Natural Disasters and the Case for Big Government

The New York Times declares "a big storm requires big government," and my liberal neighbors agree.

I expect that by the time you read this, President Obama will have been re-elected. Get ready for four more years of Big Bloated Government.

Hurricane Sandy didn't help.

The New York Times declared "a big storm requires big government," and my liberal neighbors agreed.

My science-challenged mayor, Michael Bloomberg, said the storm makes it imperative that America do something about climate change. He said this even though hurricanes have not increased and little evidence exists that man has much effect on climate. With Obama's re-election, we now will spend billions more on "green" strategies. But the Earth won't notice.

Other politicians say Sandy proves we need a powerful federal emergency management agency. So I invited the man who should be president, Rep. Ron Paul, to come on my show to give a sensible perspective.

Paul said, "We handled floods and disasters for 204 years before we had FEMA, and states and volunteers and local communities did quite well."

Paul's congressional district is on the Gulf Coast, so he knows what he's talking about.

"What we should have is real insurance," he said.

Real insurance means private companies make bets about floods with their own money. But America has little of that.

I know this first-hand. I built a beach house because government encouraged me to take the risk. Private insurance companies wouldn't insure most of us who built on the edges of oceans, and those that did charged high prices. "Too high," said Congress, "so government must insure everyone!" They said they'd price it so taxpayers wouldn't lose—but as usual, they were wrong. Even before Sandy, federal flood insurance was $18 billion in the red.

And worse, cheap insurance encouraged more people to build on the beach. This is an absurd subsidy that should immediately be abolished.

But I fear I won't have much success convincing people. In "No, They Can't: Why Government Fails—But Individuals Succeed," I explain how instinct leads us to assume that experts in Washington have the best tools to manage big risks. Most Americans believe that. Even Fox News anchors told me that "flood insurance is a role for the federal government!"

Viewers were angrier. One civil comment: "Libertarian is good on paper, but not in real life. Why would the Govt. turns its back when its people suffer?"

Because government causes suffering.

As Paul put it, "Rich people get insurance subsidized by poor people, build on beaches…. Their houses get washed away, and poor people pay to rebuild…. It's a reason we're totally bankrupt."

Yes, it is. My house eventually washed away, and you paid. That's wrong.

Federal emergency management fails, too. After Hurricane Hugo, Sen. Ernest Hollins called FEMA "bureaucratic jackasses that should just get the hell out of the way."

So politicians promised they'd improve FEMA. But three years later, after Hurricane Andrew, Sen. Barbara Mikulski said, "Government's response to Andrew was seen by many hurricane victims as a disaster itself."

Again, the bureaucrats said they'd fix it. Then came Katrina. Almost 2,000 people died.

FEMA even got in the way of rescue efforts. Wal-Mart offered flood victims three trailer trucks filled with water. FEMA turned them away. It prevented the Coast Guard from delivering fuel. It shipped 91,000 tons of ice for Louisiana hurricane victims to Maine and Arizona.

FEMA got better reviews this month, but the jury is still out. Let's see what reporters reveal in the coming weeks. Even brilliant government bureaucracies become incompetent over time, because everyone must follow the mind-numbing rules.

Economist Steven Horwitz researched prior disasters and says, "Firms like Wal-Mart, Lowe's, Marriott and McDonald's were major forces for good in getting resources to people in very desperate times, (but) FEMA was an absolute disaster. FEMA did not get into New Orleans in some cases for a week or 10 days."

No one says Wal-Mart should replace local police and firefighters. But local assistance is better. And each Wal-Mart store manager knows his neighborhood's needs. "FEMA is situated in Washington," said Horwitz. "It does not understand as well the needs of local communities."