Current Affairs

Our findings indicate that premiums as a percentage of coverage purchased are regressive: premium shares are larger than income shares for lower-income zip codes. Payouts, however, also as a percentage of coverage purchased, are progressive, meaning lower-income zip codes receive a larger portion of claims paid. Overall net premiums (premiums – payouts) divided by coverage are also regressive.

That is from a recent paper by Bin, Bishop, and Kousky, via the excellent Kevin Lewis.  Here is Politico on the fight to thwart flood insurance reform.

A lot of nonsense has been written about the causes of flooding in Houston. Anti-immigration people blame immigration. Anti-development people blame development. Anti-Trump people blame Republicans.

The truth, however, is that Houston has flooded regularly since it was founded. Moreover, unlike Katrina, the flood systems have mostly worked as they are supposed to–diverting water to the highways, for example. The problem has been that there is just a lot of water.

In a superb post, Phil Magness has the details. From here on in this is Magness. I won’t indent.

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We’ve seen a flurry of commentators in the past few days attributing Houston’s flooding to a litany of pet political causes. Aside from the normal carping about “climate change”… several pundits and journalists have opportunistically seized upon Houston’s famously lax zoning and land use regulations to blame Harvey’s destruction on “sprawl” and call for “SmartGrowth” policies that restrict and heavily regulate future construction in the city.

According to this argument, Harvey’s floods are a byproduct of unrestricted suburban development in the north and west of the city at the expense of prairies that would supposedly absorb rainwater at sufficient rates to prevent natural disasters and that supposedly served this purpose “naturally” in the past.

There are multiple problems with this line of argument that suggest it is rooted in naked political opportunism rather than actual concern for Houston’s flooding problems.

First, as we’ve established in the preceding history lesson, flooding has been a regular feature of Houston’s landscape since the beginning of recorded history in the region. And catastrophic flooding – including multiple storms in the 19th century and the well-documented flood of December 1935 – predates any of the “sprawl” that has provoked these armchair urban designers’ ire.

Second, the flooding we saw in Harvey is largely a result of creeks and bayous backlogging and spilling over their banks as more water rushes in from upstream. While parking lot and roadway runoff from “sprawl” certainly makes its way into these streams, it is hardly the source of the problem. The slow-moving and windy Brazos river reached record levels as a result of Harvey and spilled over its banks, despite being nowhere near the city’s “sprawl.” The mostly-rural prairie along Interstate 10 to the extreme west of the city recorded some of the worst flooding in terms of water volume due to the Brazos overflow, although fortunately property damage here will be much lower due to being rural.

Third, the very notion that Houston is a giant concrete-laden water retention pond is itself a pernicious myth peddled by unscrupulous urban planning activists and media outlets. In total acres, Houston has more parkland and green space than any other large city in America and ranks third overall to San Diego in park acreage per capita.*

But even more telling is a 2011 study by the Houston-Galveston Area Council that actually measured the ratio of impervious-to-pervious land cover within the city limits (basically the amount of water-blocking concrete vs. water-absorbing green land). The study used an index scale to measure water-absorption land uses. A low score (defined as less than 2.0 on the scale) indicates a high presence of green relative to concrete. A high score (defined as greater than 5.0) indicates high concrete and low levels of greenery and other water-absorbing cover. The result are in the map below, showing the city limits. Gray corresponds to high levels of pervious surfaces (or greenery). Black corresponds to high impervious surface use (basically either concrete or lakes that collect runoff). As the map shows, over 90% of the land in the city limits is gray, indicating more greenery and higher water absorption. Although they did not measure unincorporated Harris County, it also tends to be substantially less dense than the city itself.

Does this mean that impervious land uses are not a problem and do not contribute to floods in any way? No. But to cite them as a principle cause of the destruction witnessed in Harvey is purely a political move aimed at generating support for a long list of intrusive regulatory policies.

Houston’s flood problems are a distinctive feature of its topography and geography, and they long predate any “sprawl.” While steps have been taken over the years to mitigate them and reduce the severity of flooding, a rare but catastrophic event will unavoidably overwhelm even the most sophisticated flood control systems. Harvey was one such event – certainly the highest floodwater event to hit Houston in over 80 years, and possibly the worst deluge in its recorded history. But it is entirely consistent with almost 2 centuries of recorded historical patterns. In the grander scheme of causes for Harvey’s flooding, “sprawl” does not even meaningfully register.

