Consider the current funding crisis of the Texas Windstorm Insurance Association (TWIA), the state’s provider of windstorm insurance. Because of below-market rates and a corresponding failure to enforce TWIA’s status as the state’s provider of last resort for windstorm insurance, TWIA has seen an explosion in the number of policies in force and in its overall exposure. As of August 31, 2008, there were 224,468 TWIA policies in force – up from 68,756 in 2001– and TWIA’s total exposure was $66.6 billion.
However, prior to Hurricane Ike, TWIA could cover less than $2.1 billion in losses. As claims from Ike will eclipse TWIA’s reserves, Texas taxpayers will be forced to bail out the state for losses that should have been covered by TWIA were reasonable policies in place.
As with flood insurance, the government stepped in to provide below market insurance for property owners. When disaster strikes, those below market rates force the government to use taxpayer money to make up the difference.
Such government government programs are wrong on several levels.
First, the government should not be in the insurance business. Government's proper purpose is the protection of individual rights, not providing insurance, education, mail delivery, or most of the other things government currently attempts to do.
Second, economically such programs make absolutely no sense. If the government is providing insurance at below market levels, that clearly tells us that this is a money losing venture. Of course, the government cannot lose money because it has the seemingly endless supply of tax dollars at its disposal.
Third, robbing Peter to pay Paul is always immoral, no matter what justification one attempts. (More fundamentally, all robbery is wrong.) Forcing taxpayers to subsidize insurance means that some benefit at the expense of others. You may think this is fine if you are one of the beneficiaries, but you should remember that countless other groups are trying to benefit at your expense.The answer isn't a better process for choosing the winners and losers. The answer is to allow each individual to make the choices that affect his life and allow him to act accordingly. The answer is to prohibit one individual from compelling another to provide for his well-being. The answer is to hold individuals accountable, and allow them to prosper or fail based on the merits of their decisions and actions.
This of course, means abolishing every form of welfare and entitlement program, including government insurance programs and Wall Street "rescue plans". But that won't occur until individuals refuse to accept the unearned. That won't occur until individuals refuse to demand that some must sacrifice for the benefit of others.