In government we trust

By Walter E. Williams

Jan 25, 2006

What lessons should we have learned from last summer's deadly and destructive hurricanes? The primary lesson is that we shouldn't have much faith in a federal bureaucracy like the Federal Emergency Management Agency (FEMA). They amply demonstrated their incompetence, but what's our response? We'll give them more money and more authority. That's not smart.

The FEMA fiasco is discussed in several articles in the December 2005 issue of The Freeman: Ideas on Liberty magazine, published by the Foundation for Economic Education, the nation's first free market think tank (fee.org). Hillsdale College professor of economics Robert Murphy points to some of FEMA's stupidity in response to Hurricane Katrina, which includes "delaying firefighters two days in Atlanta hotels to receive sexual-harassment training and watch videos on the history of FEMA while people were dying in New Orleans."

By contrast, private firms like Wal-Mart, Sam's Club and Home Depot had trucks on the road immediately after the hurricane. Stores even gave away items like chain saws and boots for rescue workers, sheets and clothes for shelters, and water and ice for the public. Wal-Mart was so efficient that there was talk among some Louisiana officials of letting Wal-Mart take over FEMA's job and a suggestion that Wal-Mart CEO Lee Scott run FEMA. Freeman editor Sheldon Richman says the latter suggestion misses a very important point. Wal-Mart was effective because it was not a government agency. If Mr. Scott were in charge of FEMA, he wouldn't do much better than its former director, Michael Brown. Government cannot achieve the efficiencies of a business. Trying to get government to be as efficient as business is as hopeless as trying to teach cats to bark and dogs to meow.

Dwight Lee, University of Georgia professor, penned an article with the instructive title "Mitigating Disaster: Abolish FEMA and Let Gas Prices Rise." I've written several columns about the surge in gasoline prices and criticized the "price-gouging" demagoguery. Professor Lee has an insight that I overlooked. He asks whether it would have been a good idea, in the wake of supply disruptions of Hurricanes Katrina and Rita, for Americans to continue using gasoline as if there hadn't been those supply disruptions. After the hurricanes, more gas was suddenly needed to bring rescue personnel, evacuate the homeless, clear rubble and a host of other things to get the reconstruction efforts underway. If gas prices had remained what they were before the hurricanes, Americans would have continued using the same amount of gas. Professor Lee says, "The higher gas prices motivated tens of millions of drivers to conserve gasoline, allowing more to be available where it was badly needed." What's more, we didn't need a government edict; we voluntarily cut back on gasoline consumption.

Professor Lee explains that the waste, delays and incompetence are an inherent part of all federal programs and we'd be better off without FEMA. He gives many reasons why private or local disaster relief will produce a better outcome. However, Lee omits a question that I always ask when people assert that this or that government program is an absolute necessity. My question is, what did we do before? In 1871, a fire virtually destroyed Chicago. In 1900, a category 4 hurricane wiped out Galveston, Texas, and killed as many as 12,000 people. In 1906, an earthquake leveled San Francisco. Loss of life was estimated at nearly 3,000 people, and the damage estimated at the time was $400 million -- about $8 billion in today's dollars. After those massive disasters, each city recovered. I'd like to have an explanation, from those who'd argue that federal disaster relief and an agency like FEMA are the only ways to recover from a disaster, how these cities recovered.

Dr. Williams has served on the faculty of George Mason University in Fairfax, VA, as John M. Olin Distinguished Professor of Economics, since 1980.