Read the whole thing for more historical background.

*  Earlier version said second which was a typo as source reports third; other sources can differ depending on year and what exactly is counted.

That is the topic of my latest Bloomberg column, here is one excerpt from the final section:

Greater federal aid to the victims is a likely option. Still, it will not be obvious to many Americans why those who lost homes might end up receiving higher government benefits than people elsewhere who never had homes in the first place, and who may have inferior income prospects, especially if they live in rural areas. Many Texas congressional representatives voted against federal aid when Hurricane Sandy hit New York and New Jersey in 2012. That sounds cruel, but we also have to guard against the tendency for aid decisions to be driven by media cycles rather than the nation’s most serious structural problems.

One commonly discussed “economist’s solution” is to limit federal bailouts, and get the federal government out of providing flood insurance, in the hope that homes will not be built on risky floodplains. It doesn’t make sense to have $663,000 in payouts sent to one Mississippi home, which has flooded out 34 times in 32 years.

That all makes sense in theory, but it also illustrates the limitations of economics. The homes are already built in precarious places, and in the Houston area the damage has already been incurred. Are we prepared to forgo giving federal aid, just to set a precedent for the future? If anything, acting tough could lead to a backlash against the politicians who do so, and make it all the more clear that future bailouts will be forthcoming. Maybe the best we can do is to price flood insurance more appropriately, in recognition that climate risks are higher now. Over the longer run, as housing stocks turn over, that will help limit homeowner and also fiscal exposure to extreme events.

In other words, doing better in response to storms won’t be that easy.  At least so far, it seems the human logistical preparation and response has gone fairly well — relative to expectations — this time around.

Recently, the International Federation of Icelandic Horse Association (FEIF) passed a new law stating that Icelandic horses may not be named any name not registered in the WorldFeng database. If a horse owner wants to name the horse something else, their suggestion needs to be approved by the horse naming committee.

According to Vísir, a horse farmer in Skeggsstaðir farm, Guðrún hrafnsdóttir, suggest the name Mósan for her mare. The committee rejected the name since it doesn’t conform to Icelandic name traditions.

The Icelandic Ministry of Industries and Innovation is currently investigating if rulings of the horse naming committee are legal or not. So far, Guðrún has waited for 5 months for a reply from the ministry, Vísir reports.

The link adds a nice photo, via Ted Gioia.  ” Keeping Iceland Icelandic” — whatever you think that is supposed to mean — is arguably the number one issue the country faces right now, given the continuing influx of tourism.

But the climate is not changing fast enough to explain the dramatic spikes in disaster costs; all seven of the billion-dollar floods in American history have made landfall in the 21st century, and Harvey will be the eighth. Experts believe the main culprit is the explosive growth of low-lying riverine and coastal development, which has had the double effect of increasing floods (by replacing prairies and other natural sponges that hold water with pavement that deflects water) while moving more property into the path of those floods. An investigation last year by ProPublica and the Texas Tribune found that the Houston area’s impervious surfaces increased by 25 percent from 1996 to 2011, as thousands of new homes were built around its bayous. Houston is renowned for its anything-goes zoning rules, but the feds have also promoted those trends by providing extremely cheap insurance in high-risk areas.

Created in 1968, the national flood program was actually supposed to help prevent risky development. Its complex rules required new construction within designated 100-year floodplains to meet higher floodproofing standards, and “substantially damaged” properties that received claims worth half their value to be relocated or elevated. But most of the program’s 100-year flood maps are woefully obsolete, relocation almost never happens, and Uncle Sam has continued to cut multiple checks for repetitive losses. A recent Pew Foundation study found that the Higher Ground problems have not been solved; about 1 percent of insured properties have sustained repetitive losses, accounting for more than 25 percent of the nation’s flood claims. One $69,000 home in Mississippi flooded 34 times in 32 years, producing $663,000 in payouts. The government routinely dishes out more in claims than it takes in through premiums, and the program has gradually drifted deeper and deeper into debt.

That is from a superb Politico piece by Michael Grunwald.

The National Flood Insurance Program (NFIP) owes $24.6 billion to the Treasury. Most of it covered claims from Hurricane Katrina in 2005, Superstorm Sandy in 2012, and floods in 2016, the program’s third most severe loss-year on record with losses exceeding $4 billion, according to the Federal Emergency Management Agency (FEMA), which manages it.

The NFIP was extended 17 times between 2008 and 2012 and lapsed four times in that period. A 2012 law extended the program to September.

