Friday, 02 November 2012

Should Sandy’s Victims Get Your Tax Money?

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Living near the coast in the Northeast, I see the devastation wrought by Hurricane Sandy firsthand. Many have been without power for days; there are long lines at gas stations; some supermarket shelves are bare; and, more to the point here, some in vulnerable areas lost their homes. And because the storm is such a horrible, high-profile disaster, government aid to rebuild is in the offing. But should it be?

This question may seem heartless. And, don't worry, you won't hear a politician asking it anytime soon, as doing so might very well cost him the next election. But political expediency isn’t always synonymous with fairness.

Let’s start like this: On the day Sandy struck and every day since, there surely have been low-profile disasters in other parts of the country. Perhaps someone’s home was struck by lightning and burned down, maybe an anomalous and isolated flood destroyed a lonely hinterland abode, or it could have been something else. This is a big country and many things happen.

And the question is, if you suffer such a disaster and have no insurance, will Uncle Sam ride to the rescue with tax dollars? We know the answer. But why the different treatment?

In reality, Washington won’t even get wind of your woes; your story won’t be national news. And a prerequisite for getting help is getting noticed — in a big way. You have to be part of something deemed a “disaster area,” which simply amounts to labeling some disasters more equal than others. Lose your home during a news and photo-op worthy event, and you get bailed out; but if helping you won’t win votes or TV viewers, you get bupkes. And is this not a type of unjust discrimination? Now for a bit more perspective.

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Investigative reporter John Stossel once received $250,000 of our tax money to rebuild a beach house he had lost in a storm many years ago. This isn’t unusual, as shore-front property is not only most vulnerable to hurricane damage, but also very valuable, and thus is often owned by the “one percent.” And disaster relief isn’t means-tested. But be clear on what this means. During that very period there no doubt was someone of limited resources who suffered through a non-photo-op disaster and got nothing, yet some of his tax money went to Stossel and other well-heeled folks caught in a photo-op-worthy disaster. So just as with corporations bailed out because they were “too big to fail,” disasters too big to fail to make headlines inspire, to some extent, wealth redistribution from the middle class to the rich. How just and compassionate does disaster relief seem now?

I made a similar point after 9/11 (which accounts for my popularity). Tax dollars flowed into NYC and some were given to well-to-do relatives of victims, who in many cases had lost their family’s breadwinner. Of course, no amount of money can replace a loved one. But the point is that during the very same September there were other people in America who lost breadwinners through evil acts (e.g., violent robberies) — and some of those people were relatively poor. Yet their no-photo-op tragedies didn’t bring federal compensation, even as their tax money was transferred to rich 9/11 victims. 

Lest I sound cynical or callous, I’ll say there probably are politicians who genuinely care about the victims to whom they transfer wealth. And this concern is fitting, as such people do deserve compassion, as well as all the warranted private charity that can be mustered. But the beauty of private charity is not only that it’s freely given, but that, unlike top-down federal aid, its less political nature and relative closeness to the people decrease the chances that non-photo-op victims will be forgotten. And how can we characterize government aid? Well, we now complain about a crony capitalism through which Uncle Sam “picks winners and losers,” but what do the feds do through disaster relief? They pick winners and losers.

And it’s a losing proposition overall. Why? Because if people lived in areas of such high-risk — prone to hurricanes, flooding, etc. — that they couldn’t get private insurance, and disaster struck, they’d usually move to a safer locale if left to their own devices. But just as the 1990s investment-house bailouts eliminated risk, encouraged reckless investing and thus contributed to the 2008 financial crisis, cheap government insurance and disaster-aid bailouts can encourage reckless decisions concerning location. This not only guarantees repeated waste of resources, it ensures that people will continually be placed in harm’s way. As English philosopher Herbert Spencer said, “The result of shielding men from the effects of folly is to fill the world with fools.”