On How to Eliminate the Department of Motor Vehicles

My wife and I were recently at the local DMV to get our names changed on our licenses (both of us are hyphenating our names). It never ceases to amaze either of us how inefficient these people are, which got us - libertarians, both - pondering ways to eliminate, or at least minimize, the role of the Department of Motor Vehicles in everyday life.

Here is an idea we had. The Department of Motor Vehicles is responsible for issuing drivers licenses and ensuring that those who get licenses are good enough drivers to be on the road. Of course, we also require every driver to have valid insurance. So, why not consolidate these two facts and let insurance companies be responsible for ensuring that qualifying for their insurance is accompanied by a driving test? I have little doubt in my mind that having insurance companies issue licenses as a condition of gaining access to their insurance would be more efficient and cost-effective than having the state do it.

The issue is really one of who has the more compelling interest in screening drivers - the state or the insurance companies. Yes, the state has an interest in screening drivers because they pay (or force us to pay, rather) for the roads, the EMT services and the emergency rooms that could be aversely affected in the case of accidents. But, insurance companies have an immediate interest in screening drivers, as they stand to lose money should they insure less than careful, or able, drivers.

I think that privatizing licensure in this way would not only make the screening process for drivers more rigorous (and thereby, have a likely effect of cutting down the number of accidents), but be less costly to the general public. If this large role (which the DMV doesn't do all that well to begin with) were handed over to the private companies, the DMV's traffic and, let's hope, necessry expenditures would be cut in about one half.

It could be argued that such measures would result in stricter driving tests which would ultimately mean that fewer people drive. So be it. Insurance companies would not make tests too strict (as they want customers), but would likely not make tests too lax (as they don't want to increase risk of paying out). My guess is that - think colleges here - the best insurance companies will be the most selective because they can afford to be, and the lesser companies may be less selective. Those who decide to make their tests minimal so as to accept as many clients as possible will then have to deal with the larger payouts that will likely result. Companies with tests that are too lax will likely either go out of business or acquire a horrible reputation.

Drivers who can only afford to be with the worst companies can "work their way" to better companies by taking the stricter insurance companies' tests. As stricter insurance companies will likely have lower rates (as they will pay out less and be more selective), once drivers feel like they are good enough to take the tests of "elite" insurance companies, they can try them.

All of this rests ony my general belief that businesses, while not always trustworthy, are often more trustworthy than government. They must work to stay in business (whereas government can always steal more money no matter how inefficient). Voting with dollars is more efficient than voting every 2, 4, or 6 years (and the number of non-elected government positions dwarfs the number of elected ones).

So, tell me. What do you think?