We will all be paying for Harvey (or the cost of laissez-fare)

The Thinker by Rodin

Did government fail the people of Houston? Or did Texans get the second-class government they voted for? Or was Hurricane/Tropical Storm Harvey truly a “no one could have predicted” event, beyond reasonable mitigation by government?

“Don’t mess with Texas” I hear from my Texan friends and it is something they are passionate about. They like doing things the Texan way: all sort of laissez-fare (abstention by governments from interfering in the workings of the free market because government is not to be trusted). It was heartwarming to see fellow Texans come to the aid of those unable to evacuate, although many from the “Cajun Navy” came from nearby Louisiana. The “Cajun Navy” was pretty ad-hoc and poorly coordinated, but Harvey was clearly a storm beyond the resources of federal, state and local government, at least as we taxpayers chose to fund them.

Some compared it with the evacuation of Dunkirk during World War Two where pretty much every vessel available along the coast of Britain headed to this coast in France to evacuate British soldiers stationed there. Thankfully no one was firing live explosives at this “navy”. Now with floodwaters receding we are getting a better picture of the damage. So far loss of life has been minimal considering the scale of the storm. The property damage though looks horrific: hundreds of thousands of homes in need of repair, replacement or abandonment and an estimated 500,000 automobiles totaled. Estimates of repairing all the damage exceed $100 billion.

Only about 20% of these flooded homes had federal flood insurance. You would think getting this insurance would be a no-brainer for Houstonians, who are used to flooding but not quite on this scale. Except flood insurance is hardly cheap. Most of these homeowners figured they could not afford it, so they rolled the die. Most of them lost this bet.

The federal government through an act of beneficence could pay for their catastrophic losses. It’s unclear how much the federal government will rush to Texans’ aid. There would be quite a lot of hypocrisy if Texans accepted too much flood aid, given their hostility toward the federal government in general and the unwillingness of many of their legislators to fund Hurricane Sandy relief.

So it appears that most of these homeowners are on the hook for rebuilding their houses, should they choose to do so. It’s likely that most of these homeowners don’t own their homes outright, i.e. they have a mortgage on the property. Insurance companies won’t pay for flood damages, so the principal victims of this storm will be property owners. They will have to fund the rebuilding of their homes out of their own pockets. This means finding lenders who will loan them money to rebuild. Of course they are also on the hook for the balance of their mortgage. It’s unclear whether they could borrow the money to rebuild, as it may be more than they can afford to pay back.

It’s not too hard to predict then that barring some extraordinary largess from the federal government many if not most of these property owners will walk away from their investment. If they do they will ruin their credit and likely lose any equity they have in the property too. Lenders will take them to court to try to make them pay anyhow for houses they cannot afford to rebuild. Most of these lenders will eventually write off these losses. This will shift at least some of these costs to taxpayers, since when these lenders report losses they are not paying income taxes on the loss and may get money back. These flooded homeowners too will write off their losses if they can. In short whether we like it or not a lot of these losses will be socialized on you, the American taxpayer through decreased revenues to the federal government and increased borrowing costs. Perhaps the economic growth from rebuilding will mitigate some of these costs to taxpayers.

So we are all paying for Harvey, whether we know it or not and whether we like it or not. In theory taxpayers could stem their losses. It is possible to write legislation to not allow these lenders or taxpayers to write off these losses. After all, they were stupid enough to put up housing in a flood zone. That won’t happen. It’s also possible, as Senator Ted Cruz wanted to do after Hurricane Sandy, for the federal government not to come to the financial rescue of Houstonians. That won’t happen either.

However, if these unlikely events happened, the impact might be pretty profound. Texans might realize that the cost of their bad financial decisions will really be totally borne by them. This might encourage Texans to write laws that mitigate many of the preventable costs of floods. It might incentivize Houstonians to implement zoning and prioritize funding for flood mitigation. It might result in laws and ordinances to require new housing to be built outside of likely flood plains or at least raised above the floodplain.

It won’t happen. Instead, Texans will get to pretend that no one will mess with Texas. Because Texas allows cities like Houston to have no zoning laws, and because we admitted Texas into the United States knowing that federalism would make it hard to force Texas to implement common sense measures like not building houses in flood zones, we all get to pay the costs of Harvey. Certainly Houston homeowners will shoulder huge losses, and the lenders of these flooded houses will shoulder a share of these losses too. But in reality we all are paying for this mess, and we’ll continue to pay for similar messes like this in the future.

All we can really do is pass common sense legislation to minimize our liabilities when these events occur. But that requires government to work as a fiduciary, which will seem Big Brotherish. There is little likelihood of that happening, particularly in good old Laissez-faire Texas. Our own obstinacy about the so-called evil of too much government is in fact bleeding us dry.

Hurricane Sandy reminds us why we need government

The Thinker by Rodin

With the arrival of Hurricane Sandy here on the east coast yesterday, you got a timely reminder of why we need government. Yesterday was a day when you wanted to batten down the hatches and if you lived in certain areas also pray like hell. Unless you own a boat or ship you probably didn’t have to literally batten down any hatches, although I have to wonder if failure to do so lead to the sinking of the HMS Bounty during the storm.

