Posted by
Andrews on Wednesday, April 02, 2008 2:41:47 PM
In an earlier
post or
two, I mentioned that by paying people simply for being poor, we actually subsidized poverty, and, as with anything we subsidize, we ended up with more poverty. So, to be fair, I am now going to point out another nonsensical subsidy, the subsidizing of those living in flood plains, the federal flood insurance program.
The usual justification offered is that "no private insurer would offer it." Well, perhaps that should be a good argument against the government doing it. Insurers won't insure people who live in flood plains or on certain coasts against flooding for the simple reason that floods are so frequent the premiums would be astronomical. They also won't insure people who live in piles of oil-soaked rags or who eat nothing but arsenic for the same reason.
So, what does our federal government do?
THEY insure people who live in flood plains.
And what is the result? Just watch the news. Flooding causes ever increasing property damage, and every bad rain turns into a disaster*. In the past, the only people living in flood plains were those too poor to live elsewhere, or those (eg. rice farmers, trappers, those in certain maritime professions) whose jobs made the risk unavoidable. Now that we have effectively removed the individual costs associated with floods, more and more people are willing to live in risky flood plains and coastal areas, as they have no financial incentive to move elsewhere.
Let us think about this. If the feds did not offer flood insurance, what would happen? First, people would be unlikely to live in flood plains, along the Malibu coast, and elsewhere. They would know that, should a bad rain strike, they would probably lose everything. So, while a few may be willing to risk it, people in general would behave sensibly and not choose to live where floods are likely.
On the down side, when a flood struck an area where they are not expected, some innocent people would suffer catastrophic losses. That is a shame, but it does not justify the massive boondoggle that is the federal flood insurance program.
I am sure some readers are wondering what I have against the federal flood insurance program, so alloow me to explain.
The federal flood insurance program basically exists to short circuit common sense. A sane person would look at a home, say "it flooded in 10 of the past 20 years" and decide to live elsewhere. The federal insurance overcomes that sensible reticence by saying "Well, move in, if you lose any money, the tax payers will reimburse you!" In other words, rather than encouraging those who live in flood plains to move elsewhere, the federal government confiscates from all of us to help defray the costs of those who want to live on the waterfront or in flood plains.
Life comes with no guarantees, and it is not the job of the government to improve on nature. If someone wants to live in a flood plain or on the water, they know the risks and should bear the costs alone. If they can find a private insurer, then that is great. But, if the risk is too great for any private insurer, it is not the job of the government to step in. By paying for the damages caused by flooding, the government just encourages more people to move into risky areas, raising potential costs even more.
In short, as with welfare, if you want to do something self-destructive or costly, it is your right to do so, but it is not our job to defray your costs. Nor is it the job of government to subsidize risky behavior, as that only encourages it, increasing costs even more.
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* Given improved engineering and materials, one would expect that floods would become less costly with time, and logically they should. But, as we have removed any financial incentive to avoid even the areas most at risk for flooding, we have caused people to build multi-million homes taking advantage of the beautiful scenery often found in flood prone areas. So, rather than reducing the damage caused by nature, we have put in place a system designed to maximize potential harm.