Friday, November 23, 2012

Flood Insurance: Case Study for Real Conservatism

In this era of Tea Party "conservatism", social-issues "conservatism" and generally fact-averse "conservatism", my kids have trouble understanding that it wasn't always this way on the political right. Conservatives used to pride themselves on being tough-minded, evidence-based and dispassionate. Flood Insurance and federal flood policy in general, as this article outlines, provide a nice case study.

Why does federal flood insurance exist in the first place? Isn't insurance usually the province of private enterprise? Well apparently the national flood insurance program had to be created to respond to a "failure of the market". I.e., insurers wouldn't (couldn't) provide flood insurance at an affordable price.

Now for anyone with even vaguely conservative leanings, the above statement should ring a loud alarm. Companies don't make money by not selling a product. The reasonable conclusion would be that there is something about the market that is preventing them from offering a product for sale. It could be that there is no demand, at an actually sustainable cost. Or maybe there is a regulatory problem. Whatever the reason, it sure sounds like a case where foolish regulators should not rush in, where commercial businesses fear to tread.

So a traditional conservative would oppose national flood insurance for mutually reinforcing reasons of both pragmatism, principle and ethics.  
  • The program is objectionable on pragmatic grounds, for the very strong fear that the program will amount to an expensive subsidy for those who choose to live (or choose to rebuild and continue living) in flood-prone areas.  
  • It is objectionable as a matter a principle, because there is no reason the government should be stepping into an arena that political economists expect should be appropriately and adequately served by private industry.
  • It is un-ethical, because misguided government incentives actively encourage people to undertake a course of action that may well be dangerous.
So when I tell my kids I used to consider myself a conservative, they are flummoxed,
because they can't reconcile the beliefs and attitudes of this person they know very well, with the beliefs and attitudes they see widely advertised by the overwhelming majority of prominent "movement" conservatives.

Other examples I hope to explore in the future: farm aid, and special economic zones.

1 comment:

  1. You and I are both conservative in the "classical liberal" sense. Unfortunately, the whole definition of conservative and liberal has been screwed up in the US over the last 100 years.