For most of us storm preparation meant cleaning out gutters, removing chairs from our decks, testing the sump pump, stocking up on batteries, toilet paper and bottled water, and finding places for our automobiles away from trees. It worked for us here in Oak Hill, Virginia. Sandy dumped more rain than wind on us. Nearby Washington Dulles International Airport reported 5.4 inches of rain during the event, with peak sustained winds of 39 miles an hour, with gusts to 54 miles an hour. We also had a day of record low pressure, something I attribute to climate change. As hurricanes go this was a bizarre one. No tropical air and foggy windows this time, but cold air fed by a cold front on the other side of the Appalachians, driving rain for more than a day, and blustery winds yesterday afternoon and evening. Our house, windows and floorboards rattled from time to time, but the power and heat stayed on and we never lost Internet.

News reports indicated that millions of others are still without power. Sandy left much of New Jersey and lower Manhattan destroyed and/or underwater. I am monitoring my hometown of Binghamton, which likely has not seen the worst of Sandy yet. The area suffered two devastating floods in 2005 and 2010. This may be yet another one for that suffering area to endure. But its impact will be softened, thanks to local, state and federal emergency managers. Thanks should also be given to President Obama, who declared areas disaster areas before the storm hit, to speed aid and supplies.

The list of people and organizations to thank are immense. There is the Federal Emergency Management Agency (FEMA), which coordinates disaster relief and works intimately with the states to stage disaster relief supplies. There is the National Weather Service and the National Hurricane Center, which effectively tracked the storm and issued the correct warnings. There is the Coast Guard, various governors, state and local emergency responders, power crews, ambulance drivers and cops on the beat.

Some of the best results were things that did not happen. My roof did not blow off or collapse. This did not happen by magic, but was the result of building codes and building inspections. In 1985 when my house was constructed, Fairfax County sent out inspectors to make sure my house was constructed to a code that would allow it to endure major storms like Sandy. In 1999 we replaced our deck and enclosed it. “Big government” building inspectors took a look at the roof of our new deck and told the contractors it was not up to code. They were forced to add additional beams to support the roof.

There is more evidence of big government across the street from my house. There a large dry pond sits awaiting events like Hurricane Sandy. It safely collects backwater then funnels it into the nearby creek in a measured manner, minimizing flood damage. Even in the event that it overfilled the dry pond, the codes required the road to be graded in a certain way to keep the water flowing gently downhill, never leaving a spot on the road for water to accumulate. Before the community was even constructed, an engineering study was ordered to make sure no part of our community was in a flood zone. Had these safeguards not been in place, it is likely that we would have experienced some storm damage last night. Possibly me and some of my neighbors would be dislocated, injured or dead. Big government could not eliminate these risks, but through a planning and an impartial inspection process it minimized these risks. One of the reasons our power never went out is because power lines are underground in our neighborhood, another outcome of big government. Doubtless it would have been cheaper to plant telephone polls instead.

Much of the wheels of government work this way. It’s the things that you don’t see and take for granted that minimize losses and deaths during these natural events. All these services cost money, but they cost less because their costs are borne generally through taxes. The cost per capita for the National Weather Service is a couple of dollars per year.

FEMA is an example of the services that Mitt Romney plans to drastically cut if he is elected president. And yet many of these services are already chronically underfunded and if anything need more funds. Moreover, the cost of funding these arguably essential areas of government are a pittance compared to the cost of entitlements and defense. At least now Romney claims says he won’t cut FEMA. But clearly you cannot balance a budget and not raise taxes if you don’t cut something. If you won’t do much to cut entitlements and keep bloating the Defense Department’s budget, these essential government services must be drastically cut.

You can say, as many conservatives do, it is better to leave it to the states to handle these things. But hurricanes do not respect state boundaries. It makes no sense for each state to have a redundant weather service when it can be done nationally. The whole point of having a United States is to ensure that if some states have to deal with disaster, we can pick up their slack by everyone contributing aid through federal taxes. We need these services because we are all in this together. These services are not nice to have; they are essential. We are bigger than the sum of our parts because we are united and federated.

Also essential is the infrastructure that makes all this possible. We need the National Science Foundation to stimulate research in national areas of interest. We need my agency, the U.S. Geological Survey, to do seismological research, biodiversity estimates and to monitor the nation’s streams and groundwater, so the National Weather Service can make flood and drought forecasts. We need the FDA to make sure our drugs are safe, agricultural inspectors to make sure our food is safe, ICE to handle illegal and legal immigrants, and the FBI to investigate intrastate crimes. Maybe if push came to shove we can do without funding Big Bird or sending probes to Mars. These costs are mere pocket change in the federal budget.

As I have noted before, taxes are the price of civilization. If this is not clear to you, then elect Republicans and watch as our highways and bridges deteriorate, our children become unable to afford college, watch our food become impure, our drugs become adulterated and see legions of poor and starving people living on the streets because no one will house them or feed them. Expect that when some future Hurricane Sandy arrives, the size of the problem will needlessly mushroom simply because we as a society have decided we have stopped caring for anyone but ourselves.

It’s your choice. I understand if your ideology tells you to vote Republican regardless, but the next Hurricane Sandy won’t care about your philosophy and you and your family may be needless victims. God gave us brains. Let’s use them.