January 25, 2008 by Tom Armstrong.

Art Laffer says we should cut top marginal tax rates to benefit the economy.

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January 25, 2008 by Tom Armstrong.

Last night’s debate had all the republican candidates (except Ron Paul) pandering to the voters in Florida. They all supported the idea that we should collectivize the property insurance market to benefit people living on Florida’s coast. Because home insurance on the coast of Florida tends to be prohibitively expensive, many home owners in Florida would love politicians to reach into my pocket–a person who lives in safe rural Tennessee–to help subsidize their insurance payments to live on the beach. The republican candidates were all proud to announce their desire to rob from me so others could live in their oceanfront mansions.

There is an adverse selection problem here and the politicians are trying to lower insurance costs for some people by forcing all people to “buy” the insurance policies. The problem is that the politicians, aside from stealing from me to subsidize others, are negating the benefits of our insurance markets. Prices fluctuate to encourage or discourage risk, and the republican candidates are happy to destroy those price signals. It’s risky to live in parts of Florida, like its risky to drive 100 mph on wet roads. Insurance prices will rise when houses are routinely destroyed by weather or a person is often caught breaking the speed limit or wrecking. Higher prices encourage one to take less risk, which often saves heartache, economic resources, and lives. The politicians, in their pleas to purchase votes, offer to subsidize  insurance costs for people taking risks they would not take without a subsidy, which wastes resources and human lives.

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