Difficulties in making implicit government risk-bearing partnerships explicit

✍ Scribed by Edward J. Kane

• Publisher: Springer
• Year: 1996
• Tongue: English
• Weight: 649 KB
• Volume: 12
• Category: Article
• ISSN: 0895-5646
• DOI: 10.1007/bf00055793

✦ Synopsis

This article explains how lobbying pressure intensifies tax-transfer inefficiencies in disaster prevention and relief. The social-welfare tradeoff in the government's joint provision of safety regulation and disaster relief is distorted by disinformational lobbying activity by disaster-exposed households and by conflict between principles of horizontal and vertical equity. Horizontal equity presupposes that no group of taxpayers wants to transfer wealth ex ante to equally wealthy disaster-exposed parties. But vertical equity implies that, when disaster strikes, households that were previously able to hide the mitigability of their exposure to a ratable hazard can neverlbeless extract sizable transfers from other taxpayers ex post.