Ron Paul: Federal Flood Insurance – A Moral Hazard We Can’t Afford

by Ron Paul

Hurricane Sandy was one of the worst natural disasters the east coast has ever seen.  Clean-up and recovery will take months, if not years and estimates run in the tens of billions of dollars.  Parts of New York and New Jersey will never be the same.  Entire seashore communities have been wiped out, but the determination to rebuild has been lauded as courageous and admirable. Yet as with all natural disasters, Sandy raises uncomfortable questions about the extent to which taxpayers should fund the cleanup and the extent to which government programs create moral hazards.

For example, FEMA and the National Flood Insurance Program (NFIP) are expected to pick up the tab for much of the flood damage caused by the hurricane.  Of course this will mean more federal debt and inflation for the rest of us, since the program only has about $4 billion to work with and is already $18 billion in debt from hurricanes Katrina and Rita.  Many think there is a need for the government to provide flood insurance of this kind.  After all, the market would never provide insurance in flood prone areas at an affordable price.  But shouldn’t that tell us something?

Shouldn’t that tell us that it is a losing proposition to insure homes in coastal areas and flood plains often threatened by severe and destructive weather patterns? And if it’s a losing proposition, should taxpayers subsidize the inevitable losses arising from federal flood insurance?

The NFIP disguises the real cost of flood insurance in flood prone areas, which influences homebuilding and sales in such areas.  Recklessly taking unwise risks when risk is underpriced is known as moral hazard.  When politicians decide that private insurance premiums are too high, as with houses built in flood plains, the solution is to under price the risk through federal subsidies.  The obvious and expected outcome is more danger to life and limb when disaster strikes.

Even NFIP has been forced to raise rates significantly in coastal areas, and is now dropping second homes from coverage altogether,

Many assume it is compassionate to entrust government central planners with disaster recovery.  However, the greatest compassion brings results, not just good intentions.  And we’ve seen how bureaucratic organizations like FEMA mismanaged recovery and relief in the wake of hurricanes Katrina and Ike.  Organizations such as the Red Cross and private companies like Home Depot and Duracell have already stepped in admirably to help those in need, and we can only hope FEMA has learned this time not to impede and frustrate private efforts as they have in the past.

Above all, my thoughts and prayers are with the victims of Hurricane Sandy in this tremendously difficult time and hope they can get their lives put back together as quickly and seamlessly as possible.


  • I’ll be writing in Ron Paul tomorrow!!!

  • Yet you really can’t complain if you don’t put your vote in. At least you can say you voted if you write in Paul. Then we can start a revolution once we showed that the current system doesn’t work.

  • Virgil Goode for president.

  • how many people support romney and obama?

  • you can tell he actually cares about the victims, unlike romney and obama just trying for votes

  • Oh look it’s IAMWHOIAM, fancy seeing you here AGAIN

  • Don’t vote Period. Your vote don’t count, you dumb mother fuckers your just playing their game.

  • Ron Paul is a complete fuckin’ asshole!

  • Reality check: Ron Paul isn’t running for office, anywhere. He has already announced his pending retirement at the end of his current Congressional term.
    Dr Paul is good man. He has been an exemplary Representative from the 16th(?) District of TX. I voted for him for President in 2008 and in the Republican Primary in 2012. But he isn’t running for office now.

    • Diane

      He is still a legal write in candidate.

  • WRITE HIM IN… dont jump ship rock it

  • Why do you lobby to allow seed distributors to label their products as something they are not? The conflict here is that seed distributors are selling seeds under a disguise that the seeds are natural. That they came from earlier generations of a plant. Some of these seeds are not. They have been manipulated by unnatural processes and little to no research has been done to verify those seeds produce food safe for human consumptions. You are lobbying for distributors to be allowed to lie.

  • they actively spray chemtrails with aluminum oxide, while monsanto”bill gates” make aluminum resistant gmo seeds hmmm. pure coincidence surely…
    oh your seeds wont grow in the soil mr. farmer, mine “gmo” will

  • “We Jews, we are the destroyers and will remain the destroyers. Nothing you can do will meet our demands and needs. We will forever destroy because we want a world of our own.” -You Gentiles, published in 1924 by Jewish Author Maurice Samuel, p. 155.

  • I just had a look at that legislation, turns out that until 2019 processed food can still contain less than 5% genetically engineered ingredients without being labelled. So most of the arguments in favour of it won’t be relevant until then!
    Anyway, You make a good point. These companies have a huge influence on the political system. No doubt they will use that influence to change legislation to their benefit…You want the politicians to make more rules? When has it ever worked?

  • Ron Paul 2012 he has my vote

  • this video was upload lately

    I hope you all ron paul supporter are PREPARED FOR THE ELECTION!

  • i hope he will win becuase i cant stand illumanti shit anymore.

  • I have to agree with you Mr. Paul, most of the homes on the NJ e shore are second homes for the very wealthy. If you are not a home owner you are not permitted access of the beach front in front of those homes. You have to go to designated areas to get on the beach and you need to PAY to be on the beach. This is very expensive for an average middle class families. It’s outrageous. If you live on the beach, it’s your risk. Period. The tax payers SHOULD NOT bail you out!

  • If you are referring to companies like Monsanto then voting could be seen as defense. Monsanto has a lot of influence in Congress and the FDA.

    They do not perform proper research on the potential danger of their products and they actively lobby for legislation to force farmers to buy their seed.

    Voting to force these companies to label their products allows people to avoid their products and thus protect their family.