Your Florida Beachfront Property
Well, it's not exactly your beachfront property, but if there's a hurricane that hits houses there, you (and I, and the rest of us non-beachfront-dwellers) could be picking up the tab. Socialism is such fun! From the WSJ op-ed page:
We've been warning of the financial disaster looming off the Florida coast ever since Governor Charlie Crist socialized the state's hurricane insurance market and put Florida taxpayers on the hook for billions. Earlier this year, Mr. Crist stumped for and then signed a law making the Florida government the state's dominant insurer, but without the reserves that would be required of real insurance companies. The plan will work splendidly as long as there are no hurricanes in Florida, but the state will face a difficult challenge once the inevitable storm hits: how to pry new tax revenue out of Floridians just as they begin sifting through the rubble that used to be their homes.Now Florida's politicians are doubling down on their mistake, by trying to make all American taxpayers subsidize insurance for Florida homeowners. Congressman Ron Klein (D., Fla.) is hoping for a floor vote this fall on his Homeowners' Defense Act and has been assured by Speaker Nancy Pelosi that this is a top priority. Governor Crist is also lobbying hard.
Mr. Klein's bill would force the U.S. Treasury to issue below-market loans to state-insurance programs, while also creating a kind of Fannie Mae of disaster reinsurance, a federally chartered organization called the "National Catastrophe Risk Consortium." Like Fannie, the consortium would carry an implicit guarantee from the federal government as it issues securities in the capital markets, distorting prices as it sells subsidized reinsurance to participating states, all the while saddling taxpayers with new risks. According to Treasury Assistant Secretary Phillip Swagel, "Taxpayers nationwide would subsidize insurance rates in high-risk areas, which would be both costly and unfair."
Transferring the risk from condo-owners in Boca to taxpayers in Syracuse does not reduce the cost of hurricane disasters. In fact, now that Congress looks ready to volunteer middle-class taxpayers nationwide as the financial backstop for lovely beachfront properties, South Florida developers will have even less incentive to use sturdy materials and set homes a reasonable distance from the waterline. We have already run this experiment with the National Flood Insurance Program, with predictable results. When people can buy insurance at below-market rates, they tend to stay in accident-prone homes.
Taxpayers might be forgiven for wondering whether they're already paying enough, given that there are no fewer than 27 federal agencies tasked with responding to emergencies, not to mention myriad state and local agencies and private groups such as the Red Cross. Even if some believe that government should be the insurer of last resort, should taxpayers pay for every resort?
Sensing that Americans might be suffering from disaster-assistance fatigue after shelling out $110 billion to the Gulf Coast after Katrina, Mr. Klein touts the loan programs in his bill as a way to avoid no-strings gifts to affected areas. But what's the most likely outcome if state insurance programs don't pay back the loans? Treasury's Mr. Swagel put it this way in testimony to the House last month: "With federal financing, it is more than likely that there will be significant pressures to forgive outstanding debt in the case of a huge catastrophe."
We're already paying for this sort of thing, of course. Stossel wrote about this a few years back in Reason:
My Life as a Welfare QueenIn 1980 I built a wonderful beach house. Four bedrooms -- every room with a view of the Atlantic Ocean.
It was an absurd place to build, right on the edge of the ocean. All that stood between my house and ruin was a hundred feet of sand. My father told me: "Don’t do it; it’s too risky. No one should build so close to an ocean."
But I built anyway.
Why? As my eager-for-the-business architect said, "Why not? If the ocean destroys your house, the government will pay for a new one."
What? Why would the government do that? Why would it encourage people to build in such risky places? That would be insane.
But the architect was right. If the ocean took my house, Uncle Sam would pay to replace it under the National Flood Insurance Program. Since private insurers weren’t dumb enough to sell cheap insurance to people who built on the edges of oceans or rivers, Congress decided the government should step in and do it. So if the ocean ate what I built, I could rebuild and rebuild again and again -- there was no limit to the number of claims on the same property in the same location -- up to a maximum of $250,000 per house per flood. And you taxpayers would pay for it.
Thanks.
I did have to pay insurance premiums, but they were dirt cheap -- mine never exceeded a few hundred dollars a year.
Why does Uncle Sam offer me cheap insurance? "It saves federal dollars," replied James Lee Witt, head of the Federal Emergency Management Agency (FEMA), when I did a 20/20 report on this boondoggle. "If this insurance wasn’t here," he said, "then people would be building in those areas anyway. Then it would cost the American taxpayers more [in relief funds] if a disaster hit."
Sorry, but if you can afford a house on the beach in Florida, the Hamptons, or Malibu, I don't think you need the rest of us to relieve you. As the Spanish proverb goes: "Take what you need, but pay for it."
