In pursuit of a needed victory in Florida, Rudy Giuliani continues to tout the fact that he is the only candidate to support a national catastrophic fund for natural disasters. His campaign is hammering home the point that John McCain is opposed to it, and Mitt Romney has failed to take a firm position. I am writing from Sarasota, Florida now, but I haven’t spoken to enough voters in the state to know how much this will resonate politically. However, from a pure policy perspective, I remain firmly opposed to the idea, and still am having trouble seeing how supporting such a fund can be reconciled with a belief in free market economics.
Here were Giuliani’s remarks on the matter on Tuesday, as provided by the campaign (emphasis mine):
But actually, the private market is working quite perfectly. Homeowners are having trouble finding insurance at reasonable rates because they are living in areas that are at greater risk of being hit by natural disasters. Should government intercede to artificially lower insurance rates, it will only provide an incentive for more people to move to natural disaster prone areas, and thus increase the costs associated with disasters in the future. There are advantages to living in Florida–from warm weather to beautiful beaches–but one of the drawbacks is that it’s in prime position to be hit by hurricanes. Anybody who chooses to benefit from living here, should bear the full costs.
Giuliani is right that at the end of the day, the federal government jumps in with a relief package in the event of a disaster. But two wrongs still don’t make a right.