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The Silk Road to Freedom

Have you ever heard of the “Dread Pirate Roberts”?

The case of Ross Ulbricht, aka Dread Pirate Roberts, is a fascinating study of two conflicting approaches to dealing with the problems of the illegal drug marketplace.

Ross apparently tried to clean it up. This is how Brian Doherty describes his effort on Reason.com.

(he) created a site that helped bring more intelligence, more freedom, more consumer awareness, more harm reduction (because of the intelligent and communicative community that arose around the site, helping educate you about safe and sensible use, mixing, and sources of drugs), and more peace to the sometimes dangerous process of drug buying. That act can be dangerous both because of the quality of sellers and product, and because of the occasional physical danger presented by the people or situations that real-life drug deals sometimes create.

From Brian’s point of view, this crusade yielded a number of benefits to society:

If you delve into the world of Silk Road forums and fans, as I did in researching my December Reason feature, talk to some of its users, study the academic work on it, you realize Silk Road was a place that helped eliminate fear, uncertainty and danger; that made quality and customer satisfaction a more powerful incentive to succeed in drug dealing than violent defense of turf or money.

As you might imagine, Ross’ actions ran afoul of the federal government’s war on drugs. He was just found guilty of seven charges the government had brought against him. They include:

narcotics trafficking; distribution of narcotics by means of the Internet; narcotics trafficking conspiracy; continuing criminal enterprise; conspiracy to aid and abet computer hacking; conspiracy to traffic in fraudulent identity documents; and money laundering conspiracy.

Brian points out that Ross did not do these things, but managed a website that allowed other people to do them.

My take on this sorry episode is as follows: the drug world is full of predators. The government goes after them. In the meantime, many drug users fall prey to the predators. Ross tried to help them. In doing so he entered the government’s crosshairs. It did not matter that he did so to benefit society – the law is the law.

It’s an intense debate. Should social ills be fixed through government coercion? Or, should they be addressed through the transformative action of private citizens? Can some combination of both approaches be used without the government prosecuting people who have to get their “hands dirty” in the transformation?

This issue has an interesting life insurance angle. The question is this:

Do underwriters recognize the benefit of utilizing illegal goods and services, and factor it into their assessment? i.e., do underwriters distinguish between something that is illegal versus something that is harmful?

My initial answer to this question would be – maybe. Most certainly, hits on a criminal record would work against an applicant. Criminal charges and convictions are often causes for a declination; although, depending on the circumstances, candidates may still be insurable.

But what if a candidate admits to engaging in illegal activities but has never been arrested? One good example here is the use of marijuana. In many states, pot is illegal. Still, a huge amount of people use it, and disclose this fact on their application. They are basically admitting to an illegal act.

Does this mean an underwriter will automatically refuse to offer coverage? Not at all; as a matter of fact, depending on the frequency of use, some carriers will offer non-smoker rates! So here is a case of a technically illegal act gaining such social acceptance that the letter of the law is a secondary factor in underwriting. (Obviously, the sale of marijuana, as opposed to simply the use of it, is a whole different story.)

Certainly the type of activism in which Ross engaged has much more far-reaching consequences than an individual’s simple smoking of pot. Would somebody like Ross be eligible for coverage, assuming he admitted to these activities on his application?

If you were a life insurance underwriter, what would you say?