You know, when I was discussing the SCHIP expansion and the Frost family with my mother the other day, and was trying to come up with a good analogy, she mentioned exactly this issue (i.e. people building houses on beaches likely to be hit by hurricanes - her point being that they have every right to make their choices in that regard, but she fails to see why she should be subsidizing those choices).
You know, after Galveston (TX) was hit by the Great Storm in 1900 - i.e. the worst natural disaster in U.S. history in terms of loss of life - it sold bonds to finance the building of its Seawall and the elevation of the city to protect the city against hurricanes. And those bonds were paid back. Clearly, the Galvestonians of the era were enormous suckers - they should have demanded that the feds fund their entire rebuilding and engineering project. Wonder if it's too late for them to make claims under this program. Oh wait - at least some of the people hurt by the storm were poor, and this isn't a program for poor people...
marion at October 16, 2007 5:57 AM
I'm angry that politicians spend like teenagers with rich parents who've given them a Visa with unlimited credit. If you, personally, never have to pay the bill, what's a few more (million or billion) dollars on the tab?
Amy Alkon at October 16, 2007 5:59 AM
Exactly, Amy. How's this for a totally new and different political platform: "Stop lying through your teeth!"
Flynne at October 16, 2007 6:12 AM
Problem is, many people believe the lies, or don't even know or think about them, and just vote along party lines.
Amy Alkon at October 16, 2007 6:17 AM
Same sort of thing here in West St. Louis county. Remember the 1993 flood? The whole flood plain off Hyway 40 is covered in strip malls and big box stores. People forget that just beyond those trees is the Missouri river. (I live in the hills nearby. The land is rocky, flat ground is hard to find, but we won't be wiped out in the next 30-year flood cycle.) But I will be asked to pay for all the stores that get wiped out.
Ruth at October 16, 2007 6:20 AM
How does one "forget" the Missouri River?
Amy Alkon at October 16, 2007 6:23 AM
The same way one "forgets" the Gulf of Mexico, I would guess.
I have an idea! If we have to pay for all of these beach houses to be insured, that means that we own a small piece of them, right? Well, that should mean that we get to *use* one occasionally. I suggest we find the beachouse insurance welfare recipient with the biggest, most luxurious pad and have a Goddess Blog convention. I am assuming that alcohol would be part of the package, too...
marion at October 16, 2007 7:36 AM
Excellent idea, Marion, count me in! I make a mean gumbo...
Flynne at October 16, 2007 7:44 AM
How does one "forget" the Missouri River?
Guess it's like Detroit weathermen shocked that it snows in January.
Ruth at October 16, 2007 7:57 AM
Fantastic idea. If we're all paying for it...timeshares for everyone!
I'll take a little something near the coast in Palm Beach.
Amy Alkon at October 16, 2007 7:58 AM
Sigh - I'd love a timeshare in Seaside, but I think it's too far away from the water to be completely destroyed in a hurricane. Palm Beach sounds good. Now, we just need to find a mega-house built by a Streisand or Spielberg type. One with a well-stocked bar and on-site sushi maestro.
marion at October 16, 2007 8:02 AM
The Event - Advice Goddess Blog Junkies Convention March 2008, big-ass mansion in Florida.
The Slogan - "Advice Goddess Blog Junkies: Setting the World Straight, One Asshole at a Time"
Gretchen at October 16, 2007 8:25 AM
Hello. I'm a rarity. I'm a Florida native.
I grew up watching people destroy an ecological paradise: Merritt Island. When I was small, there was still a deer and even bear population there. It's now covered with houses, except for the protected reserve at Kennedy Space Center.
Here is what people do: one man builds on the waterfront. Another man vows to his family that they, too, will one day own a waterfront home. The process is repeated. The lake, the Intracoastal Waterway, is lined with houses. People tell themselves that this is "good living" because they can see water. Since the latecomers never saw it before it was lined with houses - before fertilizer and pesticide caused algae blooms, killing the waterway's wildlife, they have no idea what they're missing.
The insanity continues. Condos go up with mid-six-figure prices. The waters of the state, prohibited for development before then-Governor Graham discovered he could assume title of all bottomland, are subject to development by anyone with enough money.
It's a disgusting display, as clueless people flock to a shore that cannot supply enough fresh water. In the 1960's, M.I. was home to people who knew what hurricanes could do. Now, the population, grown fat and stupid on easy money, must be evacuated. I don't envy them. I pity them, for they will never know the joy of running through clean shallow bays that once existed where their fill-dirt-foundation, stick-and-drywall money pit is today.
Among them, eventually, will stand the ghost of a thirteen-year-old with a .22 on his hip, marveling at how beautiful the swamp could be when it rains. I never wanted to leave. I had to.
