I agree with Don Boudreaux that New Orleans’s precarious position does not, in itself, mean it’s irrational to build there.
While it’s true that New Orleans sits below sea level, and the Mississippi River’s natural flow has been replaced by a human-directed flow, these facts alone do not mean that New Orleans should not exist where it exists. The Netherlands, to pick one example, is one of the many other places that exist only because of human ingenuity at holding back the sea and replacing nature’s boundaries with man-made ones.And I agree with my Dad (from a comment on a previous post) that the Gulf region in general is too important economically to write off as too risky to inhabit. Some risks are worth taking because the return is sufficiently high.
This geographic area and the people who inhabit it provide roughly a third of the nation’s seafood and probably 20-40% of the nation’s crude oil, natural gas, liquefied petroleum gases like propane, and petrochemicals that fuel the engine of our economy and our modern way of life. This region also contains a major portion of the refining and chemical processing plant capacity in the nation. It is also the origin or throughway for many vital pipelines that carry petroleum products, like gasoline, to the rest of the country. In addition, the Mississippi River accounts for huge amounts of waterborne freight transportation.But these factors alone don’t justify having government support in the form of subsidized (or free) flood insurance, grants for rebuilding homes and businesses, etc. I agree with Amy that the existence of such subsidies creates a moral hazard problem: people will take excessive risks, locating too frequently and too extensively in dangerous areas.
One of the largest FEMA programs is the National Flood Insurance Program, which sells flood and other natural disaster insurance to Americans whose property lies in known weather hotspots. Sounds great, right? Except that by federal law, because the actual cost to insure property almost guaranteed to be destroyed by weather at some point would be astronomical, federal flood insurance is sold at well below the cost of replacing destroyed property. Yes, that means that some people living in hurricane and earthquake zones can afford to rebuild when they otherwise might be unable to. But it also removes natural economic incentives to not build in dangerous areas. That means that more people put themselves and their families in danger by living in known flood and hurricane zones because they can be sure that the government will provide the funds to rebuild their homes. Subsidized flood insurance allows property to be replaced, but it also raises the human toll of natural disasters because people are insufficiently afraid of the bad weather that can kill them.So the issue is one of giving people the incentive to engage in the correct amount of risk-taking. As valuable as the goods and services provided by the Gulf region are, there’s only one way we can be sure they are worth the risk: by making sure that producers bear the full cost of doing business (including the cost of buying unsubsidized insurance or bearing risk directly), which will be passed on to consumers in the form of higher prices. If consumers continue to buy at higher prices, then the goods and services must be valuable enough to justify the hazards associated with producing them. This is true whether we’re talking about the price of gasoline, the price of seafood, or the price of drinks on Bourbon Street. And the same reasoning applies to homeowners and other residents – they need to bear the real costs of living in dangerous areas, or else we will end up with more people living and working in flood zones than makes economic sense.
I do, however, see a limited role for government. As Tyler notes, levees do possess the key features of a true public good. Once the levees have been built, they benefit everyone inside the protected area, whether they’ve contributed or not (so the benefits are non-excludable). And the cost of maintaining levees does not increase with the number of people in the area (so the benefits are non-rivalrous). As a result, there is good reason to think private enterprise might not provide levees even when they make economic sense, so government provision might be necessary. (Yes, I realize there exist private means of providing public goods, such as assurance contracts, but I doubt those solutions would work here.) However, the appropriate level of government to support the levees is local or state, not federal, because the direct beneficiaries are the residents and businesses in the protected area. True, the ultimate consumers of goods and services produced there, including many elsewhere in the country, will also benefit – but again, they will end up paying in the form of higher prices, as the taxes for building and maintaining the levees will tend to get passed through. (The pass-through argument relies on some assumptions about the kind of taxes imposed that I won’t get into here.)
Nonetheless, the federal government did assume responsibility for the New Orleans levees a long time ago, effectively precluding action by private enterprise or local/state governments, so I think the federal government should catch the blame for failing to upgrade the levees in anticipation of a disaster like Katrina (which experts have been predicting for years).
