Thursday, July 19, 2007

Bang for buck

The steam pipe explosion in Manhattan got me to thinking about the War on Terror.

Are we spending money on the right risks? The explosion yesterday was essentially an accidental "dirty bomb"-- blasting asbestos into the air instead of radiation.

I'm a firm believer that the best way to figure out what's important and what's not is to let the People decide. Create a free market, and let people spend money on what's important to them. But in the case of public infrastructure blowing up and killing people, or terrorists intentionally blowing things up, it's not clear how to do that.

Most people aren't very good at estimating risks. But there are experts who consider costs versus risks for a living; they work for insurance companies.

Should New York City spend more money inspecting steam pipes or inspecting people's bags in subways? I have no idea. But if I was King of New York, I'd buy insurance coverage for all man-made and natural disasters, and then let my insurance companies tell me how my policy decisions would affect my insurance premiums.

If I put my cynical hat on: this'll never happen. Politicians love to head directly to disaster sites, look tough, and talk tough about how they'll protect us from something like this happening in the future by blah blah blah. Then they can fund their pet projects and screw over the victims of the disaster (because I'd bet a dollar that the city has Sovereign Immunity in this case).

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