Radwaste at October 16, 2007 7:16 PM
Radwaste -
Reminds me of my visit to my aunt in Florida. We're driving from the airport, when my kid spots the kick-ass playground and mentions how fun it looks. My aunt explains that it probably would be fun, were it not for the gator infestation. Her husband then explained that some braintrust had the brilliant idea, of building it and the subdivision, less than two miles from a major gator breeding lake.
DuWayne at October 16, 2007 8:57 PM
Radwaste:
Does the Merritt Island National Wildlife Refuge maintain any of the nature you remember?
doombuggy at October 16, 2007 9:11 PM
Doombuggy, yes. MINWR is the "protected reserve" I mentioned. Unfortunately, the southern third of MI was home to a few thousand species not found elsewhere north of Cuba.
DuWayne, if you noticed, central Florida features many "hammocks", a concentration of cypress trees so named for the shape formed by the gradient of their height, typically surrounded by sparse wild oak and scrub palm. I consider that a better "playground" than a fenced area where more than one species is prohibited.
I'm not pretending that my own presence had no effect on the wildlife; I didn't know any better growing up there. I'm just sick that ignorance and money conspire to make people also ignore things like "building stick-frame condos in a hurricane state with over 150 thunderstorm days a year is stupid" and "an otter running across the taxiway at the Orlando airport is a sign that building has gone too far". There's even a coal-fired powerplant east of the airport. It has to draw about 30 thousand gallons per minute from the freshwater aquifer for cooling.
Florida is a little bit more than insane with the idea that "growth is good!". If you wonder where the idea came from that a person trespassing on your property can sue you if he hurts himself in any way, I bet it was Florida. It was a shock to find everything being fenced off for that very reason. There's a "property value" for you.
If you must go to Florida, go see MINWR while you visit Kennedy Space Center's Apollo exhibit rather than Mickey Rat. Although probably half the audience has no idea that what they are seeing is real, Apollo will show you what we could do when the latest social fad was not the most important thing in government, and if you can spare a silent hour without an iPod blasting, MINWR will show you things you never thought possible. There is a structure, even in a swamp, more intricate than anything you've seen built.
Radwaste at October 17, 2007 3:06 AM
I am so sick and tired of subsidizing things for rich people that I have no chance of ever having. I can live with my choice to work less hours and having less and accept that others who work the 60 or 70 hours a week I'm not willing to have more to show for it but no one should have it on my back. Forgive me if I feel mugged. Rad, I hear you. Never been to Florida but when I lived in Colorado it never ceased to amaze me the people who built gorgeous mountain homes, drove out the natural game then wondered why cougars were attacking their pets, threatening their small children and one college kid mountain biking was killed by one. They seemed to suffer from some silly delusion that the cougars would be willing to just lay down and starve so they could have that lovely mountain view.
Donna at October 17, 2007 7:54 AM
"I am so sick and tired of subsidizing things for rich people..."
Here's fun and ironic thing: it isn't "the rich" screwing everybody in Florida - it's people of all backgrounds. Some inherited their property. Some invested wisely and earned the money to get where they are. It's just unfortunate that so many are ignorant, or do not care as long as they "got theirs".
Want to see something really, really dumb? Take a look at assorted referenda, and you'll see something interesting. The popular "screw the rich" mantra sets you up to vote for things that ultimately make it harder for you to get that nice house!
Today, I'm 'way inland, not on a creek, not on a river, where the land is cheap because the soil is poor - so I'm not talking to protect a personal interest. Check carefully whenever you see somebody using a buzzword. They might really mean, "you".
-----
I understand about Colorado. On the Eastern plains, people who let their domestic animals run loose are begging to get a good dose of yersenia pestis, courtesy of prairie dog fleas. People in groups are just bog-stupid.
Radwaste at October 17, 2007 3:05 PM
Whiners!
Dusky at October 17, 2007 5:22 PM
Enjoy your pavement. You asked for it.
Radwaste at October 18, 2007 2:55 AM
Say - I missed something here.
This article was focused on Florida, and by inference on compensation for hurricane damage - a certainty in those areas. But what about California?
If you look at Tarbuck's "EARTH: An Introduction To Physical Geology" (which is available online), it becomes painfully apparent that far more is at real risk than the few square miles of beach Florida will sacrifice to wind and wave.
The San Andreas Fault has shifted about 340 miles that we can measure. California, it's just a matter of "when". It's not "if". You're going to suffer, and greatly.
When I have an objection to subsidizing lunacy in building practices, it does not matter if it is legislation before or after the fact; Californians will be paid, and hugely, by "emergency" measures for choices every bit as stupid as any Floridian's.
Radwaste at October 19, 2007 7:53 AM
There are risks for living here, and I believe that they should be borne by those who live here, including me. "Take what you need, but pay for it."
Amy Alkon at October 19, 2007 7:56 AM
Leave a comment