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As I See It

Realistic assessment of risk critical to recovery

Hurricane Katrina has shocked us senseless. We were warned that it would be bad but we didn’t realize how bad it actually would be. Our friends and family members on the Gulf Coast have been dealt a devastating blow, as have our neighbors in Louisiana and Alabama. All those people in the storm-affected areas are in our thoughts and prayers.

Economic recovery will take a long time and be very expensive but the real tragedy is in the loss of life, jobs and homes that so many have suffered. The devastation is beyond description.

However, to belabor the suffering that has occurred and will continue into the future borders on disingenuous and that I will not do. Suffice it to say that we here at the Mississippi Business Journal feel deeply for our fellow Mississippians and our neighbors and will do what we can to make their lives better over the coming days.

What happened?

Now that the winds have calmed and the storm surge has receded, we need to look at what happened and see if there are changes that need to be made to mitigate future suffering and destruction. Hurricanes are a reality for coastal areas. As surely as the sun rises in the east they will come again and again. We ignore that reality at our peril.

Let’s start with our own Gulf Coast.

Building beachfront property is folly. It will be destroyed by hurricanes next year or, if not then, in some future year, but destroyed nonetheless. Many of the homes and businesses built near the beach are insured with taxpayer-subsidized property insurance. We need to seriously consider the wisdom of this program since it encourages waste of public funds to the benefit of a few.

Further, many of the buildings that did not have federal flood insurance may not be covered for the damages sustained in Katrina. It all will depend on the insurance companies’ definition of whether the damage was wind related or water related. This was a big problem with Camille and we appear to be headed down the same trail with Katrina.

Insurance policies should not be written to cover some losses but not others. The purpose of insurance is to spread risk among similar properties and all risk to the properties should be covered. If insurance companies can’t be persuaded to sell coverage for a property perhaps that should be a signal that constructing the property is unsound.

Heading inland

Here’s a thought: let’s not rebuild on the beach where they are sure to be destroyed long before they wear out from natural causes. Rebuilding the Coast at least a quarter-mile inland from the beach would probably negate most future damage from storm surges. Those beachfront buildings that survived should be allowed to stay since their construction is obviously sufficient to withstand level 4 hurricanes. Let’s return the beaches to the public and promote swimsuits, ice chests and towels rather than concrete and steel. That would leave the beaches to sunbathers and we’d be using some common sense in rebuilding the Coast.

Even if folks have sufficient money of their own to build on the beach without any help from the taxpayers the subject themselves and their families to death and injury from future storms.

My thinking on this subject is not entirely original. Within the last few months one of the national news magazines carried a section railing against the building of beachside mansions along the Carolina coastline with the assistance of federally-subsidized property insurance. These homes will ultimately be destroyed by hurricanes and the loss charged to the taxpayers.

This madness should cease immediately, both here in Mississippi and throughout the beachfront areas of the U.S. While on the subject of using our heads when rebuilding after disaster, a passing note about New Orleans seems appropriate.

New Orleans has been an accident waiting to happen since its founding in the 1700s. Much of the city is below sea level and officials have long known that the levees would not withstand a direct hit from a strong hurricane. Nonetheless, nothing was done to fix the problem and hundreds, if not thousands, are now dead because of that neglect.

It is inevitable that another hurricane will strike New Orleans within the foreseeable future and flood the city again. Accordingly, the portion of New Orleans below sea level should not be rebuilt using any public funds unless the levees are strengthened and certified capable of withstanding a Category 5 hurricane.

Katrina was devastating to our state and our neighbors in Louisiana and Alabama. We need to learn from our mistakes and commit ourselves to not repeating them in the future. Nothing we do can prevent the ravages of a hurricane. However, we do have it within our power to mitigate the damage and we should not rest until every effort is made to protect lives, property and the public purse.

Thought for the Moment

That which does not destroy me, makes me stronger. — Friedrich Nietzsche

Joe D. Jones, CPA (retired), is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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