Here’s the dilemma we face now. On the one hand, the government has made lots of promises to the residents of the Gulf Region. The people there have come to expect massive assistance in the wake of natural disasters – and not without justification. The government has always bailed out disaster victims, and then it has always helped to rebuild. Without such promises, I think many fewer people would have placed themselves in harm’s way. Reneging on those (explicit and implicit) promises now would be unfair and cruel. But keeping the promises creates the expectation of future bail-outs, thereby perpetuating the problem. I don’t have any simple solution.
16 comments:
One quick point Glen: I think the point about local responsibility for levees is correct. And your possible counter-argument ("don't they benefit those who consume the goods elsewhere in the country?") can also be refuted by a reductio. How much of what gets produced or transported through New Orleans is exported? Would we/should we somehow charge foreign consumers for part of the cost of the levees?
You leave me befuddled. Should we or shouldn't we rebuild in the recently devastated areas, including New Orleans? Is this a matter for insurance companies to decide via high insurance rates or are there other economic and non-economic considerations?
If you want insurance companies to decide the matter then I suppose the area will be (sparsely) populated by rich people who will rebuild mansions and can afford the high insurance premiums or will self-insure. Also, "fools" will rebuild without carrying flood insurance and take their chances on the future. And why should the government rebuild the levies or provide any infrastructure at all to the ravaged areas? To cater to millionaires and fools? You make me laugh if you think private money alone will rebuild the roads, highways, schools, hospitals, levies, etc. to make communities reemerge and be viable once again. So, I ask you again, What do envision for the future of this area? Shall we allow it to return to its natural state as a swamp? Then why oh why are we even bothering to pump the water out as we speak?
If I've been reading correctly, they are currently pumping MASSIVELY toxic water from New Orleans into the Mississippi - and, I've read - this is because of the massive public outcry for them to pump the water out immediately. And also because they can't conceive what else to do. Shouldn't we stop and think about this? Isn't toxic water contained one step better than toxic water pouring into an active, healthy water system? That drains into the Gulf, right? That creates the delta, which is already endangered and dying and which needs to live to protect New Orleans in the first place, right?
I make no pretense of actually knowing what's best, I mean only to say that this seems really, really bad.
Am I the only one with absolutely no sense of leadership in this debacle?
1. Should New Orleans and the Gulf Coast region in general be reclaimed and rebuilt?
If the answer to this is ”Yes,” then:
2. Who should pay for it?
I believe the answer to the first question is a resounding yes, for reasons that I have stated in my comments under Glen’s posting, “Sympathy Rationing.” Glen appears to agree, as he states, “The Gulf region in general is too important economically to write off as too risky to inhabit. Some risks are worth taking because the return is sufficiently high.”
Glen also says, however, that “these factors alone don’t justify having government support in the form of subsidized (or free) flood insurance, grants for rebuilding homes and businesses, etc.” Gil agrees with Glen. Gil states, ”If the geographical advantages of commerce in the New Orleans flood plain justify the costs of protecting it from damage, then those who wish to benefit from those advantages should have no problem affording the costs.”
It seems to me that there are only two options:
1. The producers of the goods should pay for the reclamation and pass on the costs in the form of higher prices.
2. Government should pay for the reclamation and pass on the costs in the form of taxes, either on the people or on the businesses who produce the goods (who, no doubt, would pass on the taxes in the form of higher prices).
Glen obviously believes the first option is the right one, since he states, “As valuable as the goods and services provided by the Gulf region are, there’s only one way we can be sure they are worth the risk: by making sure that producers bear the full cost of doing business (including the cost of buying unsubsidized insurance or bearing risk directly), which will be passed on to consumers in the form of higher prices.”
And Gil states, “If the geographical advantages of commerce in the New Orleans flood plain justify the costs of protecting it from damage, then those who wish to benefit from those advantages should have no problem affording the costs.”
Well, I have no objection at all to the producers of the seafood and the energy and the petrochemicals and the other agricultural and manufactured goods paying for reclamation and passing on the costs in the form of higher prices. The problem with this position is, WHAT IF THEY DON’T/WON’T DO IT? After all, they have not done it for the past hundred years or so. (Corporate America has learned long ago that huge profits can be reaped in the short term by raping the environment in the long run and ignoring safety and the value of human life along the way. And I say that having worked in the oil and gas industry all my life.)
