Capitalism stance on natural disasters

Question

This question is not really related to objectivism, but I am somewhat intersted in "What would Ayn Rand say?", with emphasis on her defense of capitalism rather than her general philosophy.

Accepting the premise that the sole role of the government is to protect us against violation of our human rights, what role should it take in the event of natural disasters, e.g. hurricanes or an epidemic.

My feeling is that by definition, human rights can only be violated by humans, thus it makes no sense to demand the government to protect us against such natural enemies. However, while I might sympathize with Rand's stance on government grants, I find it more difficult to disprove the necessity of government encouragement towards research in case of a dangerous epidemic, or help with restoring infrastructure after some natural disaster.

To sum up, I want to know what is the role of the government in such cases, in a complete laissez faire system. Does the responsibility fall to the relevant entities, e.g. owners of the land in case of hurricanes and self interest (and even altruism) to work towards a cure in the epidemic case, or does the criticality of the matter call for government interference. Global economic crisis should not be possible in laissez faire capitalism, but we can't prevent natural disasters.

Answer 1

Sometimes a disaster takes place that will make human life impossible in some particular limited context - Ayn Rand calls this an emergency:

http://aynrandlexicon.com/lexicon/emergencies.html

In such circumstances it may be a good idea to help people caught up in that disaster. There is no particular reason to think that government must provide such help. Such help has been provided by private companies:

http://www.independent.org/publications/tir/article.asp?a=727

However, providing such help shouldn't be compulsory, i.e. - it shouldn't be provided by government. Nor is there any particular reason to expect the government to be good at providing such assistance. If there is an epidemic, then developing cures or treatments requires creating new scientific knowledge. If government provides the funding for such research then the funding isn't contingent on providing help that people are willing to pay for since the government gets its funds by taxation, which is taken from people without their consent. In addition, people who want to work under government compulsion may not be particularly good at creating knowledge. For an description of the issues involved see the State Science Institute in "Atlas Shrugged".

Answer 2

Providing resources for rebuilding private infrastructure would not be considered a role of government under the Objectivist conception of capitalism. People do not have a “right” to be free from the effects of natural disasters, and property that is damaged or destroyed by a natural disaster would not fall in the scope of protection of rights. This role would fall to private insurers, according to insurance policies on the properties in question. Since governments own some facilities themselves, they would need to make a decision as to whether to insure these facilities on the private insurance market, or self-insure (i.e., pay the costs of rebuilding their own facilities in the event of loss), or some combination of these two options.

Capitalism allows for a free market for insurance contracts, whereby private insurance companies form to “pool risks” across multiple customers. In exchange for regular insurance premiums, the insurer agrees to compensate for damage due to accidents and disasters within the scope of their policies (usually with an “excess” payable by the customer to incentivise proper protection of the property). The scope of available insurance depends on the willingness of businesses to pool risk for large disasters, and to have confidence in their ability to price such contracts accurately. (Insurance for large events is sometimes pooled across multiple large companies to spread the risk.) In the absence of a market for this insurance, this would mean that people are unwilling to pool risk for these events at a price acceptable to would-be buyers in the market.

Epidemics are a little different to natural disasters, insofar as the movement of people forms part of the risk, and allowing people freedom of movement lets the disease spread. A diseased person coming into contact with another person in an epidemic can be considered a rights-breach (aggression against the latter), and so Rand regarded it as legitimate for governments to quarantine diseased people during an epidemic (see her answer in a Q&A on this topic). As to the role of researching cures to diseases, this would fall within the scope of the medical profession and the pharmaceutical industry, which would not be government controlled under free-market capitalism. Successful cures would be monetised through patents and copyrights on drugs, etc., and related forms of intellectual property.