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| Radar image of the ground changes due to the 2015 Nepal earthquake. |
Rather than the patchwork of often ad hoc disaster assistance systems we have now, really all nations should be part of a global disaster insurance plan. This would provide is certainty as to what degree of response would be mounted so that planning can be done and in theory lead time could be reduced. It would force not only a systematic evaluation of all the risk factors each nation faces but also provide economic incentive to take preventative steps to lessen them. Too often a disaster occurs and obvious, generally inexpensive (relative to the costs of the damage itself) preventive measures come to light. It bears mentioning that a large part of any risk assessment would include the impact of corruption on general preparedness, again providing incentive for solutions to be found before such systems are needed. It is tempting to think this would be useful to only less developed nations, but many other faults, such as Boston's earthquake deficient buildings, could benefit from a sober assessment of the risks and the price of potential remedies, especially placed in a global context.
Note that there is nothing about this proposal that would lessen the opportunity for charitable foreign assistance. In fact, by better highlighting the problem areas and encouraging more efficient mitigation efforts it should vastly improve it.
At the moment more emphasis is being placed on extending health care coverage than on cost containment. I would argue that this is in fact the correct position from a political standpoint. Once coverage is expanded it will be extremely difficult for future lawmakers to diminish it, and it will also put additional pressure on the cost problem. This is certainly worrying, but I believe that in practice it takes a real crisis to prompt serious reform owing to our onerous system of checks and balances and special interests. Costs are out of control so action on that front must come; universal coverage, however, is much less of a sure thing.
The rating agencies that failed so spectacularly during the recent housing boom have a serious conflict of interest problem: if they don't rate bonds highly, the bond owners will take their business elsewhere. Since they're funded by the companies whose products they rate, this is a serious problem. There are many proposed ways to address this, such as changing who funds them or basing rewards on prediction accuracy, but I was also thinking that requiring them to offer another service that creates a bias in the opposite direction could also work. If a rating agency were required to offer insurance on a product based on their own rating, then they'd have a powerful financial stake in its accuracy. Of course they'd need to have enough capital requirements to ensure their insurance was viable, and the two competing areas of business need to be roughly matched in value. This is fundamentally different than having third party insurance entities, because the rating agency has complete knowledge of the internal mechanisms used to arrive at their ratings. I feel a fundamental overall of the entire system is more appropriate, but still found this idea rather intriguing.
