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You have to be careful when applying moral hazard, because it's just authoritarian behavior with a more polite coating. There are times when it's appropriate an
by Spivak 1y ago
You have to be careful when applying moral hazard, because it's just authoritarian behavior with a more polite coating. There are times when it's appropriate and necessary to tell people what they can and can't do but I think this is a case where you either have to write and pass a law forbidding people to build and explicitly define the areas, even if it only forbids new construction, or continue bailing them out like any other natural disaster. This doesn't feel like a situation to "let the market figure it out" or abruptly pull disaster relief after the damage is done.
- kibwen 1y agoNo, what's authoritarian is an unavoidable insurance scheme that ignores the concept of moral hazard. In fact, I am all for insurance, it's extremely efficient at large and an institution as old as humanity itself, but if you don't deal with moral hazard then the wheels come off the engine. If I'm in an insurance pool with a smoker and they break their leg, that's fine. If I'm in an insurance pool with a smoker and they get lung cancer, they better be paying more than me. Some things are decisions, not fate, and people need to be willing to bear the cost of their decisions. To the point, if that Floridian's house burns down or that Californian's house floods then that's fine; vice versa is the problem.