What I Learned from Hurricane Milton

(00:00.898)

Hurricanes and moral hazard. Okay. First and foremost, I got to thank the litany of people that have been reaching out all over the country, checking in. In fact that, yeah, I count myself extraordinarily, let’s say lucky, blessed, whatever you want to call it. It is, it’s ugly.

in many places down here where, and places where, you know, as a kid I used to come to, you know, down in Manasotaki, Englewood, Siesta Key, all of these places have been wrecked. People say they were decimated. No, no, no, they weren’t decimated. Decimated means, you know, one out of 10. It’s the Romans used to do. And no, it’s not decimated. It’s much, much worse than that.

Still haven’t made my way back to living in my home. Home is fine. It’s OK. We’ll talk about that a little bit. Power has yet to be restored where I live. But again, it’s all well and good to eventually be in there. Everything is OK. I want to go through this hurricane and experience. As it turns out, moved out of the way of Tampa, went down to Sarasota.

the storm actually hit, but I was east of the interstate and knew I’d be OK. I experienced the eye wall both sides and the eye of the hurricane, which was something to behold. Watching it right over your head, that went outside and extraordinary, quite frankly. But anyway, neither here nor there. Something I’ve been talking about for some time in regards to moral hazard. Moral hazard.

and hurricanes and government involvement and subsidies and where we’re at today. We have been subsidizing as a society, we’ve been subsidizing flood insurance. I think it’s going back to LBJ, if I’m not mistaken. It have been a little bit earlier. And what we’ve had happen is we’ve had

(02:24.386)

Well, basically when the taxpayer subsidizes something or makes something cheaper, you cause a price disconnect that again, it doesn’t translate well. And what happens is, is that you end up, the taxpayer ends up footing the bill for things that quite frankly, they shouldn’t. over the years have lamented, talked about.

flood insurance and basically called it for all intents and purposes welfare for wealthy people where the taxpayer is subsidizing the insurance on a beachfront mansion.

(03:13.145)

People end up living in places where normally they wouldn’t live if they couldn’t get their hands on this mispriced insurance. It was actually interesting. like John Stossel, like 20, no, it was 20, was about 15 years ago, did a bit on his beachfront house and he was talking about how twice,

The house got inundated by water and both times the taxpayer picked up the bill. Again, I don’t like dealing with anything like that. I live now in the state of Florida. It’s the first time I’ve lived in this state. And I’ve made choices saying, hey, you know what? I don’t want to be in a flood zone. I don’t want to be in one of those areas. I don’t want to deal with any of that.

I saw, I took a look at where the elevation of my current house is in Tampa. Tampa was supposed to be hit and have a massive storm surge. And I came in right underneath the line. But with that being said, I still went out there. I put sandbags out, did a myriad of things. you know, I didn’t think that the water was gonna get anywhere near there and it didn’t. But you know, it was almost like a peace of mind type of thing.

People ask me, they ask me, I’ve just got a lot of emails, ask me what I pay in homeowners insurance and they’re blown away. Like, I can’t believe how cheap it is. You’re in Florida, you’re in Tampa, you’re not far from the water. Yes, but I’m not in a flood zone.

I am not in a flood zone and I don’t need to have any subsidized insurance. The reason why, and you take a look at the news media and they’re always throwing out these numbers and the numbers are catastrophic when you talk about the amount of destruction that has taken place, the cost that’s gonna be involved with rebuilding all of these areas. It’s extraordinary.

(05:21.262)

and they compare it to the past. The difference is there’s a hell of a lot more people living in these areas than there were in the past. Same thing holds true. had the same conversation. We’re talking about wildfires out in California. my God, the damage that was done. People didn’t always live there. Now they do. The reality is that Sarasota has in

been hit with a hurricane, I think it’s 1850. Tampa is the biggest they’ve had in over 100 years. And the reality is nature happens. Mother nature happens. Hurricanes are going to happen. You’re fooled by randomness. The fact that two hurricanes came into Tampa, all of a sudden you’re listening to all these wizards just smart out, my God, it must be climate change. Really?

