What would be good enough? “They say the city should be steeled for a 500-year or 1,000-year storm—roughly equivalent to a Category 5 hurricane.” Estimated cost: “at least $70 billion.”

New Orleans, most of which lies below sea level, gives new meaning to the term “money pit.” Yet the tax dollars keep flowing, partly because it’s taken for granted that no matter how risky it is to live next door to a wall of water, government must ensure everyone’s safety at public expense. “We should be looking at a much higher level of protection in New Orleans,” said one college professor. “If that thing breaks, you’ve got people who are trapped in there.”

The second sentence is true, but the first doesn’t follow logically from it. There are lots of places in America where the forces of nature threaten human safety. But it’s not government’s function to protect us from natural forces, only from human force—such as that wielded by foreign enemies or criminals. By spending billions on such measures as flood protection, government lures people into building (or rebuilding) in places where they wouldn’t otherwise dare to live.

In this way, as I’ve written elsewhere, government has a way of making natural disasters more disastrous. What is to be done?

[T]he solution is not more of the market distortions and perverse incentives that have lured so many people into harm’s way. The solution is to replace the prevailing entitlement mentality with a free market in disaster prevention, insurance, and recovery.

In a free market—without tax-paid levees, government disaster relief, or subsidized insurance—anyone who contemplates building or buying property in a high-hazard area will need to face hard facts about the local history of natural disasters, the efficacy and cost of preventive measures, and the availability of insurance.

For example, the high price—or total unavailability—of private insurance will resound like a clanging alarm bell, signaling the market’s objective view that a particular building plan is abnormally risky compared to less dangerous locales.

With their own lives and wealth at stake, people will have every incentive to evaluate risks objectively. And if hardy souls still choose to occupy and fortify New Orleans, or build on an earthquake fault, or live in a tornado alley, the risk and reward will be theirs alone. No longer will government make disasters more disastrous by pretending that citizens have a right to defy the forces of nature at others’ expense.

It’s time to start planning for the day when the money spigot that keeps New Orleans awash in federal dollars can be twisted shut.

Image: Wikimedia Commons

For years, fading interest in the Gulf of Mexico had punished the local economy and left Louisiana to mourn its “Dead Sea.” Now, rising oil prices and new technology were setting off the deep-water version of a gold rush.

We have heard endless stories about how the oil spill has “ruined” the Gulf–the same Gulf the administration is now admitting it is already safe to eat from. But while the dangers of drilling accidents have been overblown, the fundamentally productive, life-giving nature of oil drilling has been largely evaded. We should remember that it was oil drilling that brought the “Dead Sea” to life.

Image: Wikimedia Commons

If you are wondering how the government is letting this happen, you’ve got it backwards; as was the case leading up to the financial crisis, the government is making it happen through its many manipulating tentacles:

This offer does not come from a subprime lender, looking to reel in thousands of unqualified and ill-advised homebuyers, only to slap them with add-ons, fees and variable rates. It is not a teaser or a trick. The advertisement references a program initiated by the National Council of State Housing Agencies and Fannie Mae, the taxpayer-backed, government-sponsored enterprise that buys up mortgages from lending banks.

The pilot program is called “Affordable Advantage,” and it has now been adopted by three states — Massachusetts, Wisconsin and Idaho. (Other states, such as Pennsylvania, California and Colorado, have similar state programs.)…Fannie Mae helped to create Affordable Advantage after the state government agencies tasked with expanding homeownership found they were having trouble doing their job.

The idea that it is the government’s job to “promote homeownership” or create “stimulus” is the root cause of the financial crisis. This idea was carried out by the Federal Reserve, Fannie Mae, and Freddie Mac. Until that idea dies and these entities lose their power to manipulate the economy, the financial carnage will just continue.

Image Source: Wikimedia Commons

The argument [that government housing policy is un-American] as stated is obviously (1) untrue: subsidizing specific patterns of settlement, land, houses, etc. is a longstanding American tradition; and (2) fallacious: implying that an idea has merit because it is distinctive of one’s own tradition is a subtle form of appeal to authority.

I can sympathize with people who bristle at claims that this or the other thing is “un-American.” Usually that tactic is used as an undefined smear or an appeal to the authority of tradition. But that’s not what Yaron and I were doing.

Yaron and I have a certain view of what the essence of America is. Our view is that certain basic ideas shaped the founding of this country: namely, the sovereignty of the individual, and government as the protector of the individual’s rights.

Whether or not government housing policy is un-American, therefore, has nothing to do with whether most Americans (now or in 1776) think the government should promote housing. It has nothing to do with what housing policies the Founders themselves might have advocated. The Founders were great men but they were not infallible oracles–they made mistakes and were not always fully consistent. The issue is: something is un-American if it is inconsistent with the principle of individual rights. That’s not a matter of tradition, but of logic.

Klein and Wilkinson suggest that all of this is irrelevant. It shouldn’t matter if a given policy is consistent with America’s founding principles–what matters is the policy’s merits. In Klein’s words, “we should stick to policy argument rather than philosophical projection.”

But Yaron and I share a radically different view of what constitutes the merits or demerits of a policy. We reject the widespread idea that to debate a policy on its merits means to engage in some sort of utilitarian calculus. Our view is that the standard for whether a policy is desirable is precisely its relationship to America’s founding principles–not out of blind obedience to tradition, but because those principles are true. To examine a policy on its merits is to ask: is it consistent with individual rights or not?

