COMMENT: Toner, Mike (MC1972) agrees on “federal flood insurance


For once – (mostly) a point a agreement!

Even though I vacation, happily, on the Outer Banks of NC, I couldn’t agree with you more about the futility of underpriced flood insurance. And government involvement only makes this worse, because rates and conditions are more subject to political than strictly actuarial forces. Instead of caving to the entreaties of the frequently wealthy owners, the spineless pols should be saying, “You should not have built (or bought) there in the first place.”

I think that there should be stricter building and development regulations which would not allow a lot of this building to happen at all. I suspect our opinions would diverge on this score…

Also, since Social Security payments are solely funded from employee and employer contributions, I’m not sure how this is a “wealth transfer” program.

Thanks, as always, for your kind efforts as CIC!

mike toner
BEE ’72
Buffalo, NY

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JR: Nice to be in (mostly) agreement.

I’m not in favor of Gooferment “diktats” like “building and development regulations”. If you own the land, you should be able to build what you want. The Gooferment shouldn’t be in the “insurance business” or “mistake prevention”. I’m sure that the unavailability of insurance, or say-high cost if it is, will “solve” the problem.

As far as “Social Security” as a “wealth transfer”:

  • “Social Security payments” are not from “contributions”. Contributions are voluntary; theft is not.
  • AND, this is not an actuarily based insurance contract. Since poor minority men have a much lower life expectancy than rich white women, they get the short end of the stick. In effect, they are subsidizing rich white women.
  • In addition, it’s a inter-generational wealth transfer. Past generations got more than they put in, and future generations will get a lot less, if anything.
  • Finally, the analysis of “Social Security” seems to indicate that the ROI is a negative 7%; if you figure in the time value of money, it’s close to 100%. (Not hard when inflation over 30 years is 95%.) All in all it’s worse than a Ponzi scheme. One has to voluntarily participate in a Ponzi scheme; with Social Security, there’s no choice.

I have to credit Tom Woods and Bob Murphy for my understanding of “Social Security”

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