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.