And it incentivizes such building in high-risk areas, guaranteeing future losses, and the cycle starts anew.

Charlie Munger, Warren Buffet's partner, famously said "Show me the incentives, and I'll show you the outcome."

It's true here. Incentivize building on flood plains and other high-risk areas by subsidizing or socializing the true costs of doing so, and you get more of the high-risk behaviour, and more losses.

We need to stop the cycle.

#incentive #outcome #MakingItWorse