A non-foolish inconsistency

Considering moral hazard in providing disaster insurance makes sense; but that doesn’t mean leaving people to drown.

A conservatarian reader suggests an inconsistency between Mike O’Hare’s reflections on whether it’s right to subsidize the risks people voluntarily take by locating in the path of predictable natural disasters and criticism of the Bush Administration’s negligent misfeasance in efforts to prevent, prepare for, and respond to the New Orleans flood.

Seems to me that, if the people of New Orleans wanted their government to protect them from this threat, maybe they should have hired a lobbyist to lobby their local government, not a federal government which has a constitutionally defined list of responsiblitiies which conspicuously does NOT include protecting people who live in flood plains from getting wet.

Well, no.

I agree with Mike that we ought to give more heed to the problem of moral hazard when passing out disaster-relief funds. The Clinton Administration’s approach to one of the Mississippi floods was to buy the land rather than paying people to rebuild on it, which seems sensible to me.

New Orleans is an historic city, but maybe it ought to be relocated to the north of (i.e., above) Lake Pontchartrain rather than being rebuilt where it is sure, eventually, to be re-flooded. (When the shifting course of the Euphrates made Babylon uninhabitable, the inhabitants build Baghdad instead.)

Or maybe the economics and the equities suggest, instead, rebuilding it where it was. I’m not sure, and neither, I think, is Mike, but we both think the question ought to be considered rather than giving in to the reflexive demand to build a new city to be drowned again.

That has nothing to do with the question of whether, as a nation, we ought to help people located in harm’s way, rather than merely sitting back and watching them drown if the poverty of their local government doesn’t allow them to adequately protect themselves from disasters and from the consequences of disasters. Of course those levees should have been shored up. Of course those hospital ships should have been located offshore last week. Of course there should have been an evacuation plan. Of course there ought to be someone in charge of the rescue effort now. The vast outpouring of private money is welcome, but this is not a case where sponanteous self-organization is going to get the job done.

Yes, disaster relief has some second-order moral-hazard problems associated with it. But that’s not a reason to neglect it, any more than we should neglect the victims of car crashes in order to teach people to drive more carefully.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com