The only source of flood insurance for most Americans, it will be in place for homeowners and businesses in Harvey’s path along the central Texas coast.

But Harvey-related claims covered under the program could push it deeper into the red and possibly toward its borrowing limit of just over $30 billion, said Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan budget watchdog in Washington, D.C.

Federal law requires that homes in flood-risk areas have flood insurance before a mortgage can be completed. The program is the only flood insurance available to the vast majority of Americans, although a small market for private flood insurance is sprouting in flood-prone states such as Florida.

Here is the article.  Note the Trump administration previously was pushing a plan to cut the insurance to pay for The Wall.  I do see a case for doing without a federal role for this insurance, but the benefits there come ex ante, not from yanking it away ex post.

That is the topic of my latest column from Bloomberg, here is one excerpt:

If you could directly alter your kids’ genetic profile, what would you want? It’s hard to know how the social debate would turn out after years of back and forth, but I was dismayed to read one recent research paper by psychologists Rachel M. Latham and Sophie von Stumm. The descriptive title of that work, based on survey evidence, is “Mothers want extraversion over conscientiousness or intelligence for their children.” Upon reflection, maybe that isn’t so surprising, because parents presumably want children who are fun to spend time with.

Would a more extroverted human race be desirable, all things considered? I genuinely don’t know, but at the very least I am concerned. The current mix of human personalities and institutions is a delicate balance which, for all of its flaws, has allowed society to survive and progress. I’m not looking to make a big roll of the dice on this one.

It’s also not difficult to imagine parents wanting children who are relatively well-behaved. The same research paper found that mothers, after extroversion, preferred the trait of “agreeableness” in their children, again over both intelligence and conscientiousness.

I was struck by a recent Chinese report that some parents are asking for children who are able to drink socially, for business purposes, and thus trying to avoid some genes that make it difficult to process alcohol. Caveat emptor.

Best sentence: “I don’t trust people to take so much control over the future of human nature.”

Robo-Adviser Tries to Reach Muslim Investors (WSJ, on-line header differs)

And just to remind you this truly is 2017, here is another of today’s headlines (NYT):

France’s Macron Looks to Confront Eastern Europe Over Cheap Labor

Macron: overrated, as I’ve said from the beginning.  As for the robo-advisers, we’ll have to see.

Veterans’ issues — something that almost never make the national conversation unless the Veteran’s Administration has a juicy scandal for us to gape at — loomed much larger in the questioning than health-care reform, which has obsessed the national media for the past nine months. That shouldn’t really be surprising. The number of veterans in the country is roughly equal to the widely touted figure of 20 million people who gained insurance because of Obamacare.

And:

Veterans’ issues were the most notable way that the local conversation differed from the national one, but far from the only one. I heard more about school policy than climate change, and a great deal about very local issues indeed — problems with asbestos in the water table, a local community college that someone said was doing a poor job of preparing kids for work. In the El Paso leg of the trip, which I didn’t cover, Hurd says that the conversation was dominated by flooding, as heavy rains had recently filled normally dry arroyos, damaging property and displacing families.

That is from Megan McArdle, who is touring the politics of Texas, national level politics I might add, a House race.

These aspects raise an uncomfortable possibility for libertarians: is there a sort of law of conservation of coercion in well-functioning societies? A community with a minimal state can only function if it is thick enough and homogeneous enough to enforce sanctions for antisocial behavior that are almost state-like in their severity, and, furthermore, can make them stick. Freeing individuals from their smothering parochialisms will lead to a compensating increase in the scope and reach of the state as people search for a new solution to social dilemmas formerly handled via informal means. Conversely, attempts to suddenly curtail state power may lead to chaos in the intervening period when social institutions have not yet reasserted themselves. Principled libertarians might still have good reasons to prefer the non-state forms of compulsion—among them the arguments from public choice economics and a federalist preference for decisions being made at the lowest feasible level, where actors are most likely to have relevant information. But “increased freedom” may not be one of them.

