Hurricane Reconstruction

The recent hurricanes took a heavy toll. The cost of rebuilding will be significant.

Politicians from the areas hit now want hundreds of billions of dollars in aid.

When disaster strikes, the federal government definitely has a role because the feds control resources like the military and other first responders. After Hurricane Harvey, FEMA housed 42,000 people in 692 shelters. After Irma, 13,000 National Guard soldiers helped rescue and evacuate people. That's the kind of emergency response we expect from the federal government.

But why is rebuilding afterwards the federal government's responsibility? Until recently, businesses and charities handled most disaster response.

The private sector does a better job than government. Federal rebuilding creates moral hazards that lead to expectations of even more government help.