Hayek and the Hurricane

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Mercatus has published an interesting paper by Steven Horwitz on disaster relief during Hurricane Katrina. Here's his basic thesis:

While the major media and political actors rightly focused on the failures of FEMA, the major government agency responsible for disaster relief, the successes of the private sector and of one particular government agency, the U.S. Coast Guard, have been much less publicized. Their effective responses deserve greater consideration as we seek to improve disaster relief and recovery policies….

Why were big-box stores like Wal-Mart and one particular government agency able to respond so effectively when other organizations were not? In this Policy Comment, I argue that, contrary to the conventional wisdom, the incentives facing private-sector organizations actually lead them to outperform public agencies in many disaster relief tasks. Furthermore, where a government response is deemed necessary, agencies with more decentralized structures will perform better because they are able to tap into local knowledge and conditions.

You can download the whole thing here. For some of reason's responses to Katrina, go here, here, and here.

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  1. Woot Coast Guard. I’m hard for the guard.

  2. Private industry outperforms the government in a crisis.

    How do the lefties respond?

    “We have to increase government.”

    The sleep of reason breeds Democrats…

  3. Whether in business or in government if you put in hacks & cronies & the just plain incompetent in charge they will f**k up things badly, look at Bear Syearns. FEMA worked when it had people in charge who knew what to do.

  4. Whether in business or in government if you put in hacks & cronies & the just plain incompetent in charge they will f**k up things badly, look at Bear Syearns. FEMA worked when it had people in charge who knew what to do.

    Profit-oriented business are less likely to have hacks and cronies and incompetency, as the market punishes them — just look at Bear Stearns.

    And FEMA never really worked. Look through the history of FEMA: They always respond after 4 days, just like in New Orleans. The difference was the scope of the disaster and the lack of any local and state response magnified FEMA’s stupidity. Furthermore, we’re still seeing the affects of bad FEMA: 2 and half years later and homes remain unbuilt.

  5. This reminds me of the old joke about the scariest phrase in the English language….”I’m from the goverment and I’m here to help”.

    Slight bit of perspective….Floridians (of which I was one) seemed to do just fine after hurricanes without FEMA showing up to muck up the process. We got our sulpplies pre-storm from the retailers who rushed in extra water, lumber, batteries, etc. or post-storm from local and state authorities who already had well-publicized pickup areas set up. I fail to understand why New Orleans couldn’t do the same thing.

  6. “hell of a job Brownie”

  7. Uh, Jen, where do you think those supplies come from? It ain’t the state, it’s FEMA.

  8. The primary reason that the Coast Guard responded well to the disaster is that they are a military organization. When something happens there is already a plan on file about how to respond. They also have a dedicated, secure communications system.

  9. Scott, the local PD’s handled the purchasing and distributing of relief-type goods. I included the state becuse I’m not sure if the state reimbursed the PD’s for the cost. That way we didn’t have to wait for FEMA to get their asses down there to hand out water.

  10. Eric – The Coast Guard is more decentralized than other military organizations, with a higher percentage of officers (authorized decision makers).

  11. FEMA worked when it had people in charge who knew what to do.

    Exactly backwards. A disaster, natural or man-made, is by definition a situation where control has been lost. The number and competency of the people in charge is irrelevant. It’s the people in the field with knowledge and the authority to use it who make the most difference.

    The Coast Guard worked because each captain is totally in charge of his ship. Wal-Mart worked because the folks in Arkansas stayed out of the way. FEMA sucked because the decisions were being made in D.C., modified in Baton Rouge, and countermanded in New Orleans.

    I fail to understand why New Orleans couldn’t do the same thing.

    The New Orleans government.

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