Our Forbes.com piece was not an appeal to authority or tradition. In fact, we went out of our way to declare our opposition to government’s traditional promotion of homeownership. Our point was that if you agree with us and the Founding Fathers, that government should protect your right to pursue happiness, then you have to reject the idea that the government should have a position on the wisdom of homeownership.

For nearly a century it has been the policy of the U.S. government to increase American homeownership. Its efforts include (but aren’t limited to) bouts of easy money from the Fed, the mortgage-interest deduction, the exclusion of capital gains on primary residence sales, direct and indirect subsidies from the Department of Housing and Urban Development, and artificial liquidity pumped into the mortgage market via government sponsored entities Fannie and Freddie.

Policymakers assure us that the next generation of government housing programs will be “carefully designed” (bring on the next five-year plan, Comrade!). But the real question is why the government should be doing anything to promote homeownership.

Read the whole thing.

image: sxc.hu/alexkalina

But a superb letter to the editor in Tuesday’s Wall Street Journal by Paul Gilmour does just that. Responding to my point in my op-ed last week that oil spill hysteria ignores that “large amounts of oil enter the ocean every year through naturally occurring oil seeps,” he writes:

the situation is even more idiotic than the one Mr. Epstein describes.

Most of the oil in the Santa Barbara Channel and on nearby beaches comes from natural leakage of buried reservoirs, not man-made spills. Europeans who visited the area in the 16th century reported the sea was covered by a “sheen of oil, visible for as far as the eye could see,” and that local Indians waterproofed baskets and canoes with tar collected on beaches. It is estimated that, yearly, these seeps release the equivalent of one third of the oil spilled by Exxon Valdez.

Seeps of oil are common in coastal California, having given rise to such place-names as Oil Creek, Oildale, Brea (Spanish “tar”) and Coal Oil Point. By far the best known is the La Brea Tar Pits, located in downtown Los Angeles.

Wouldn’t it be nice if reporters actually told us this stuff, instead of only reporting things that reaffirm to them that oil is an “addiction”?

Seventy-five years ago today, in the midst of the Great Depression, Franklin Roosevelt signed Social Security into law, laying a cornerstone in the foundation of America’s middle class, and assuring generations of America’s seniors that after a lifetime of hard work, they’d have a chance to retire with dignity.  We have an obligation to keep that promise; to safeguard Social Security for our seniors, people with disabilities, and all Americans–today, tomorrow, and forever.

Actually, we have an obligation to retire Social Security as soon as possible. As I wrote in “Don’t Save Social Security,”

Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their gross income–approximately 12 percent–for the alleged purpose of securing their retirement. That money is not saved or invested, but transferred directly to the program’s current beneficiaries–with the “promise” that when current taxpayers get old, the income of future taxpayers will be transferred to them. Since this scheme creates no wealth, any benefits one person receives in excess of his payments necessarily come at the expense of others.

Under Social Security, every aspect of the government’s “promise” to provide financial security is at the mercy of political whim…

If Social Security did not exist–if the individual were free to use that 12 percent of his income as he chose–his ability to better his future would be incomparably greater. He could save for his retirement with a diversified, long-term, productive investment in stocks or bonds. Or he could reasonably choose not to devote all 12 percent to retirement. He might plan to work far past the age of 65. He might plan to live more comfortably when he is young and more modestly in old age. He might choose to invest in his own productivity through additional education or starting a business.

…

We should be debating, not how to save Social Security, but how to end it–how to phase it out so as to best protect both the rights of those who have paid into it, and those who are forced to pay for it today. This will be a painful task. But it will make possible a world in which Americans enjoy far greater freedom to secure their own futures.

To be clear, ending Social Security would not mean a George W. Bush-style “privatization” in which the government lets us invest our money in a few government-approved ways. It would mean individual ownership, as private property, of all the money Social Security now seizes. Period.

Image: Wikimedia Commons

In general, I have found that studying the history of oil is essential for understanding the present world. For example:

• How did so much of the world’s oil end up in the hands of dictators even though it was discovered by citizens of free countries?
• How is the history of oil connected to the history of terrorism?
• What policies led to the greatest amount of production and innovation, and what caused the least?

I cover these and many more questions in my course “The Triumph and Tragedy of the Oil Industry.” Listen to it online or download in MP3 here.

Image: Wikimedia Commons

The entire 72-minute discussion is worth listening to—all four panelists were excellent in presenting their diverging viewpoints—but if you’re pressed for time, I urge you to start with Prof. Eric Daniels’ 8-minute discussion of essential issues raised in the case. In this segment, Dr. Daniels makes it clear why he agrees with the result reached by the Supreme Court, but not with the Court’s reasoning. Along the way, he addresses some important questions:

• Is the First Amendment an instrument for achieving so-called social interests, or is it a safeguard of individual rights?
• Why do corporations spend as much money as they do on elections, and is that spending a symptom of a deeper problem?
• Are corporations exercising special privileges when they speak, or are the rights of individuals being exercised?

To locate the Daniels segment, let the video download (click here—may take a few minutes to finish) and then move the slider to the 36:25 mark.

Image: WikiMedia Commons

Quick excerpt:

While Republicans often express admiration for Ayn Rand, the one thing they refuse to rein in is today’s massive regulatory-welfare state. To the extent they oppose Obama, it’s not on the grounds that businessmen have a right to function free from government coercion, but on the grounds that the amount of coercion Obama advocates goes a little too far.

The article’s title: “The U.S. Anti-Business Epidemic”

Finally, Yaron and I would like to thank the fine people at Forbes.com for this opportunity. We’re both excited to be writing for the Forbes audience.

image: Wikimedia Commons