Hayekian response
For background on what I have to say here, I recommend Hayek's essay, "The Use of Knowledge in Society," American Economic Review, XXXV, No. 4, September, 1945, pp. 519-530.
Taking these accounts into view:
wasted reserve manpower and materiel." The scale of waste would be breathtaking.
There is, however, one off-base comment at CT that claims they are underfunding FEMA in order to undermine it in order to shut it down. How does underfunding lead to bad decision-making such as this? Or turning back the Red Cross. Or the Democratic Congressman's story I heard on NPR about how he couldn't get through with water and Florida Troopers? Or the local government's failure to use buses? Or turning down use of Chicago fire and rescue? It's not like people don't know about these decisions. The problem wasn't with underfunding, it was with poor management at every level from federal to ward.
In fairness, FEMA had become an entitlement program ... for the wealthy! And it displaced local spending. And it was headed by political appointees - no surprise there. In contrast, though, Clinton's FEMA head James Witt was a construction company owner, then an elected judge, then tapped to be director of Arkansas Office of Emergency Services by then-gov. Clinton, then FEMA head, then made cabinet member (because people liked getting money from FEMA, so it seemed like a government program that "works") seems to have been competent though prodigal.
FEMA, like many federal "solutions", displaces local problem-solving by absorbing resources to itself, denying resources and authority to others (taxpayers, local and state government), claiming to be the dependable solution of last resort, failing to deliver, and then exerting arbitrary regulatory power to protect itself from criticism, blame, and liability, and using its failure as proof of its lack of power and funding. Of course they claim to be underfunded - is there a single agency which doesn't? And of course advocates repeat this claim - especially for an agency whose task is to respond to disaster and whose proactive mission is to mitigate risk: there will never be a 0 risk situation, so they will always claim FEMA is underfunded.
A hurricane is a great big problem. If Hayek is right, lots of people working on small pieces of the puzzle will solve it more efficiently than a central authority. From that standpoint, FEMA is an idiotic idea. On the other hand, lots of people working the puzzle without coordination are likely to duplicate effort and overlook some problems. In a market, the price mechanism solves this coordination problem, but there is no price mechanism here.
Let me suggest this, though. I know that some insurance companies offer kidnapping insurance for South-bound travellers. I also know that some search and rescue operations are starting to charge wayward hikers for their services, and you can get rescue insurance. Is anyone providing disaster insurance that includes rescue attempts?
Knowing I have insurance, I may want to stay inside the evacuation area. That creates a moral hazard problem that they may be able to solve by requiring that you follow the instructions of authorities. Then there is the problem that I may be with a lot of other people who want aid or rescue. On first glance, I think that they should rescue the others, too, in the interest of marketing themselves. On the other hand, that may lead to free riding. So maybe you present bills to everyone and sue them according to the likelihood of collecting a settlement (in other words, poor people get a free one).
Conceptually, I don't think this is much different than bounty hunting. I buy insurance; maybe I buy a lifetime policy at $1/month (especially if I live in San Francisco), or maybe I pony up $1000 at the beginning of hurricane season for term insurance if I live on the Gulf Coast. They equip me with a transmitter. When a hurricane is predicted to hit my area, or when an earthquake hits, they fly in immediately after the storm passes and look for me and all of their other customers. Now multiply this by thousands of insurees and insurers. Exit FEMA.
UPDATE: Don't know why I hadn't thought of this earlier, seeing as how I was on the verge of it. There's no need for the insurance company to come looking: they need only put out a bounty on the insured, and professional bounty hunters will come looking. Who do you think is more motivated to find you, a deputy at $50k per year, or Dog at $50k per head?
Taking these accounts into view:
- By way of MarginalRevolution, the Washington Times reports that Walmart had 45 trucks full of food and water before Katrina made landfall, "$20 million in cash donations, 1,500 truckloads of free merchandise, food for 100,000 meals and the promise of a job for every one of its displaced workers," and "mini-Wal-Marts in storm-ravaged areas, handing out clothing, diapers, baby wipes, toothbrushes and food. With police escorts, it delivered two truckloads of ice and water into New Orleans. It is shipping 150 Internet-ready computers to shelters caring for evacuees." Why weren't these guys in charge instead of a failed horse association chief?
