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Monday, July 11, 2005

Economics Corner with Paul 

Hurricanes. Fearful unstoppable hurricanes. Living in Colorado, I have certain limitations. No beach access. No Disney World. On the "plus" side, no hurricanes. And therefore no multi-billion dollar federal bail-out every 2 months every summer.

Not so for for Florida. The state once called "America's Wang" by Homer Simpson is indeed sticking it to us. They are making us pay for their choice to live in an area likely to be hit by hurricanes. Like the Coloradoans surprised to find at their mountain/Forrest homes, their dogs are eaten by mountain lions, and their houses burned by forrest fires. These people are externalizing the cost of their lifestyle.

Federal Flood insurance was designed by an economist, and as originally imagined, as a way of putting the externalized costs of living in a flood plane back on the property owner. Since we will inevitably have to dole out money when we see houses afloatin' down the Mississippi, we have at least gotten that cost up front. Price signals are expected to be better as well. The insurance tells people "this house will be flooded" and more importantly "this will be expensive". More importantly because the foolhardy can ignore that former, but the later is an absolute, built into the price of ownership. So when the national guard spends a day getting your cow off of your barn, the rest of us aren't stiffed with the bill.

How about some hurricane/forrest fire/wildlife attack insurance so we can stop subsidizing people's bad decisions?

-paul  13:04 EST | |

About us:

This weblog is an ongoing, if periodic, effort by several friends to stay in touch, in reading material, and in ideas.

Lucky Luciano is a former Italian Stallion real estate hustler and Benedict Arnold CEO turned shady lawyer-to-be. He lives in Denver.

Ben is a Paramedic and would-be philantropist who lives in Denver. He knows everything about nothing.

Fuzzy Dunlop lives in Manhattan. He is more than capable of standing up to the stresses of a high crime urban environment.

Jess is a teacher. But have YOU given her an apple? No, you haven't. You should be ashamed of yourself. This crazy feminist currently rests her copy of Awakening in Jersey City.

Matt is a pariah, iconoclast, and professor of gambling living in Oakland.

Miguel Sanchez is not Lionel Hutz.

Daddy Brooklyn lives in Brooklyn. He hates Republicans, though he wouldn't mind being ensconced in the landed elite of New York City.

Paul just smoked my eyelids and punched my cigarette.

Ziggy Stardust has no past.

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