If the producers/corporations won’t/don’t reclaim the region, only the second option is left, that of government doing it and passing on the costs in the form of taxes. On this point, Glen notes that in this event it should be the job of local and state governments, not the federal government. I don’t understand this argument at all, since Louisiana and the other Gulf Coast states export most of their fish, energy, and petrochemicals to other states. (See Gil’s comment above about those who benefit should pay). The other states, plainly benefit from the productivity of this region. California, for example, is the largest net importer of energy in the United States, and a huge amount of it comes from Texas and other Gulf Coast States. (Also Alaska – California consumes 100% of Alaskan oil production, almost a million barrels a day.) Personally, I don’t care whether I pay the costs in the form of taxes or in the form of higher prices, just so long as the resources and the people responsible for providing them to the rest of us are protected.
Incidentally, I understated the percentage of energy provided by the Gulf Coast states previous comments. I said that the region contained from 20-40% of the nation’s total oil and gas supply and refining capacity , when it turns out to be that the Gulf Coast States in the aggregate actually account for more than 50%, probably nearer 60-70% – I may be able to provide more accurate numbers in the future, given a little more time to research it. Most of this type of information is available on the DOE/EIA Internet website, if you look hard enough.
One final comment: Levees alone are not sufficient to protect the region, so if it is reclaimed and rebuilt, improvements are in order, in addition to strengthening the levees (which were never designed to withstand more than a Category 3 hurricane). In fact, in the long run, levees alone aggravate the problem. Before the Mississippi River was partially tamed by flood control projects, the river dropped millions of tons of sediment in the delta, thereby replenishing the wetlands and barrier islands that help mitigate storm flood surges. By building concrete levees, we channeled the river effluent into the deep Gulf waters. As a result, the Gulf Coast states, particularly Louisiana, has lost land to the sea at an alarming rate for many years. I am not a marine or environmental engineer, but I have been reading that there are better ways, such as cutting channels in the levees to allow the sediment out at controlled point along the way to the Gulf, and by erecting sea gates in the Gulf like the Netherlands have used for a long time to help reduce tidal surges.
1. Should New Orleans and the Gulf Coast region in general be reclaimed and rebuilt?
If the answer to this is ”Yes,” then:
2. Who should pay for it?
I believe the answer to the first question is a resounding yes, for reasons that I have stated in my comments under Glen’s posting, “Sympathy Rationing.” Glen appears to agree, as he states, “The Gulf region in general is too important economically to write off as too risky to inhabit. Some risks are worth taking because the return is sufficiently high.”
Glen also says, however, that “these factors alone don’t justify having government support in the form of subsidized (or free) flood insurance, grants for rebuilding homes and businesses, etc.” Gil agrees with Glen. Gil states, ”If the geographical advantages of commerce in the New Orleans flood plain justify the costs of protecting it from damage, then those who wish to benefit from those advantages should have no problem affording the costs.”
It seems to me that there are only two options:
1. The producers of the goods should pay for the reclamation and pass on the costs in the form of higher prices.
2. Government should pay for the reclamation and pass on the costs in the form of taxes, either on the people or on the businesses who produce the goods (who, no doubt, would pass on the taxes in the form of higher prices).
Glen obviously believes the first option is the right one, since he states, “As valuable as the goods and services provided by the Gulf region are, there’s only one way we can be sure they are worth the risk: by making sure that producers bear the full cost of doing business (including the cost of buying unsubsidized insurance or bearing risk directly), which will be passed on to consumers in the form of higher prices.”
And Gil states, “If the geographical advantages of commerce in the New Orleans flood plain justify the costs of protecting it from damage, then those who wish to benefit from those advantages should have no problem affording the costs.”
Well, I have no objection at all to the producers of the seafood and the energy and the petrochemicals and the other agricultural and manufactured goods paying for reclamation and passing on the costs in the form of higher prices. The problem with this position is, WHAT IF THEY DON’T/WON’T DO IT? After all, they have not done it for the past hundred years or so. (Corporate America has learned long ago that huge profits can be reaped in the short term by raping the environment in the long run and ignoring safety and the value of human life along the way. And I say that having worked in the oil and gas industry all my life.)
