Government subsidized flood insurance encourages people to live in flood zones and ends up spreading the cost of these people's poor decisions (e.g. to live where there is higher risk of flooding) to other people not living in flood zones. If government didn't intervene, only the people who live in flood zones would share the cost. Additionally (and ironically) it also encourages people to live in ecologically sensitive areas that environmentalists don't want people to live!
In general, government subsidized insurance of any kind is an injustice to the people because it skews the free market in undesirable ways, unfairly redistributes wealth, and has unintended consequences.
See: Save a Tree Hug a Capitalist
Tuesday, June 9, 2009
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