Inside the Asylum

Steven Landsburg argues that (1) federal disaster relief doesn't help disaster victims and (2) that it places a special burden on the poor. His argument gets something right, but it also leaves out some significant complications. Here's the argument as he gives it.

There has long been an expectation that in Katrina-like circumstances, the government will step in to help. That makes disaster-prone cities like New Orleans (and, among others, San Francisco) more desirable and pushes up land prices in those cities.

So if you own a house on a flood plain, chances are the purchase price included a premium for the disaster insurance that the government insists on providing. That's a boon not to you, but to the former owner, who might live in Montana by now. The wealth transfer goes not to those who are currently in danger, but to those who owned endangered property when the policy went into effect.

By pushing up land prices, federal disaster relief denies people the opportunity to live cheaply in exchange for living dangerously. That opportunity is particularly valuable to the poor.

To reach his first conclusion Landsburg must assume that land owners are able to extract the entire value of promised federal disaster relief when they sell their land, but this is seldom true. Federal disaster relief certainly makes land in disaster prone areas more valuable, but sellers are still competing with land in areas that are not prone to disaster, so there is a limit to how much they can charge for the bundles of land plus promised disaster relief that they are selling.

Most of the time the price that a seller gets will be considerably less than the price he would get for the land without the promise of federal disaster relief plus the price at which a free market would provide comparable disaster insurance. In other words, buyers will still be getting cheap disaster insurance even after accounting for the premium built into the price of the land.

As for his second conclusion, Landsburg is correct that some people who would be buyers at the bottom of the property market are priced out as a result of federal disaster relief. So federal disaster relief harms some of the poor. This group of people will probably not include the poorest of the poor (who would probably be priced out even in an entirely free market). Nor will it necessarily include all the rest of the poor. Plenty of the people who now live in disaster prone areas are poor by the standards of the US, and benefit from the provision of cheap disaster insurance.

Eugene Volokh and John Hinderaker both argue that it is not wrong to jump straight into the political debate over tragic events, when those events have political significance. Which sounds about right to me. I have more of a problem when legislators use the public desire for action to rush through ill-considered legislation that not enough people liked the day before, and not enough people will like in a few months time.

Over at Crooked Timber I ran across this post by Belle Waring that struck me as a particularly feeble response to a common argument made by global warming skeptics.

It’s a standard move in global warming denial rhetoric to say, “if they were really serious about CO2 production, those crazy hippies would support the construction of nuclear power plants. Bwa ha ha ha, in your face, Al Gore!” Now, I never see anyone actually go on to advocate new nuclear power plants. But guess what? If, after the implementation of a reasonable, revenue-neutral carbon tax, nuclear power would be competitive without subsidies, then I would be happy to support nuclear power. If government subsidies would still be required, I think we would be better off subsidising something like wind or solar power, because nuclear power plants do have a wee negative externality problem, what with all the extra security needed, and that whole “radioactive” issue.

Where this goes wrong is in failing to recognize that the original argument is addressed to people who think that the consequences of global warming will be catastrophic in the near future, and that the argument comes from people who do not believe that the consequences will be catastrophic. Several obvious points follow from this.

Now, I never see anyone actually go on to advocate new nuclear power plants.

Sure, that's because the people making the argument don't believe there are any catastrophic consequences that must be averted. Why would they advocate a solution to a problem that, as far as they are concerned, does not exist?

If government subsidies would still be required, I think we would be better off subsidising something like wind or solar power...

Wind and solar power might make a dent in greenhouse gas emissions but they could never produce the 50-90% reductions that global warming alarmists claim we need. The people this argument is addressed to do not think that some fiddling around the edges with renewable power sources is going to be enough. A disaster of epic proportions is on the way remember?

...nuclear power plants do have a wee negative externality problem, what with all the extra security needed, and that whole “radioactive” issue...

While nuclear power carries some costly externalities, these are trivial compared to the disaster that global warming alarmists are predicting.

The position that Waring takes is fine for someone who thinks that the effects of global warming are going to be significant, but maybe not such a big deal. But that is exactly the problem that global warming skeptics are pointing to. Global warming alarmists say the apocalypse is nigh, but when you look at their proposed solutions, and the solutions they won't propose, it's hard to believe that they take their own predictions seriously.

Via Mark Steyn I see that Francis Fukuyama thinks the end of history will look a lot more like the EU than the US.

I believe that the European Union more accurately reflects what the world will look like at the end of history than the contemporary United States. The EU's attempt to transcend sovereignty and traditional power politics by establishing a transnational rule of law is much more in line with a "post-historical" world than the Americans' continuing belief in God, national sovereignty, and their military.

Unlike Steyn I think Fukuyama is probably right. Unlike Fukuyama I think that the US model is the more likely path to the end of history, while the EU model is most likely a path to the ashheap of history. The EU is behaving as though the end of history is already here and has given up the struggle before it's done.

Update: Wretchard makes the much the same point.

It doesn't make much sense to plan on living in a "post-historical" world unless one can exist an historical world. But maybe the EU plans on leaving history to the United States while it waits patiently, having missed the Worker's Paradise, for the next scheduled mothership.