Monday, June 26, 2006

Stealing from your fellow citizens

Being a Florida resident, I just received this email letter from my Senator, Bill Nelson.

This is an example of how Government rewards people for making poor decisions.

Hurricanes are anticipated in Florida. If Floridians were not confident that the rest of the country would be required to reimburse them for much of their hurricane damage, Floridians, faced with the real costs of living in Florida, would build stronger infrastructure, stronger homes, etc. Just as important, they would build less in dangerous areas, like on the Ocean or the Gulf.

Subsidizing Floridians for known events distorts the economy in a way such that it is possible to readjust production so that everyone is better off (technically, the subsidy ensures that equilibrium is not Pareto-optimum).

It is jus plain dumb (but thanks for your money, anyway).

At this point you are probably nodding your head in agreement and ridiculing Government. But the real problem is that Bill Nelson gets elected in return for bribes like this.

As Pogo said, we have met the enemy and he is us.

Even worse, see if you can think up a set of “rules” for Government that would induce individuals, in and out of Government, to behave in the kind of efficient (Pareto-optimal?) manner we all claim we want to see. Don't forget to assume that everyone acts in their own self interest (in the economics vocabulary, marginal, not general analysis).

I conjecture that no such set of rules exists.

Here is the letter.

June 26, 2006

“Dear Floridian,I am pleased to report that Congress has authorized $5.2 billion for disaster relief to Florida and other states hit by hurricanes last year. The funding is included in the Iraq war funding supplemental bill.

These federal funds are especially important to communities in the Panhandle that were hit hard by Hurricane Dennis. Although previous Federal disaster relief excluded damage caused by this storm, this new funding will help all communities damaged by storms last year, including Dennis, Rita, Katrina, and Wilma.

The relief will come in the form of disaster Community Development Block Grants (CDBGs), with the Department of Housing and Urban Development dispersing the funds among eligible states, and states then allocating the money to counties and municipalities. CDBG funds are often used for long-term recovery efforts, housing and business assistance, infrastructure reconstruction, mitigation efforts, and public services.

The following counties are eligible for the funds: Bay, Brevard, Broward, Calhoun, Charlotte, Collier, DeSoto, Dixie, Escambia, Franklin, Gadsden, Glades, Gulf, Hardee, Hendry, Highlands, Holmes, Indian River, Jackson, Jefferson, Lee, Leon, Levy, Liberty, Martin, Miami-Dade, Monroe, Okaloosa, Okeechobee, Osceola, Palm Beach, Polk, Santa Rosa, Sarasota, St. Lucie, Taylor, Wakulla, Walton, and Washington.


Bill Nelson
U.S. Senator”

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