Good Investment For Whom?

It seems to me that I’m the one in the best position to manage my own risks; why should I want to manage the risks of others? Richard Posner smuggles in a collectivist premise when he writes:

The fact that a catastrophe is very unlikely to occur is not a rational justification for ignoring the risk of its occurrence. Suppose that a tsunami as destructive as the Indian Ocean one occurs on average once a century and kills 150,000 people. That is an average of 1,500 deaths per year. Even without attempting a sophisticated estimate of the value of life to the people exposed to the risk, one can say with some confidence that if an annual death toll of 1,500 could be substantially reduced at moderate cost, the investment would be worthwhile.

Worthwhile for whom? It so happens that I have other things I’d prefer to do with my money than spend it on than saving hundreds of theoretical people a year, so how is this a worthwhile investment for me?

Posner also ought to remember that the government program you get is never the one the wonks drew up in the ivory tower. In this case he’s effectively proposing government programs that are not expected to bear actual fruit for generations. There’s very little incentive for the people implementing these programs to get much of anything right.

3 thoughts on “Good Investment For Whom?”

  1. There’s also the fail-safe policy-wonk excuse of “Just think how bad it’d have been if we didn’t have a ten-jillion dollar sub-marginal system!” Once private alternatives are shut out of the marketplace by government, there’s nothing to compare to, and they can justify any pasteboard construction as the “best” that “anyone” could do. The Space Shuttle and the Post Office come to mind.

  2. There�s very little incentive for the people implementing these programs to get much of anything right.

    Like: Where are the contractual obligations welded to accepting the money?

    You’ll be happy to know that FEMA is on its way to Marietta Ohio to hand out money in the wake of the recent Ohio River flood, to the very same businesses that just re-opened their doors two weeks ago in the very same locations that were flooded last September. Four months ago, FEMA was spending other people’s money here with great pride.

    The only thing that will keep the idiots from not installing their business (and building their houses) right on the banks of The Brown Behemoth is a lack of their own money, or the acquisition of a certain amount of “sense”.

    How much you want to bet that Indonesians, right now, are lining up at the edge of the ocean, with “U.S.” money in their fists, shorting the risk, because they aren’t playing with their own dough?

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