The title of this post is from Holman Jenkins’ insightful Wall Street Journal ($) column today in which he decries the role of federally-subsidized flood insurance in promoting the risk-taking that helped turn New Orleans into a disaster waiting to happen:

Professions of shock about the extent of the New Orleans disaster may be understandable from the broader public, but not from Louisianians themselves. Their disaster was the most predicted disaster in recent memory. The city’s vulnerability was well documented and this is one case where you can’t blame the press for taking its eye off the ball.

The policy implications were not lost on congressmen and federal officials either. A screaming match three years ago concerned a House bill to charge market-based flood insurance premiums to homeowners who filed frequent claims. Louisiana Rep. Billy Tauzin (since retired) denounced the bill as “an assault on the culture of South Louisiana.” He was right.
The bill’s author, Rep. Earl Blumenauer, put the issue in less hysterical perspective: “The notion that the federal government is just going to shovel money to people in harm’s way is misguided, and I personally think it’s cruel.” He was right too.
Modern New Orleans was the ultimate expression of this high-rolling dynamic. In 2000, an unnamed city official succinctly explained the city’s hurricane strategy to the trade publication Risk & Insurance: “We are below sea level and we do get floods sometimes, but it’s not a real serious problem. You can still purchase flood insurance.”
. . . [a] corollary to the city’s acceptance that sooner or later it would be destroyed by a hurricane (and rebuilt using insurance money) was a reliance on evacuation to spare human life in the event of a Category 4 or worse storm, of which there had been four since 1899. That would have meant evicting residents every time a hurricane threatened, a policy that likely would have collapsed after the first false alarm, had a decrepit municipal government cared enough to try it. Instead the city defaulted to an evacuation strategy that was tantamount to every man for himself until it’s time to reassemble and collect the checks that will be rolling in.

Along the same lines, John Tierney in this NY Times op-ed suggested the following common sense approach to rebuilding New Orleans:

Here’s the bargain I’d offer New Orleans: the feds will spend the billions for your new levees, but then you’re on your own. You and others along the coast have to buy flood insurance the same way we all buy fire insurance – from private companies that have more at stake than do Washington bureaucrats.
Private flood insurance has come to seem quaint in America, but in Britain it’s the norm. If Americans paid premiums for living in risky areas, they’d think twice about building oceanfront villas. Voters and insurance companies would put pressure on local politicians to take care of the levees, prepare for the worst – and stop waiting for that bumbling white knight from Washington.