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    letters | the storm

    Federal flood insurance encourages irrational choices

    An aerial photo showed storm damage in the central Jersey Shore area of New Jersey Wednesday.
    An aerial photo showed storm damage in the central Jersey Shore area of New Jersey Wednesday.

    GIVEN FOOTAGE of a sand bar barely two blocks wide jammed with destroyed houses, the sense of loss can give one pause, even a propensity to think of the devastation as a tragedy. The stuff of the lives of hundreds of families is either in the ocean or saturated. Apart from a loss of life, I believe that we demean the sense of “tragedy” when we confuse it with what is, in fact, the rational consequence of irrational behavior.

    Folks have known for years that it is a bad idea to build your house on shifting sands. Why, then, have so many houses sprouted up on sandbars, particularly along the mid-Atlantic coast? If there existed a free market for houses built on shifting sands, few would exist. A great many of those houses are financed with someone else’s capital, and those loans are conditioned upon the fact that Congress, by creating the federal flood insurance program, elected to obligate all of us taxpayers to pay for rebuilding those houses.

    Those who risk their own capital do so knowing that it is not a matter of if, but when, that house will be washed into the sea. The federal government’s irrational program relieves buyers and lenders, however, from having to think rationally.


    Ideologically, perhaps only the ardent Ayn Rand rightist argues that the federal government should not be in the business of helping our fellow citizens recover from devastation on this scale. Yet candidates who promise lower taxes and more government stuff relieve us from having to think rationally about paying for what we want to get from government. As a result, we have accumulated an astonishing $16 trillion debt, and that’s a tragedy.

    Joseph B. Harrington