- There is this story about Canadian Frank Stronach from Kevin Drum.
"This improbable dream involves airlifting evacuees from the devastation of New Orleans to the pampered world of Palm Beach, Fla. -- a vision that involves rich American whites from gated communities opening up to desperately poor American blacks and even includes the construction of a new mobile-home community in Louisiana for more than 300 victims of hurricane Katrina.
"And so far, he's pulling it off."
- Finally, by way of Crooked Timber, we have this story about Hyatt.
"A convoy of food and supplies provided by Hyatt hotels in Atlanta and Houston arrived at Hyatt Regency New Orleans on Wednesday of this week."
There is, however, one off-base comment at CT that claims they are underfunding FEMA in order to undermine it in order to shut it down. How does underfunding lead to bad decision-making such as this? Or turning back the Red Cross. Or the Democratic Congressman's story I heard on NPR about how he couldn't get through with water and Florida Troopers? Or the local government's failure to use buses? Or turning down use of Chicago fire and rescue? It's not like people don't know about these decisions. The problem wasn't with underfunding, it was with poor management at every level from federal to ward.
In fairness, FEMA had become an entitlement program ... for the wealthy! And it displaced local spending. And it was headed by political appointees - no surprise there. In contrast, though, Clinton's FEMA head James Witt was a construction company owner, then an elected judge, then tapped to be director of Arkansas Office of Emergency Services by then-gov. Clinton, then FEMA head, then made cabinet member (because people liked getting money from FEMA, so it seemed like a government program that "works") seems to have been competent though prodigal.
FEMA, like many federal "solutions", displaces local problem-solving by absorbing resources to itself, denying resources and authority to others (taxpayers, local and state government), claiming to be the dependable solution of last resort, failing to deliver, and then exerting arbitrary regulatory power to protect itself from criticism, blame, and liability, and using its failure as proof of its lack of power and funding. Of course they claim to be underfunded - is there a single agency which doesn't? And of course advocates repeat this claim - especially for an agency whose task is to respond to disaster and whose proactive mission is to mitigate risk: there will never be a 0 risk situation, so they will always claim FEMA is underfunded.
A hurricane is a great big problem. If Hayek is right, lots of people working on small pieces of the puzzle will solve it more efficiently than a central authority. From that standpoint, FEMA is an idiotic idea. On the other hand, lots of people working the puzzle without coordination are likely to duplicate effort and overlook some problems. In a market, the price mechanism solves this coordination problem, but there is no price mechanism here.
Let me suggest this, though. I know that some insurance companies offer kidnapping insurance for South-bound travellers. I also know that some search and rescue operations are starting to charge wayward hikers for their services, and you can get rescue insurance. Is anyone providing disaster insurance that includes rescue attempts?
Knowing I have insurance, I may want to stay inside the evacuation area. That creates a moral hazard problem that they may be able to solve by requiring that you follow the instructions of authorities. Then there is the problem that I may be with a lot of other people who want aid or rescue. On first glance, I think that they should rescue the others, too, in the interest of marketing themselves. On the other hand, that may lead to free riding. So maybe you present bills to everyone and sue them according to the likelihood of collecting a settlement (in other words, poor people get a free one).
Conceptually, I don't think this is much different than bounty hunting. I buy insurance; maybe I buy a lifetime policy at $1/month (especially if I live in San Francisco), or maybe I pony up $1000 at the beginning of hurricane season for term insurance if I live on the Gulf Coast. They equip me with a transmitter. When a hurricane is predicted to hit my area, or when an earthquake hits, they fly in immediately after the storm passes and look for me and all of their other customers. Now multiply this by thousands of insurees and insurers. Exit FEMA.
UPDATE: Don't know why I hadn't thought of this earlier, seeing as how I was on the verge of it. There's no need for the insurance company to come looking: they need only put out a bounty on the insured, and professional bounty hunters will come looking. Who do you think is more motivated to find you, a deputy at $50k per year, or Dog at $50k per head?
Labels: decentralization
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