free markets — VOICES for REASONVOICES for REASON

In the movie “The Wizard of Oz,” a powerful tornado sends Dorothy’s house—with her in it—spinning high in the air only to deposit it safely in the land of Oz. In real life, of course, the story is different: tornadoes and hurricanes often destroy houses and sometimes kill their occupants. A below-ground shelter is good protection (remember the root cellar where Dorothy’s family huddled to ride out the storm?), but mobile homes and houses without basements often lack good protection.

Now a new manufacturing industry has emerged, offering ready-made storm shelters (also called safe rooms) to the general public, at a cost of $4,000 to $15,000. Usually made of concrete or steel, these rigid structures can be trucked to a home and bolted to a concrete slab, whether inside the house, outside, or in the garage. Increasingly, too, they are being built into newly constructed homes. According to a report in The Wall Street Journal, safe rooms are replacing danger with security:

When a powerful tornado roared through Murfreesboro, Tenn., last year, David Glass ducked into his newly installed “TornadoSafeRoom,” a $4,300 galvanized steel shelter bolted to the concrete floor of his garage. Mr. Glass waited out the storm in the shelter with his brother-in-law who was visiting and Mr. Glass’s two cats, Buggs and Lady Buggs. (His wife was at work.) They emerged to find the home battered but still standing. Five doors down, though, a neighbor’s house was flattened.

I just want to make two points about this:

1. The emergence of this market illustrates an important truth: increased safety is a product of increased wealth. It’s long been noted that natural disasters in wealthy countries like the United States are far less dangerous than similar events in underdeveloped countries overseas, where hundreds or thousands of people might die in an event that would injure far fewer people here. But the direct connection between wealth and safety is even more obvious when you think about how an intelligent investment in a safe room can provide personal safety against violent storms for many years in the future. Even owners of mobile homes, notoriously vulnerable to tornadic winds, can obtain security that would have been impossible before.

2. The rise of the safe room industry also illustrates how individualized risk assessment works on a free market. Each resident of a disaster-prone area must make his own risk/benefit calculations, involving such factors as: How likely is it that a storm will hit? How solidly built is my house? Do I have a basement or other suitable protected area? What else could I do with the funds necessary to buy and install a safe room—and would that other choice provide me a greater value than increased physical security? The individual is in charge of his own life and his own safety.

For contrast, think what a collectivist approach would look like: a multibillion-dollar program to install safe rooms in every home, funded by taxpayers who aren’t even exposed to the risks. In a world where government frequently makes disasters more disastrous, it is worthwhile to contemplate the alternative: a free market in disaster insurance, prevention, protection, and recovery.

Image: Wikimedia Commons