debtors instead. Well, if you cover the introductory section of this post, that part can generate you ±~3-5 extra perspectives and arguments you can employ to deviate the debate into your favor. All you have to do is just research research and research. Google.

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