The father of a former college roomie of mine (guess who!) worked for Equitable, though it's possible that the British company is a different animal than the one reported on below. The Equitable I heard about was actually owned by its policy-holders: they couldn't lower rates (because of NY state insurance law) and couldn't pay dividends, so that it was a lot like Baran & Sweezy's story of the rising surplus -- especially since it went into waste. I've heard that it since converted to the joint-stock form, which would make it more prone to bankruptcy.
JD
-----Original Message-----
From: Tom Walker
To: [EMAIL PROTECTED]
Sent: 7/5/2002 9:52 AM
Subject: [PEN-L:27627] Equitable Life (was Slaughter of dead labour)
Chris Burford:
"A major pensions company, Equitable Life, is on the verge of
bankruptcy."
Some background on Equitable Life:
"Price saw practical application of Bayes' theorem in the actuarial
field,
since many annuity schemes had failed on account of the inadequacy of
available mortality statistics. He addressed these problems in a series
of
papers in the Philosophical Transactions culminating in the Observations
on
Reversionary Payments (1771), which remained a standard work for many
years
(7th edn, 1812). Price discovered that the mortality statistics
available
for Northampton were much the most complete available and these
'Northampton
Tables' remained in use until more complete and therefore accurate
information became available. He also tried to calculate the effect on
mortality of specific circumstances, such as marshy situations, and
calculate tables for situations such as joint lives and survivorships.
The
newly founded Equitable Life Assurance Company (1762) retained Price as
consultant, and his nephew William, himself the author of important
works on
the subject, became their first actuary."
Karl Marx on Richard Price:
"The conception of capital as a self-reproducing and self-expanding
value,
lasting and growing eternally by virtue of its innate properties --
hence by
virtue of the hidden quality of scholasticists -- has led to the
fabulous
fancies of Dr. Price, which outdo by far the fantasies of the
alchemists;
fancies, in which Pitt believed in all earnest, and which he used as
pillars
of his financial administration in his laws concerning the sinking fund.
"'Money bearing compound interest increases at first slowly. But, the
rate
of increase being continually accelerated, it becomes in some time so
rapid,
as to mock all the powers of the imagination. One penny, put out at our
Saviour's birth to 5 per cent compound interest, would, before this
time,
have increased to a greater sum, than would be contained in a hundred
and
fifty millions of earths, all solid gold. But if put out to simple
interest,
it would, in the same time, have amounted to no more than seven
shillings
and four pence half-penny. Our government has hitherto chosen to improve
money in the last, rather than the first of these ways."[1]
"His fancy flies still higher in his Observations on Reversionary
Payments,
etc., London, 1772. There we read: "A shilling put out to 6% compound
interest at our Saviours birth" (presumably in the Temple of Jerusalem)
"would... have increased to a greater sum than the whole solar system
could
hold, supposing it a sphere equal in diameter to the diameter of
Saturn's
orbit." "A state need never therefore be under any difficulties; for
with
the smallest savings it may in as little time as its interest can
require
pay off the largest debts" (pp. XIII, XIV). What a pretty theoretical
introduction to the national debt of England!"
Tom Walker
604 254 0470