If the producers/corporations won’t/don’t reclaim the region, only the second option is left, that of government doing it and passing on the costs in the form of taxes. On this point, Glen notes that in this event it should be the job of local and state governments, not the federal government. I don’t understand this argument at all, since Louisiana and the other Gulf Coast states export most of their fish, energy, and petrochemicals to other states. (See Gil’s comment above about those who benefit should pay). The other states plainly benefit from the productivity of this region. California, for example, is the largest net importer of out-of-state energy in the United States, and a huge amount of it comes from Texas and other Gulf Coast States. (Also Alaska – California consumes 100% of Alaskan oil production, almost a million barrels a day.) Personally, I don’t care whether I pay the costs in the form of taxes or in the form of higher prices, just so long as the resources and the people responsible for providing them to the rest of us are protected.
Incidentally, I understated the percentage of energy provided by the Gulf Coast states previous comments. I said that the region contained from 20-40% of the nation’s total oil and gas supply and refining capacity , when it turns out to be that the Gulf Coast States in the aggregate actually account for more than 50%, probably nearer 60-70% – I may be able to provide more accurate numbers in the future, given a little more time to research it. Most of this type of information is available on the DOE/EIA Internet website, if you look hard enough.
One final comment: Levees alone are not sufficient to protect the region, so if it is reclaimed and rebuilt, improvements are in order, in addition to strengthening the levees (which were never designed to withstand more than a Category 3 hurricane). In fact, in the long run, levees alone aggravate the problem. Before the Mississippi River was partially tamed by flood control projects, the river dropped millions of tons of sediment in the delta, thereby replenishing the wetlands and barrier islands that help mitigate storm flood surges. By building concrete levees, we channeled the river effluent into the deep Gulf waters. As a result, the Gulf Coast states, particularly Louisiana, has lost land to the sea at an alarming rate for many years. I am not a marine or environmental engineer, but I have been reading that there are better ways, such as cutting channels in the levees to allow the sediment out at controlled point along the way to the Gulf, and by erecting sea gates in the Gulf like the Netherlands have used for a long time to help reduce tidal surges.
Philip Whitman
"Well, I have no objection at all to the producers of the seafood and the energy and the petrochemicals and the other agricultural and manufactured goods paying for reclamation and passing on the costs in the form of higher prices. The problem with this position is, WHAT IF THEY DON’T/WON’T DO IT?"
You mean, what if they lobby for subsidies? Then we ought to oppose them. But the whole question is whether you and I should support subsidies. Saying, "They'll get them anyway" doesn't refute the argument that they shouldn't.
"On this point, Glen notes that in this event it should be the job of local and state governments, not the federal government. I don’t understand this argument at all, since Louisiana and the other Gulf Coast states export most of their fish, energy, and petrochemicals to other states."
Hollywood produces movies watched by the rest of the country and, indeed, the world. Is this an argument for subsidizing Hollywood? No -- Hollywood has to pay to make movies, and the rest of us cover the cost through ticket prices. The fact that consumers benefit from a good is not an argument for making consumers subsidize it with tax dollars. If it were, then we'd have an argument for subsidizing *every* good (because consumers benefit from all the goods they buy).
"Personally, I don’t care whether I pay the costs in the form of taxes or in the form of higher prices, just so long as the resources and the people responsible for providing them to the rest of us are protected."
Well, I do care whether I pay through taxes or higher prices. Why? First, because higher prices target exactly the people who benefit, instead of forcing other people (e.g., someone who rides a bike or doesn't eat seafood) to pay. Second, because higher prices make consumers face the true cost of their economic choices. When the gov't subsidizes oil (or anything else for that matter), prices don't reflect the real cost of production, and consumers will tend to consume more of the product than makes economic sense.
With all that said, there's a difference between whether the gov't should help rebuild now (given past promises the gov't has made) and whether the gov't should continuing making promises to help rebuild in the future. My point in this post was to say that future promises should not be forthcoming. I still want the Katrina victims to get help, in large part because they were at least implicitly promised the help before the fact.
The local governments seem to be in dire straits at the moment with their tax base under water. Parking ticket revenues are at an all-time low (zero). Tickets for speeding now show the speed in knots instead of mph.
Why should there continue to be an implicit promise on the part of the federal government to bail out disaster victims when the government has been defunded by tax cuts and there are ongoing costly wars in Iraq and Afghanistan? Isn't it ironic that the feds sent money to Indonesia for tsunami relief, and now the Chinese and Cubans! are offering aid to us. Money provided by FEMA should carry the stipulation that the money not be used to rebuild in the flood plain. Once bitten, twice shy.