Here is more:

Kuznicki thinks the engineering mindset in political theory is an antidote to what he sees as a philosophical tradition of abstract theorizing that puts the state on a pedestal and makes it into an almost metaphysical nexus of the human condition. But as I look around, much of the vapid theorizing seems to be in favor of liberalism writ large, while the best current example of a state built on hard-nosed pragmatism is Singapore. Kuznicki himself is a representative of a currently fashionable sort of cosmopolitan libertarianism that has never existed in governmental form, and which I suspect is the least likely form of government ever to exist. What if a practical politics that took account of human frailty implied a world formed from a combination of cosmopolitan but illiberal city-states, unified but homogeneous nation-states, and sprawling empires that vacillate between centrifugal and centripetal tendencies? In fact, this is the world that has existed for most of recorded history. Perhaps the real ideological blinders are those which tell us that we have transcended this condition and can replace it with something else.

That is from William Wilson in American Affairs, hat tip goes to Garett Jones and Rogue WPA Staff.  Here is Jason Kuznicki’s new book, which I have not yet seen.

Gab is an app similar to twitter but it has a more permissive speech policy. According to company spokesman Utsav Sanduja, “Whatever is permissible under the First Amendment is what Gab allows onto its site.” Gab has attracted some users from the alt-right and seemingly for this reason Gab has been banned by both Google and Apple. I wouldn’t go so far as Aaron Renn who argues that “Google and Apple have used their duopoly status to revoke the First Amendment on mobile phones” but I do find these actions troubling.

I have no problem with Twitter or Facebook policing their sites for content they find objectionable, such as pornography or hate speech, even though these are permitted under the First Amendment. A free market in news doesn’t mean that every newspaper must cover every story. A free market in news means free entry. But free entry is exactly what is now at stake. Gab was created, in part, to combat what was seen as Facebook’s bias against conservative news and views. If Gab or services like cannot be accessed via the big platforms that is a significant barrier to entry.

When Facebook and Twitter regulate what can be said on their platforms and Google and Apple regulate who can provide a platform, we have a big problem. It’s as if the NYTimes and the Washington Post were the only major newspapers and the government regulated who could own a printing press.

In a pure libertarian world, I’d be inclined to say that Google and Apple can also police whom they allow on their platforms. But we live in a world in which Google and Apple are bound up with and in some ways beholden to the government. I worry when a lot of news travels through a handful of choke points.

I also fear that Google and Apple haven’t thought very far down the game tree. One of the arguments for leaving the meta-platforms alone is that they are facially neutral with respect to content. But if Google and Apple are explicitly exercising their power over speech on moral and political grounds then they open themselves up to regulation. If code is law then don’t be surprised when the legislators demand to write the code.

These problems are arising in many fields not just news. As Politico noted, OKCupid has banned users accused of being white supremacists and asked members to report “people involved in hate groups.” AirBnb took it even one step further and “jettisoned the accounts of users it suspected of renting rooms to attendees of the “Unite the Right” event.” So it wasn’t even white supremacists who were banned but people who rented to them. What is next? Will white supremacists be banned from lunch counters? Sure, that prospect might generate a frisson of excitement but is that the kind of society we want to live in? And are we so sure that the tables will never turn again?

Addendum: By the way, LBRY, the censorship-free “blockchain meets youtube” startup (I am an adviser), is up and running in beta. Check it out!

Chris Blattman tweets:

Is there a modern day Fanon or Memmi writing about dvpt & globalizn as they wrote about colonialization? Doesn’t only have to be leftist.

Hardi and Negri come up in the mentions, but I am underwhelmed.  There is the alt right, mostly on the internet rather than in books of note.  To whatever extent they are objectionable, keep in mind Fanon was a Marxist, and in any case agreement is not the metric here.

I also nominate Alexander Dugin.  There is plenty in Islamic theology too, and the environmental movement would be yet another direction.

On the academic and also more liberal side, there is Joe Stiglitz and Dani Rodrik.  Is Roberto Unger going too far back?  Three-quarters of the Bengali intelligentsia?  Arundhati Roy?  Or maybe you think Naomi Klein is not serious enough, but the lower quality of at least some of these answers is itself data.  Does the writer have to be from a developing nation?

Frank Fukuyama would be a subtle answer, as would be “the government of China.”  I am reluctant to categorize Slavoj Žižek, but he is not irrelevant for this question by any means.

And let’s not restrict ourselves to non-fiction.  How about Roberto Bolaño’s 2666?  Jia Zhangke’s A Touch of SinNeill Blomkamp?  Michel Houllebecq of course.

What do you all think? I know I am missing a great deal.  That said, if you look for a very direct parallel and just google “leading Algerian intellectuals,” little of relevance comes up, focus maybe there on rai music and theology.

