Hip-high in Hooey

[Pryderi]

I've been having an email argument with a conservative friend about the role of govt and got this today.

"Maybe we shouldn't be creating moral hazards by having a federal insurance agency that gets involved in disaster relief. The market is pretty clear: if you build a structure in a place where it is more likely to get blown away or flooded, you're going to pay a higher insurance premium. When you have a federal bureaucracy like FEMA, you remove some of that market feedback.

The result is that you get people engaging in riskier behavior because they're backstopped by the federal government."

I'm flabbergasted and not sure how or whether to respond.

[dgibby]

1. Ask them to name one place in the US they could live

that is exempt from natural disaster.

[Pryderi]

3. Thanks! I was so stunned by the missive I couldn't think straight.

[WDIM]

2. I would agree.

I would say that Business should not have FEMA protection then. They should assume the free market risk of doing business in a risky area.

But the People the Federal Government has a duty to protect and assist those in need. The Government is under contract with the people to promote the general welfare of the people. If there are sick, hungry, dying, homeless, needy, less fortunate that need help because of a disaster the Federal Government must respond!

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.


promote the general Welfare!

[phantom power]

4. In my experience...

conservatives will acknowledge only one role for govt: force projection. Usually, they'll call it "defence" and/or "law enforcement."

It would be interesting to ask your friend to list some specific "riskier behaviors" that would be reduced with more expensive insurance, and/or lack of FEMA support. And then ponder what the impact on the economy would be if those behavior were reduced.

[Silent3]

5. By that same argument, corporations should be abolished

Let's see what he/she thinks of that. Corporations exist to limit liability for the founders of a business, socializing the risk of conducting business.

Personally I'm OK will the concept of limited liability corporations, but only if the public which incurs the socialized risk makes much higher demands for what the public gets out of the deal than we currently make.