OK, I hate that I'm the person with the far less intellectual comments, but if you read the various scientific proposals of changes to the levy system and reclamation/maintenance of the delta, etc., it's really quite cool. We do have an opportunity to build something incredible there.
One wonders, can you renew the environment, rebuild a major city practically from scratch, fully planned and designed, and then repopulate it? Historically speaking, areas that have been so destroyed often become areas where the newest technology can prevail, yes? It's potentially a ground-up opportunity for reinvention and technological advancement.
Which is just cool. Perhaps I've read too much sci-fi...
Damn you, blogger! That was me. "justagrrrlinthewhirled" Ghost of blog thoughts long ago! LOL
I apologize for posting my last comments twice. I didn't realize the first time I posted them had been successful.
The interruption of Hollywood movies would hardly qualify as a national catastrophe severely affecting the nations energy and food supply.
People who ride bikes get a free ride, because they don't pay gasoline taxes that help build and maintain roads, they don't have to pay for drivers' licenses, registration, safety inspections, and insurance that all vehicles drivers have to pay for, yet they nonetheless get to use (and block) the roads that vehicle owners pay for.
People who don't eat seafood should do so for health reasons, but by not doing so they make the demand for other food higher and the demand for seafood lower, so it all comes out in the wash. Should people who have no children not pay school taxes? Children are the future caretakers of today's non-parents (as well as the parents) and the only hope we have for humankind. An ignorant populace is a doomed populace. My parents and non-parents of their day paid for my education, and it behooves our generation to do likewise for the next generation, and so on down the line. Surely, you don’t expect the children to pay the cost of their education. Bikers and non-fish eaters benefit from the fisheries and the hydrocarbon industry like everybody else.
Again, I don’t care whether I pay for something through taxes or prices, as the money is fungible. Again, if the businesses won’t do it, it falls upon the government to do it, as it has countless times before in our history. But I offer a challenge to those who believe otherwise to get after the businesses and make them pay for it (and pass along the costs to us in the form of higher prices).
I had a really bad plumbing problem the other day. My bathtub was overflowing with raw sewage! I called the plumber first then the carpet cleaner second to suck the water up. It was so disgusting and so smelly. I get sick thinking about it. Between the plumbing repair and the flood damage to my house, it's going to be one hell of a clean-up and repair bill. This whole thing might have been caused by the fact that I tried to do a little plumbing repair on my own a while back. Do you think I'm nuts? I'm not going to mention that to the insurance company. What's the big deal about a flood in New Orleans? Aren't the people covered by their homeowner policy like me?
Glen has asked me please to refrain from ad hominem attacks, so I won't respond to Arnold or Arnie in the manner deserved. I will merely point out these things: (1) Arnold or Arnie might want to read his homeowner's policy more closely, since flood insurance normally must be purchased separate and apart from normal homeowner’s insurance. (2) If you don't have a home to insure, there is no point in purchasing home insurance. In fact, I doubt you could, even if you had money to burn. (3) If you have no car in which to get out of town, and the school buses never leave the parking lots, and the city buses are shut down, and Greyhound stops service, and you have no money to buy an airline ticket and no way to get to the airport anyway, even if the planes are flying, which many of them weren’t, then the only way you’re going to leave town is on your feet or by boat, and if you don’t have a boat, and if you have a bed-ridden momma or infants or a cripple in the house, that’s going to be a problem, especially if you have to swim through bacteria-infested flood waters that have already caused multiple deaths. (4) It is one thing to make an insurance claim for house damage; it is entirely another thing to have your home destroyed and flooded, with no place to go, and no job when you get there. Even if you or your insurance pays for your house to be rebuilt or for you to relocate, this takes time. I Know, as I’ve done it many times in my life. (5) If, on top of that, you go the Superdome, which was supposed to be a safe haven, and the Red Cross arrives with food and water and medicines, and the local authorities refuse to let them in because they don’t want to “encourage” people to stay there, you are probably going to be pretty desperate and depressed -- and hungry and thirsty. This whole thing was a travesty and displayed a complete breakdown of Federal, State, and local government’s obligations to the people.
