Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
In the same category

The Economics of Disaster

IMG Auteur
Published : November 06th, 2012
464 words - Reading time : 1 - 1 minutes
( 18 votes, 4.5/5 ) , 1 commentary
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
1
comment
Our Newsletter...

 

 

 

 

Hurricane Sandy was one of the worst natural disasters the east coast has ever seen. Clean-up and recovery will take months, if not years and estimates run in the tens of billions of dollars. Parts of New York and New Jersey will never be the same. Entire seashore communities have been wiped out, but the determination to rebuild has been lauded as courageous and admirable. Yet as with all natural disasters, Sandy raises uncomfortable questions about the extent to which taxpayers should fund the cleanup and the extent to which government programs create moral hazards.

For example, FEMA and the National Flood Insurance Program (NFIP) are expected to pick up the tab for much of the flood damage caused by the hurricane. Of course this will mean more federal debt and inflation for the rest of us, since the program only has about $4 billion to work with and is already $18 billion in debt from hurricanes Katrina and Rita. Many think there is a need for the government to provide flood insurance of this kind. After all, the market would never provide insurance in flood prone areas at an affordable price. But shouldn't that tell us something?

Shouldn't that tell us that it is a losing proposition to insure homes in coastal areas and flood plains often threatened by severe and destructive weather patterns? And if it's a losing proposition, should taxpayers subsidize the inevitable losses arising from federal flood insurance?

The NFIP disguises the real cost of flood insurance in flood prone areas, which influences homebuilding and sales in such areas. Recklessly taking unwise risks when risk is underpriced is known as moral hazard. When politicians decide that private insurance premiums are too high, as with houses built in flood plains, the solution is to under price the risk through federal subsidies. The obvious and expected outcome is more danger to life and limb when disaster strikes.

Even NFIP has been forced to raise rates significantly in coastal areas, and is now dropping second homes from coverage altogether,

Many assume it is compassionate to entrust government central planners with disaster recovery. However, the greatest compassion brings results, not just good intentions. And we've seen how bureaucratic organizations like FEMA mismanaged recovery and relief in the wake of hurricanes Katrina and Ike. Organizations such as the Red Cross and private companies like Home Depot and Duracell have already stepped in admirably to help those in need, and we can only hope FEMA has learned this time not to impede and frustrate private efforts as they have in the past.

Above all, my thoughts and prayers are with the victims of Hurricane Sandy in this tremendously difficult time and hope they can get their lives put back together as quickly and seamlessly as possible.

 

 

Data and Statistics for these countries : Jersey | All
Gold and Silver Prices for these countries : Jersey | All
<< Previous article
Rate : Average :4.5 (18 votes)
>> Next article
Congressman Ron Paul of Texas enjoys a national reputation as the premier advocate for liberty in politics today. Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on commodity-backed currency. He is known among both his colleagues in Congress and his constituents for his consistent voting record in the House of Representatives: Dr. Paul never votes for legislation unless the proposed measure is expressly authorized by the Constitution. In the words of former Treasury Secretary William Simon, Dr. Paul is the "one exception to the Gang of 535" on Capitol Hill.
WebsiteMake a donation
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Elizabeth Warren: The 14 Trillio...
02:15sneezy67
Good ideas...good information....but somewhat behind the curve...the water has already gone under the bridge.
Man Grabbed, Crushed to Death By...
00:00user4779
The "lump of labour" fallacy raises its tired old head yet again, mixed in with B-movie-style sci-fi speculation about a terrible robotic future wo...
Max Keiser Interviews GoldCore’s...
03 Julovertheedge
"The IMF said that Greece requires additional bailout funds of around 50 billion euros until 2018 under the current bailout conditions, and slashed...
Greece’s referendum
03 Julend
"History may judge him instead to have played a poor hand very well indeed." I'm quite sure both Macleod and Varoufakis will be quite disa...
Gold Daily and Silver Weekly Cha...
02 Julglasstiger
Jesse, you use the term "could care less" frequently. Is this American speak for "couldn't care less"? Similar I suppose to the ubiquitou...
One more book, Mr. Stockman
02 Juluser4779-1
While it is true that "[Gold standards] were abused, suspended, and ultimately abandoned in favor of a currency that central banks could inflate at...
Panicked Hedge Funds Now Praying...
30 Junovertheedge1
"... and the silly game theory ..." Obviously you have no knowledge of game theory and its applications. Otherwise you wouldn't have used ...
The Gold Standard: Generator & P...
30 Junuser4779
Is it really so bad for Americans that they do not spend their lives labouring on a production line to make mass-produced goods, and have left this...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Gray Rock(Au)GRK.V
Gray Rock Closes Non-Brokered Private Placement
CA$ 0.02+0.00%Trend Power :
Corporate news
PetrobrasPBR
Petrobras to Sell Stake in Bijupira & Salema Fields for $25M - Analyst Blog
US$ 8.83+2.08%Trend Power :
Corporate news
BP plc(Ngas-Oil)BP
BP to Settle Federal, State GoM Oil Spill Claims for $18B - Analyst Blog
US$ 41.29+5.14%Trend Power :
Corporate news
Clean EnergyCLNE
ALLETE Clean Energy Acquires Wind Farm in Pennsylvania - Analyst Blog
US$ 5.37-0.56%Trend Power :
Corporate news
Junex(Ngas)JNX.V
Junex Closes a Portion of its Private Placement for Proceeds of $5 Million
CA$ 0.80+0.00%Trend Power :
Corporate news
Yingli GreenYGE
SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders With Losses on Their Investment in Yingli Green Energy Holding Co. Ltd. of Class Action Lawsuit and Upcoming Deadline - YGE
US$ 1.15-3.36%Trend Power :
Corporate news
Sandspring Res.SSP.V
IIROC Trading Halt - SSP
CA$ 0.12+0.00%Trend Power :
Corporate news
Fortune Minerals(Ag-Au-Co)FT.TO
Receives Notice of Default Under Prepay Facility and Reaches Agreement in Principle to Settle
CA$ 0.05+11.11%Trend Power :
Corporate news
PetrobrasPBR
Indian Tycoon Plans to Invest $2.5 Billion in Brazil Oil and Gas
US$ 8.83+2.08%Trend Power :
Corporate news
Potash Corp.POT.TO
K+S says no basis for talks suggested by Potash Corp
CA$ 39.26+0.98%Trend Power :
Corporate news
Comments closed
  All Favorites Best Rated  
All clues indicate Sandy is an unnatural disaster caused by weather modification and HAARP steering! Congress surely controls the usage of these two unnatural weather devices. "ALL Law making Power is vested" in the Congress of this United States, (Constitution). Could the "Executive Branch be exceeding it's Constitutional Powers of only "Executing the Laws passed by the Congress" ??? A Concerned Citizen of this Nation!!
Rate :   1  2Rating :   -1
EmailPermalink