8 ms·

Why does the government need to place restrictions on where people build? If I build a house without flood insurance and it gets washed away, it's my loss - why

by MarkMc 9y ago

Why does the government need to place restrictions on where people build? If I build a house without flood insurance and it gets washed away, it's my loss - why does the government care? Perhaps there are costs associated with emergency aid during a crisis. But then the solution is to force people to buy 'crisis cover' from private insurance companies. When a crisis occurs, the government collects the payout from the insurance companies.

mannykannot 9y ago
Politics does not work that way. People all across the political spectrum demand to be bailed out when their risks go bad, and it is pointless to adopt an ideology that ignores this reality. Then there is the issue of people whose prudent choices were nullified by rampant development upstream. > But then the solution is to force people to buy 'crisis cover' from private insurance companies. I see you are not opposed to government intervention, you just want it in a different form.
- MarkMc 9y ago
  > I see you are not opposed to government intervention, you just want it in a different form. That's right - I want it in a reduced, more efficient form. Personally I don't think the government should bail out property damage of people whose risks go bad and who don't have insurance. But I can accept that maybe this is the minority opinion - but even in this case it's still more efficient for people to be forced to buy private insurance rather than have the government say 'you must pay us $X flood risk premium' or 'you cannot build here'. Private insurance companies (with money on the line) will more accurately assess flood risks than a government official (who has no financial interest in the accuracy of his assessment).
  - mannykannot 9y ago
    We have been down this route with flood insurance, so we know what happens - the electorate pressures the legislature to make insurance available at below-market rates, which it does by interfering in the market. As the notably conservative states along the Gulf coast have not done anything to make the situation truly market-driven, it is unrealistic to think of this as a solution. Maybe if the legislature did not have to respond to the populace... is that the more efficient form of government you prefer?
    - MarkMc 9y ago
      There are plenty of examples in history where the majority opinion changes, even with regard to deep, long-held ideas. In any case it's reasonable to support a policy on principle, even if it's unlikely to be implemented.
Goronmon 9y ago
Why does the government need to place restrictions on where people build? If I build a house without flood insurance and it gets washed away, it's my loss - why does the government care? Because the cost ends up showing up in other ways. Maybe it costs more due to social safety nets needing to take care of those who lose their houses without the means to replace them. Maybe it means an increase in crime as those who lost homes/stuff get desperate if they can't recover from such a loss financially.
WorldMaker 9y ago
Keep in mind, the US Government is the primary underwriter of Flood Insurance in the US. [1] In many cases, even if you are buying your Flood Insurance policy from a private company, they are buying National Flood Insurance on your behalf. If your insurance company's pool directly covered the all the extremely variable risk (part of the discussion here), it would be a lot more expensive, so the US government takes on a lot of that risk. The US government is in the best position to take on a lot of that risk in part because in most states the flood plains are also actively managed by the government. A lot of flood plains have levees and dams and reservoirs that are at least monitored by the US Army Corps of Engineers, if not built and/or maintained by them as well. In the case of a flood event too, it's the US Government that is supposed to act as the primary active management agency (FEMA and in turn it's delegations to the National Guard), presumably mitigating risks during the course of an event (assuming proper management) or taking direct responsibility for mistakes in crisis. [1] https://www.fema.gov/national-flood-insurance-program https://www.fema.gov/national-flood-insurance-program (Disclosure: Working as a consultant for the USACE on a semi-related project. I do not speak for my government or my employer; any mistakes or opinions are my own.)
stevep98 9y ago
It costs the government to provide infrastructure to service people in these areas. It costs them to repair when they get flooded. It costs the government to rescue people and provide emergency services.

by MarkMc 9y ago

mannykannot 9y ago

Politics does not work that way. People all across the political spectrum demand to be bailed out when their risks go bad, and it is pointless to adopt an ideology that ignores this reality. Then there is the issue of people whose prudent choices were nullified by rampant development upstream. > But then the solution is to force people to buy 'crisis cover' from private insurance companies. I see you are not opposed to government intervention, you just want it in a different form.

MarkMc 9y ago
> I see you are not opposed to government intervention, you just want it in a different form. That's right - I want it in a reduced, more efficient form. Personally I don't think the government should bail out property damage of people whose risks go bad and who don't have insurance. But I can accept that maybe this is the minority opinion - but even in this case it's still more efficient for people to be forced to buy private insurance rather than have the government say 'you must pay us $X flood risk premium' or 'you cannot build here'. Private insurance companies (with money on the line) will more accurately assess flood risks than a government official (who has no financial interest in the accuracy of his assessment).
- mannykannot 9y ago
  We have been down this route with flood insurance, so we know what happens - the electorate pressures the legislature to make insurance available at below-market rates, which it does by interfering in the market. As the notably conservative states along the Gulf coast have not done anything to make the situation truly market-driven, it is unrealistic to think of this as a solution. Maybe if the legislature did not have to respond to the populace... is that the more efficient form of government you prefer?
  - MarkMc 9y ago
    There are plenty of examples in history where the majority opinion changes, even with regard to deep, long-held ideas. In any case it's reasonable to support a policy on principle, even if it's unlikely to be implemented.

Goronmon 9y ago

Why does the government need to place restrictions on where people build? If I build a house without flood insurance and it gets washed away, it's my loss - why does the government care? Because the cost ends up showing up in other ways. Maybe it costs more due to social safety nets needing to take care of those who lose their houses without the means to replace them. Maybe it means an increase in crime as those who lost homes/stuff get desperate if they can't recover from such a loss financially.

WorldMaker 9y ago

Keep in mind, the US Government is the primary underwriter of Flood Insurance in the US. [1] In many cases, even if you are buying your Flood Insurance policy from a private company, they are buying National Flood Insurance on your behalf. If your insurance company's pool directly covered the all the extremely variable risk (part of the discussion here), it would be a lot more expensive, so the US government takes on a lot of that risk. The US government is in the best position to take on a lot of that risk in part because in most states the flood plains are also actively managed by the government. A lot of flood plains have levees and dams and reservoirs that are at least monitored by the US Army Corps of Engineers, if not built and/or maintained by them as well. In the case of a flood event too, it's the US Government that is supposed to act as the primary active management agency (FEMA and in turn it's delegations to the National Guard), presumably mitigating risks during the course of an event (assuming proper management) or taking direct responsibility for mistakes in crisis. [1] https://www.fema.gov/national-flood-insurance-program https://www.fema.gov/national-flood-insurance-program (Disclosure: Working as a consultant for the USACE on a semi-related project. I do not speak for my government or my employer; any mistakes or opinions are my own.)

stevep98 9y ago

It costs the government to provide infrastructure to service people in these areas. It costs them to repair when they get flooded. It costs the government to rescue people and provide emergency services.