"The interruption of Hollywood movies would hardly qualify as a national catastrophe severely affecting the nations energy and food supply."
Hold on a minute -- you're shifting the argument. Remember your original argument was, in essence, "everyone who benefits from an activity should have to support it with taxes." My Hollywood example clearly refutes that point. You, as a moviegoer, pay for the cost of movies through your ticket price, so no subsidy is necessary.
But now you're shifting to a different argument, which is "these products are really important, and that's why government should be involved." As the present disaster shows, however, government involvement does not necessarily make the supply of these products any more secure. Indeed, subsidies encourage the placement of more industry in harm's way.
With the bike example, you're implicitly admitting my point by indicating that bike riders should pay their fair share for the roads (and that it's wrong for them to get a free ride). You're basically saying, "bike riders get a subsidy, so car drivers should, too." I'm saying no one should get a subsidy, and that way they'll face the true cost of their decisions. (And yes, I would like to see more pricing of road use, which would also help to deal with traffic congestion.)
Your response on seafood is a red herring. If non-seafood-eaters demand other foods, they also have to pay the costs of producing those other foods (through their prices). But if the production of seafood is subsidized, then seafood eaters don't face the full cost of their choices. Instead, they foist some of the cost of producing seafood onto those who don't eat it. (And if I'm willing to forgo the health benefits of seafood, that's my own business!)
Education is clearly a special case. I'd like to see much less gov't involvement there as well, but there's at least a case for subsidizing education on grounds that it produces positive external benefits for people not involved in the transaction -- specifically, those of us less likely to be victimized by future criminals. But the analogy to petroleum products just isn't there. There aren't any positive externalities; all of the benefits are experienced by the producers and the buyers of petroleum. (To anticipate your response: yes, petroleum products are used in the production of other goods and services, like transportation of food -- but then it's included in the price of those other goods and services, so the ultimate users still end up paying.) On the other hand, petroleum products arguably *do* create negative externalities in the form of pollution. There's a better case for heavily taxing oil and gas than subsidizing them.
"Again, I don’t care whether I pay for something through taxes or prices, as the money is fungible." Well, you *should* care, for exactly the reasons I said. The fungibility of money is irrelevant to the two arguments I made. First, when good X is subsidized with general tax revenues, that means money is being transferred from those who don't consume X to those who do. Fungibility doesn't alter that fact. Second, when faced with a lower price at the point of sale, people will tend to consume more of the product. The portion of the cost that they feel in their tax bill, on the other hand, does not affect their consumption of the good (because they have to pay the tax regardless). And that means subsidized goods will be over-consumed -- people will consume them even when the true costs are greater than the benefits. That's wasteful.
Dad, you've told me many times that petroleum is an industry that will eventually have to die as we switch from oil to other kinds of fuel. Well, how do you think that will happen? If you let the market work, prices for oil will keep rising, which will (a) give people an incentive to economize, and (b) give investors an incentive to invest in alternative products. When the government subsidizes the petroleum industry, it stymies both of those market incentives -- and then politicians blame the market for not producing alternative fuel sources! This is clearly nonsense. If the gov't wants people to economize on oil and develop fuel alternatives, it should STOP SUBSIDIZING OIL!
I dont think your dad was making a argument purely about subsidies for big business. He was talking about who should assume the cost and responsibility for reclaming and rebuilding the infrastructure that was lost. Dad was making a Keynsian argument when he stated emphatically, "The problem with this position is, WHAT IF THEY DON’T/WON’T DO IT?" Business and government should work hand and glove to make the economy work for everybody, not just rich folks.
I, for one, don't want to see another big corporate ripoff of the little guy. Who wants to see land speculators zoom into the ravaged areas and buy up all the land for pennies on the dollar. Who wants to see big business's own all the roads and highways, controlling access to everywhere. If you can't pay, you can't play. Anyway, there's going to be a big ripoff of the taxpayers with the coming handing out of government contracts based on favoritism & cronyism as is the Bush Administration's wont.
Dad, I'm 100% with you on this one.