Really, that is ridiculous, quite frankly. Inevitably, they are going to happen. And what happens, again, sometimes people get complacent, get complacent, and they’re, that could never happen here. Well, it did.

It did. many of these places, again, you’re going to be very, very difficult now for anyone. They’re going to be writing insurance policy. mean, how are you going to get insurance? know, not many. I’m getting loans to rebuild some of these places on the water. The difference is when you talk about the amount of damage as far as costs are concerned, yes, they’ve skyrocketed because the population has increased. But you know what’s fascinating is the amount of

deaths due to these storms have gone down incredibly simply because of again the various different building codes that are being put forward. The ability to evacuate, to prediction miles, all these various different things. That has come way down. You can build a house now down here. It’s going to cost you.

(07:40.258)

brand new house to build because again the codes are that stringent that high again make any difference you’re get a storm surge that’s gonna come in it’s gonna do damage no matter what depending on your elevation but the point is the point is is that if you want that why should the taxpayer why should the taxpayer have to absorb that risk why

It’s become part and parcel here in the United States. It’s not just, it’s not just, if you think about it, it’s not just with flood insurance, it’s with health insurance. But we’ve, again, it’s becoming a popular topic and I’ve talked about it for years here on the program. We subsidize people’s health insurance in the sense that, again, you can’t even call it health insurance. You’re basically prepaying in many respects for what?

medical expenses that you’re gonna come. They don’t, when you sign up for health insurance as part of Obamacare, pre-existing conditions, pre-existing, cover pre-existing conditions. Well, not only that, you also cover people the same price. You could be in a, you could be,

overweight, alcoholic, drug addicted person and you’re going to be paying the same exact rate with your company or whatever under Obamacare, someone that’s completely healthy. Is that reasonable? Is that fair? Is that right? Shouldn’t there be, you know, tremendous incentives if you take care of oneself? Again, this is what happens, this is what causes disconnects when you subsidize certain areas. This is the moral hazard part.

that we have taken out of the equation with some of these things. I really wish we would get away from that. Again, if you want to, if you have the money and if you wanna go ahead and you wanna build a house on the water, fine. I don’t even care if you wanna build a house on the water. You didn’t wanna put it up on stilts. Okay, and if the storm comes and knocks your house down, well, guess what? That’s on you.

(09:58.722)

That’s your choice, okay? That’s the trade off that you are accepting to live in paradise. it’s, no, people don’t like hearing this, it’s too soon, Markowski. No, it’s not too soon, okay? There is a risk that you take. There’s risk when you get out of bed in the morning for crying out loud, but there’s certainly a hell of a lot more risk if you want to live on the water.

Again, my neighborhood, old neighborhood in Tampa. Many of my neighbors’ homes are very old. Very old. And they weren’t graded.

Well, when they were graded, there wasn’t much attention being paid to any sort of water. They do that now. Whereas when I went back to my house, and this is not gloating or anything like that, this is just showing you how things have changed and the designs are different. I didn’t have any flooding in my yard. Many of my neighbors, their yards were swamps underwater. mean, dealing with 15 inches of water in a short period of time,

How is it that certain homes were able to deal with that? Again, it’s the modern design of these things. Again, had many places, it was an incredible run for a period of time where you weren’t dealing with any of that, but nature happens. Now this is where it’s going to be an issue and this is where people are going to be clamoring to rebuild and repair many of these homes.

It is going to, it’s costly. It’s a hell of a lot more expensive. You know, how we’re going to go about dealing with that, I don’t know. I don’t know, we’re gonna have to decide as a society, but again.

(12:04.012)

When taxpayers subsidize government insurance policies, protect people. Protect people against damage from storms, from floods. More people are going to be willing to live in places where there is greater danger of this happening. That’s just the reality. Watchdog on wallstreet.com.