Another Central Planning Disaster

The gist of Hurricane Katrina related comments I've heard from many people goes something like this:

Government really messed up the relief effort for Katrina, but let's keep putting our faith in government to lead the relief efforts for future natural disasters.

To be sure, it's never put quite that way. There's always some caveat that dilutes the blatant absurdity of the argument. For example, a common version of the statement is that the government led by Bush failed, but a government led by a Democrat would, of course, have performed flawlessly. And of course, Republicans, by and large, take the other side - if it weren't for those corrupt Democrats in office in New Orleans and Louisiana, there wouldn't have been any problems with the relief effort.

Our elected leaders aren't the ones who perform the actual work of the relief effort. And the work for the relief effort isn't directly performed by those people that our elected leaders appoint either. The people who actually provide the relief services are bureaucrats and civil servants, and these folks remain the same no matter who is elected (and they're usually not the smartest or most motivated people you've ever encountered). Thus, the relief effort we saw for Katrina (at least at the federal level) is likely to be about what we'll see for other comparable disasters in the future. Indeed, looking back, the speed of the federal response to Katrina was very similar to that for previous storms.

Over the last few decades, most people have come to realize that the concept of central planning is disastrous for an economic system because central authorities simply don't have access to and/or the capability to process the overwhelmingly huge amount of localized information distributed throughout the economic system. Put more simply, the central authorities don't and can't have a clue about what's going on almost everywhere and, as a result, can't make very good decisions regarding economic policy.

This same informational deficit applies to centrally planned disaster relief. Some random bureaucrat in D.C. has no idea what the bridges in N.O. look like, their status, or even how to get to them. They could use MapQuest like you or me, but I can't count how many times MapQuest's directions have led me to a dead end. And there were a lot of dead ends in New Orleans after Katrina struck that weren't previously on the map. Disaster relief efforts must be led locals because outsiders are at a huge informational disadvantage. A well timed, well executed federal led response is never going to happen. The local citizenry and secondarily, local officials, must lead the way.

There's an immediate, but superficial, rebuttal to this argument that disaster relief should be led by locals: in the case of Katrina they didn't do such a great job either. Both the planning and actions preceding the storm and the actions after Katrina struck were far from perfect.

Let's first consider the situation prior to the storm. For sure, lots of things could have been done differently. Lots more money could have been spent, for example, on the levee system. The citizens themselves could have been better prepared (by stocking food and water).

But let's put things in perspective. Katrina was nearly a worst case storm - certainly the worst, all things considered, in decades. Yet, less than 1,000 people died. On average, each year, some number of tens of people die due to hurricanes. Compare that impact from hurricanes to that wonderfully dangerous activity nearly all of us do more or less every day - driving. On average, each year, some number of tens of thousands of people die in automobile accidents. Nearly one thousand times as many people die in car accidents as hurricanes. Thinking that the planning and actions for hurricanes and the associated relief effort should be a top priority relative to everything else exhibits a deep innumeracy.

In other words, it might have actually been pretty darn rational not to have spent billions and billions of dollars ahead of time. Not that many people died, everyone else will recover, many, many, many people are actually better off now (making new and better lives elsewhere), and we can always rebuild New Orleans - or not, the choice is ours.

As another example, consider this. It is possible for a category 5 tornado to strike anywhere. Granted, it's exceedingly unlikely outside of the great plains, but still possible. A huge (greater than 9.0) earthquake can also strike anywhere. It is theoretically possible to build every new building and structure and retrofit every old one to withstand these natural disasters. But, this isn't done and there are no plans to do so. That's because it's prohibitively expensive to do so. It simply makes more sense to roll the dice, take our chances, and recover as best we can from those disasters that do strike.

What I'm saying is that, except for those few hundred people who rolled the dice and lost their lives because of Katrina, the planning and actions before the storm (or lack thereof) were perfectly rational. It simply made more sense to spend the money and effort elsewhere.