Wednesday, October 31, 2012

Steve Horwitz on Wal-Mart During Disasters

On Facebook, Steve posts a great video reaching back to our experience with Katrina elaborating on the role that the private sector plays in disaster relief.

The advantages of the private sector over the public in disaster are the same that they are in normal times: the ability to make use of decentralized knowledge. Most of the critique of FEMA is quite good. Steve does make some naive assumptions about the incentives of FEMA officials - assumptions that he does not make about Wal-Mart and which economists usually criticize when they are made about private actors. But overall the point about the advantages of Wal-Mart over FEMA are very well made. He also goes over how why the Coast Guard performs well when FEMA doesn't, which helps to get past this idea that it's just a public vs. private sector thing.

The conclusion is very similar to Obama's statements prior to Sandy: listen to the people in your communities. They are the best positioned to handle these problems.


  1. Have you checked out the work of Dr. Emily Chamlee-Wright on Huricane Katrina and the economic recovery?

    1. I haven't read it in detail or anything, but yes I'm familiar with the Katrina project at Mercatus. Lots of very good work going on there with it.

      It's very nice - there's plenty of work on what the government did wrong. There's less work on what the private sector did right, which is why it's great to have that contribution.


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