by Patrick Appel
A reader defends government flood insurance:
Why does the public favor federally subsidizing the risk taken by homeowners and residents in flood-prone areas? From the view of basic human psychology we probably favor helping people out when their homes & livelihoods are at risk, and most people are not going to put a lot of energy into stripping away such protections. People will live near water, and I would hypothesize that many of us would rather help out than see mass bankruptcies after a flood. Surely this is as worth while as some semi-useless defense system that employees an entire town for its construction. But there is a stronger argument.
From the point of view of the nation's general welfare, we all reap enormous benefits from having people live along the coasts and shores, both in the history of building our nation as a great power and moving forward (generally, if not specifically in every community that is at risk.) There is a reason that settlements have always tracked waterways, the enormous economic benefit of having ports for shipping and transportation.
Maybe I'm off-base, but it seems to me we would all have to pay more for importion/exporting goods if everyone in low lying areas had to travel an extra 30 miles to get to work. And oil exploration around the Gulf would be a lot for more expensive. This is true not just of oceans and the Gulf but also the Mississippi. (Maybe that explains it; it's because first-in-the-nation primary Iowans need flood insurance).
Not everyone will benefit equally from this wealth and welfare enhancement, and not all who benefit from the subsidy "need" it. But from my perspective it is overall better for the nation. This is pretty standard for federal programs, and I am in favor of efforts to more narrowly target recipients of federal subsidies to better track our actual policy priorities. But the fact that this is more so a way to deal with already existing conditions (large populations living in flood-prone areas) makes it even more reasonable to support. This, of course, if a vision for solving the collective-action problem that the modern Republican party rejects (in-land/high-ground free riders on value created by at-risk for flooding communities and commerce). I'm amused to see progressives such as Yglesias also fail to see the broader context for subsidizing some of the risk for coastal communities.
Kevin Drum makes related points. Another reader:
I work in the insurance industry and have been asking for years why do FEMA flood policies cover second homes? I am ok with subsidizing homes for a flood loss but have a real problem subsidizing anyone's second home. I know the cost of a flood policy with a standard or excess insurance market would be very expensive or maybe even impossible to find but why is that FEMA's problem? If you can't afford to insure your second home then you shouldn't own one. This is a form of government welfare for affluent citizens.
What irritates me is that some politicians are now calling for reducing or eliminating FEMA help during natural disasters. I bet they won't look at dropping policies for second homes because too many of their wealthy constituents will raise hell to keep their cheap subsidized insurance in place.
The Dish 