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It is not accurate to apply terms like "gambling" or "betting" to situations either of risk or of uncertainty. These terms have unfavorable emotional implications, and for this reason: they refer to situations where new risks or uncertainties are created for the enjoyment of the uncertainties themselves. Gambling on the throw of the dice and betting on horse races are examples of the deliberate creation by the bettor or gambler of new uncertainties which otherwise would not have existed. The entrepreneur, on the other hand, is not creating uncertainties for the fun of it. On the contrary, he tries to reduce them as much as possible. The uncertainties he confronts are already inherent in the market situation, indeed in the nature of human action; someone must deal with them, and he is the most skilled or willing candidate.Thoughts of Gary North:
Insurance is one of the great discoveries in the history of man. It enables people to secure themselves against the effects of statistically predictable negative events in life. By surrendering ownership of money in advance, we gain legal access to far more money in the future, if some statistically predictable negative event occurs in our lives.
I don't believe any of this is random, but I surely believe in taking advantage of insurance to protect myself against the outcome of statistically predictable aggregate events.
Gambling is a zero-sum game. Somebody wins because other people lose. I don't want to win on that basis unless the nature of the game is imposed by the real world, and therefore is not a game. Commodity futures speculation is a zero-sum transaction, but it is not a zero-sum game. It enables people who don't want to bear uncertainty, namely, producers, to transfer this uncertainty to speculators. Then speculators enter into a zero-sum transaction with each other. Out of this competition comes an array of prices. These prices guide other producers free of charge -- a tremendous benefit to society. This is no game.