I would stress that the nature of intellectual fame has changed, and if there are few exact parallels to Fanon it is for that reason.  I do not think there is a more general vacuum in this area of inquiry.

That is the excellent title they gave to my latest Bloomberg column.  The piece starts by offering a very simple theory of what statues are for, and then I shift to the perspective of a foreigner.  Here is one bit:

Or consider the debates in Macedonia. The city of Skopje went on a major statue-building binge several years ago, both as fiscal policy and to cement national identity. One of the resulting disputes is whether those statues should emphasize the country’s ancient Greek connections (e.g., Alexander the Great) or the Slavic heritage (e.g., Saints Cyril and Methodius). It’s a strange debate to an outsider, yet to many Macedonians and some of their Greek neighbors (who wish to claim Alexander as their own), it is one of the most fraught issues of the day.

Again, you won’t get too far on this one by debating the life and times of Alexander, whether he led aggressive or defensive wars, or by asking how many slaves he owned. It’s better to focus on which political faction you wish to see assume more authority in Macedonia, and then work backward to figure out your preferred statues.

Similarly, if Macedonians were asked to evaluate the relative moralities of historic American leaders, I hope they would consider a similar approach. I don’t find it so fruitful to debate how much Robert E. Lee does or does not have in common with George Washington  — arguably Washington was a traitor of sorts as well, against a relatively benign British ruler, and he fought against Native Americans and owned slaves. American treatment of Native Americans makes it hard to find many truly “good guys” from that period. Still, we can ask what role Washington statues play in today’s politics; few people are using them to lord over Native Americans.

And my conclusion:

So if you’re considering the worthiness of a particular statue, here are three pointers: Pretend you’re from some very distant foreign country and view the dispute through that more objective lens. Second, focus on the future, and third don’t be afraid to make some changes.

Do read the whole thing.

This city removed several Confederate monuments before dawn Wednesday in a stealth operation that highlights the growing backlash against such memorials across the country.

“I said I would move as quickly as I could, and I did,” Baltimore Mayor Catherine Pugh, a Democrat, said in an interview. “We didn’t need those kinds of symbols.”

Bravo, and let’s hope Old Town Alexandria — wihch frankly I have never liked — does the same with its prominent Lee statue.  But, posturing aside, the real import of this story has not yet been digested.  This statue removal was done suddenly, without democratic input for the final decision to proceed, and, as far as I can tell, without much in the way of leaks.  The mayor just did it.  Physically.  Overnight.  The importance of physical space, and how we shape and present it, must have been paramount in her mind.

That is what the end of complacency looks like.  It may just be a blip, but keep the nature of this episode in mind as you track subsequent news developments in this and other areas.

Here is the WSJ article.

PayPal, the popular online payment platform, announced late Tuesday night that it would bar users from accepting donations to promote hate, violence and intolerance after revelations that the company played a key role in raising money for a white supremacist rally that turned deadly.

The company, in a lengthy blog post, outlined its long-standing policy of not allowing its services to be used to accept payments or donations to organizations that advocate racist views. PayPal singled out the Ku Klux Klan, white supremacist groups or Nazi groups — all three of whom were involved in last weekend’s Charlottesville rally.

“Intolerance can take on a range of on-line and off-line forms, across a wide array of content and language,” the company wrote. “It is with this backdrop that PayPal strives to navigate the balance between freedom of expression and open dialogue — and the limiting and closing of sites that accept payments or raise funds to promote hate, violence and intolerance.”

Here is the full Wonkblog article by Tracy Jan.

So far I see the backlash to recent events as very much harming the noxious elements behind the Charlottesville protests.  I wonder how many businesses — including those who do not supply essential services to such groups (or maybe not any services at all) — will move to make similar announcements.  I feel the country has reached a tipping point where businesses will not find neutrality across extremist or fringe or possibly violent groups a profitable or acceptable attitude in the public eye.  I applaud this move from PayPal, as I don’t think we are close to a “slippery slope” point where it becomes problematic to decide who should be banned from PayPal services and who not.  Nonetheless I do wonder what it will look like when American business gets to the more difficult cases of judgment.  Sooner or later, the ideological computational burden placed on businesses will rise considerably, as Twitter and Facebook and YouTube discovered not long ago, and are still struggling to deal with.  It will be a kind of mandate placed on business, but put there by public opinion and social media, rather than government.  I’ve yet to see a good, data-based research paper on that topic, but it seems that boycotts and refusal to deal are headed back into the public limelight.