As Hurricane Wilma bears down on Florida, are we going to do the right thing and let the markets start discouraging people from living in disaster-prone areas? The government spends a lot of money subsidizing recovery efforts that the private sector tries to discourage with things like high insurance rates and high deductibles. Isn't this just setting us up for more loss, death, and injury later on? There's a fine line between compassion for people who get caught in circumstances beyond their control...and enabling people to continue making bad decisions year after year.
When the government subsidizes repairs that insurance won't, it encourages people to stick around places they shouldn't. So when they say, "'You live in the Midwest, you get tornadoes. Here, we have sunshine, beautiful weather, and once in a while a hurricane. You can't run away from Mother Nature no matter where you live." Why can't we call out that false choice? Even here in Tornado Alley, you'll only see one tornado per decade, on average -- and there's no certainty you'll experience damage. It's not like living in the Midwest means you're guaranteed to lose your house every few years. Yet hurricanes are virtually inevitable all along the Atlantic and Gulf coasts.
So while government interferes with a natural set of incentives that should discourage people from living in hazardous areas, it also interferes with natural incentives that encourage good behavior -- like when Sen. Charles Schumer threatens to take patents away from drugmakers. If bird flu really does become a deadly pandemic, and if Tamiflu (the drug Schumer wants to steal) really is a way to keep people alive, the right way to protect people isn't to steal the drug patent from the drugmaker -- do that, and no one will spend the money needed to develop the next generation of life-saving drugs.