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» Moral Hazard Today: Extreme   2002-12-08 13:04 Strawman
Political Pendulum

Every disaster creates opportunities to the seasoned capitalist, especially when the capitalists are politicians and the currency is votes. Bob (election-coming-soon) Carr has managed a bizarre twist of logic in which he takes both the hard-line and squishy approach to bushfire relief.

Many people have lost their houses as the result of the recent bushfires around Sydney, and the usual factors - drought, heat, wind, arson, building their houses right on the edge of the bush, and greenie back-burning phobia - have contributed.

Building your house right on the edge of the bush is a stupid thing to do, and even more stupid with the greenies stopping the back-burning. Stupidity, of course, is anyone's right, however it is not society's obligation to subsidize it.

On the one hand Bob (-each-way) Carr is saying

Residents in bushfire-prone areas should take out comprehensive insurance, because the government is not the insurer of last resort.

But then he weakens this position with

families that have lost a house in the latest fires will be given $10,000 from the bushfire relief fund set up during the fire crisis last Christmas.

So people are responsible for taking out most of their insurance, but the taxpayer is obliged to cough up $10,000?

If the government is providing $10,000 home insurance, then why just in bush-fires? Are people who have lost their homes through other means (electrical fault, windstorm, flooding or other accident) somehow less deserving than those who have chosen to build on the edge of volatile bushland?

While every family who has lost their home in this tragedy is hurting badly, this does not make it the taxpayer's responsibility. They are no more deserving than many, but the fires make it into the paper, and Bob (opportunity knocks) Carr sees a pork barrel just begging to be filled with the ever-increasing available taxation revenue.

Not only is the imposition on the taxpayer unfair, the government is insuring that people will under-insure themselves for $10,000, and hence is creating more 'victims' to be dealt with in the next disaster.

Doubtless Bob is aware of the moral hazard - and knows that subsidizing victimhood creates more victims. But he also knows it makes for true believers - who are going to the polls very soon.


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