Floods, pestilence, taxes, etc

Stephen King, "managing director of economics at HSBC", on market failures:

The suffering we're now seeing in the Deep South evokes John Kenneth Galbraith's famous reference to "private affluence, public squalor". If a nation becomes too reliant on the market, and market failures are therefore ignored, the nation's longer-term economic health is potentially compromised...

...some mechanism should be found to ensure that businesses and individuals pay for the social costs of their private actions. If stronger flood defences are a requirement for cities like New Orleans, then those that profit from activity in the region should be made to bear some of the costs. After all, property developers who are given a free rein to invest without making a proper contribution to flood defences are typically long gone before disaster strikes: their profit all too easily comes at the detriment of those who, later on, have to pick up the pieces. There's a need to understand when government has to be involved to help establish the socially-appropriate market price.

Meanwhile, in other news... incidentally, I wonder who the property developers now rushing to build on the UK's flood-plains are borrowing their money from?