I have been away from a computer for the last three days, and I doubt there are many folks out there who are still interested in beating this dead horse anymore, but just in case there is still an ember or two of interest, I am making this final commentary on this subject. Glen and I are not nearly as far apart in our opinions as he or some readers might think. This is in part due to the inadequacy of the written word to perfectly convey one’s thoughts. Also, Glen is very good at framing his arguments in a way that sharpens distinctions and blurs contrasts to make his point. I mean that as a compliment, not an insult. I, on the other hand, am often not as articulate as I would like to be.
I do strongly oppose subsidies to the oil, gas, and petrochemical industry, as well as to the professional sports industries (in the form of stadium palaces we are made to pay for with taxes for millionaire owners and athletes, even if we have no interest in the sports), as well as almost every other industry. (There are exceptions, such as certain enterprises that benefit the consumer through economies of scale and therefore might serve them better as regulated monopolies – but that’s another issue for another time.) I oppose tax subsidies for the oil companies. I oppose tax subsidies for corn farmers to make ethanol as a gasoline-blending component, not just because it is woefully inefficient to make it and difficult to handle, driving up transportation, storage, and usage costs. And most of all, I oppose oil subsidies in the form of our military presence to protect the supply areas and shipping lanes. If that cost were factored into the price of oil, it would probably be in the $150 per barrel range or more.
My main point is that as a nation we owe it to ourselves and our progeny to protect vital regions of food and energy supply, and we cannot count on the energy companies (or other companies) to do it. One reason is the amount of capital involved often exceeds their ability (or willingness) to raise it, absent cooperation with competitors, and they are loath to do that and would be criticized for it anyway. Another thing is that the efforts required sometimes span decades, and these people know they are going to be dead by the time the chickens come home to roost. An additional reason is, believe me, that these companies are inordinately greedy, or more specifically, the people who own and manage them are. They will not spend a dime to reduce pollution, improve safety, or increase efficiency, unless they are forced to, or unless they see a nearly immediate profit in doing so. This is especially true, given that these companies profit enormously from catastrophes like this, because they can raise prices and profit margins. The Phillips chemical plant explosion of the early 1990’s, which killed about 20 people, resulted in an OSHA slap on the wrist for the company and enormous unprecedented profits for it due to the disruption in supply of polyethylene. Not that there is anything necessarily wrong with making a profit. But as I said, most people who know about and live in this region have known for decades about the inherent vulnerability of the Gulf Coast States, and Louisiana in particular, to hurricanes and flooding. And the companies operating in this region haven’t done anything. Only the government has done anything, and what it did obviously was not enough.
What I think is that the government ought to reclaim the region and upgrade the levee and wetland sediment retention areas, add sea gates, etc., and pay for it through direct taxation of the businesses operating in the region, with the taxes being proportionate to their size, revenue, profitability, etc. Then the businesses would pass on those costs to consumers, and the consumers would realize the true coast of what they are using, which is basically what Glen would like, I think.
As to the subject of the bicycle riders, I wasn’t the person who first brought them up, but my point was simply that they were irrelevant to the issue, since they contribute nothing to the building and maintaining of the roads that they so arrogantly block, that other people who do pay for them need to use. Incidentally, I don’t believe I have seen many bicycles with wooden wheels. The rubber for their tires was most likely made in the Gulf Coast and certainly came from oil.
Regarding the fish, I simply was pointing out that seafood was just one of many reasons why this region is vital to the nation’s food supply, energy supply, and commodity transportation. I could have just as easily said grain, since roughly a third of the nation’s grain supply is (or was) shipped through the port of New Orleans. I may be wrong, but I doubt there are many people who eat neither seafood nor grain products. I agree, what you eat is your own business, but if you don’t eat something, you are gonna die, and the total supply of all foodstuffs is what has to feed the entire nation.
I am pleased to see that Glen (at least so far) has not jumped in on behalf of the specious argument made by Arnie or Arnold. Incidentally, in my response to Arnie or Arnold, I should have also pointed out that people in the Gulf Coast States cannot buy flood insurance with their homeowner policies, because the insurance companies refuse to cover it. That is why if you want flood insurance here, you have to buy it from the federal government – it is the only entity willing to cover it. (Where are the entrepreneurs?) There is some stupidity and inefficiency in the way the government does flood insurance, but nobody else is willing to cover it and, again, that’s another issue anyway. I don’t know, but I would not be surprised if the same were true for California dwellers as regards earthquake insurance.
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