The public choice economics of crisis management

Why don’t governments handle all crises well?  Read Brad DeLong’s catalog of charges on Katrina.  I can think of a few systematic reasons for institutional failure:

1. The event is often small-probability in nature.

2. The event has very negative consequences, and we don’t have optimal punishments for those who get it wrong.

3. Many crisis-related events and required decisions happen quickly in immediate sequence.  First, it is hard to get the decisions right, second it is even harder to look good, given some inevitable mistakes.

4. Media scrutiny is intense, and voters care about the issue.  This encourages ex post overreactions and overinvestments in symbolic fixes, especially when combined with #1.

5. A crisis is, by definition, large.  This puts federalism, whatever its other merits, at a disadvantage.  No one is sure who is responsible for what, or how a chain of command should operate.

All of these seem to have operated in New Orleans, plus they were combined with one of our worst-functioning local governments and an administration especially weak on the issue of accountability.  My colleague Roger Congleton has a paper on the public choice of crisis management.  This is an underexplored topic, so feel free to suggest other readings in the comments.


Tyler, these points are true for Wal-Mart also, so why is its reponse rapid
and efficient, in contrast to the slow and bumbling one of the State?
The reason has nothing to do with high vs. low probablility events, etc.
It's because Wal-Mart is a profit-seeking business with paying customers who it
must satisfy with "everyday low prices." The government is a bureaucracy,
answerable not to customers who can go across the street to a competitor
in 30 seconds and to shareholders who can sell at the click of a mouse, but to
voters, who can vote only every few years and to taxpayers who can only
scream and hollar at the government.
Wal-Mart is a lean, mean logistics machine, and wrote the book on productivity.
The government is a ... well, never mind.
One book, Rothbard's "Power and Market," is better than a ream of weblogs
and a shelf of public choice journals for understanding the economics of Katrina.

"FEMA was better when it was bigger. Explain that?"
Chris, when was FEMA bigger? Why is there a question mark after your second sentence?

Government failed at all levels, but FEMA failed more pervasively and intentionally. Consider this
†¢ FEMA refuses Amtrak's help in evacuations
†¢ FEMA turns away experienced firefighters
†¢ FEMA turns back Wal-Mart supply trucks
†¢ FEMA prevents Coast Guard from delivering diesel fuel
†¢ FEMA blocks 500-boat citizen flotilla from Lafayette delivering aid
Maybe some of this is just jealousy- trying to keep the amateurs away, but consider
this from Craig’s List:
September 4, 2005 -- Reports continue that communications in and around New Orleans are being purposely jammed (and severed) by the US government (see Sep. 2 article below). The jamming is having an adverse impact on emergency, disaster recovery, and news media communications. The jamming is even affecting police radio frequencies in Jefferson Parish, according to an Australian news report. The President of Jefferson Parish Aaron Broussard told Meet the Press today that FEMA cut his parish's emergency communications lines and he had to have his sheriff restore the severed lines and post armed deputies to ensure that FEMA did not try to cut the communications lines again. Broussard's statement: "Yesterday--yesterday--FEMA comes in and cuts all of our emergency communication lines. They cut them without notice. Our sheriff, Harry Lee, goes back in, he reconnects the line. He posts armed guards on our line and says, 'No one is getting near these lines.'"

This is not from unnamed sources. Aaron Broussard and Harry lee are alive and should be able to substantiate their allegations. If they can’t, maybe they should be fined or punished. Assuming that they can, a special prosecutor needs to be named- there is no reason for FEMA to order disruption of communications and its employees should recognize such orders as illegal and immoral. What about FEMA directing contributions to Operation Blessing- Pat Robertson’s corrupt entity? This sounds like graft to me.

Saying that FEMA people acted in a criminal manner does absolve the city and state governments, which screwed up in multiple ways. Everybody acted as if long term planning is an oxymoron. Bremer, Brown and Rumsfeld are among the most incompetent and corrupt managers in history. Rumsfeld seems to be smart but carried away by ideology- the other two shouldn’t manage anything bigger than a wastebasket.

I was on my college's disaster management team as an undergrad.

The team of us were willing to give up a few Saturdays a month to train any number of scenarios, to spend our free time combing maps and prowling campus for valves and shutoffs and hazards. We became disciplined and effective.

The administration made it clear that we could be the instant response because we'd be first on the scene, but they'd take over as soon as they arrived because, you know, liability, adults are clearly more qualified that teenagers, blah blah blah whatever.

The administration was not willing to sacrifice several Saturdays a month to training. They were willing to train a few times a year. They had jobs and families and lives.

We had a face-off of sorts, once. We and the administration teams gathered to face the same scenario under the same time pressure and present our strategies afterward. Our group, running at half-strength due to schedule conflicts, must have had six pages on the easel filled to their one, and thirty minutes explanation to their five.


* Disaster planning isn't rocket science. Ordinary people can be trained to do it, to anticipate problems, to perform under pressure.

* But they have to be trained. This stuff isn't obvious. Working as a team isn't obvious.

* By and large, no one in government is motivated to put in the training required. They all have day jobs and everything in their day job has a higher level of urgency than planning for a disaster that, frankly, may never happen. (My southern California college did not have an earthquake to speak of while I was there, and hasn't since, though some fires came close.)

* The people who are going to be qualified are the people who are obsessive enough to make this their hobby. These people may be in government, but probably won't be; they'll probably be ordinary citizens who think this sort of thing sounds like fun.

* Because they are not in the government, government won't trust them to run things. Pick your reason: they'r not accountable to the voters. The liability is weird. Only people in the government are real grown-ups.

Therefore, structurally, good disaster planning and management won't happen. It might happen for personnel reasons -- you happen to have a leader who is driven about disaster response and a critical mass of people who think it is important enough to supercede more short-term things on their to-do list. And you can make it happen by outsourcing to people who respond to a significant number of disasters such that it's always on their radar (thus FEMA, the military branches, the Red Cross, etc.), but those people have to be properly led and supported which seems, in general, not to have happened in this case.

Russel Sobel and Tom Garrett have a paper in Economic Inquiry:

Thomas A. Garrett and Russell S. Sobel. “The Political Economy of FEMA Disaster Payments.†
Economic Inquiry 41, No. 3 (July 2003): 496-509.

Nice nice. A lot of useful here. Such disscussions make our surfing not so useless
Thanks for all.

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