Friday, September 02, 2005

A libertarian (different) look at Katrina

Posted by Craig Westover | 8:18 AM |  

Taking the high road for the most part, conservatives have been covering and laying against the ropes as the mainstream media lashes out at the failures of the Bush administration in handling the relief efforts in New Orleans. There is little doubt that conservatives, in my humble opinion with some justification, will be lashing back at the political left and a good portion of the mainstream media for exploiting a national disaster for political gain.

The irony, however, is as thick as the mud-clogged waters in the streets of the Big Easy. The disaster in New Orleans is a massive federal government failure, but it has nothing to do with the competency or lack their of from the Bush administration. Ironically, it is a failure of the massive bureaucracy that the left has built and the right has enabled. The left continues to extol its virtues while the right decrys big government and continues to fund and expand it.
Mother Nature can be cruel, but even at her worst, she is no match for government, [writes Llewellyn H. Rockwell, Jr. in an excellent piece posted on the Ludwig von Mises Institute web site]. It was the glorified public sector, the one we are always told is protecting us, that is responsible for this. And though our public servants and a sycophantic media will do their darn best to present this calamity as an act of nature, it was not and is not. Katrina came and went with far less damage than anyone expected. It was the failure of the public infrastructure and the response to it that brought down civilization.
He notes that the levees that failed, owned and maintained by the Army Corps of Engineers, were originally constructed in 1718, but “who knew that a direct hit by a hurracane would cause them to break?"
Many people, it turns out. Ivor van Heerden of Louisiana State University, reports Newsday, "who has developed flooding models for New Orleans, was among those issuing dire predictions as Katrina approached, warnings that turned out to be grimly accurate. He predicted that floodwaters would overcome the levee system, fill the low-lying areas of the city and then remain trapped there well after the storm passed — creating a giant, stagnant pool contaminated with debris, sewage and other hazardous materials."

He is hardly some lone nut. National Geographic ran a large article on the topic last year that begins with a war-of-the-worlds scenario and reads precisely like this week's news from New Orleans. It is the Army Corps of Engineers that has been responsible for the dwindling of the coastline that has required the levees to be constantly reinforced with higher walls. But one problem: no one bothered to do this since 1965.
In 1965 George Bush was still partying at Yale and, relying on the mainstream media, plotting how to get into the Texas Air National Guard, so let’s put the political sniping to bed. There are more important issues here, not the least of which is the false sense of security provided by the image of a benevolent and vigilant government. From Newsday--
Despite warnings from experts, the levees may also have contributed to an unwarranted sense of security among residents. Only 34 percent of respondents in a University of New Orleans survey earlier this year said they would definitely leave home if evacuation orders were issued ahead of an approaching Category 3 hurricane.
The politically motivated criticism of the left and as Rockwell notes, “the ever-stupid right” defense that Bush is actually a big and compassionate spender who cares about infrastructure, while demanding that people recognize his greatness, along with all the other pieties that have become staples of modern "conservatism" don’t get to the root of the problem.
The problem here is public ownership itself. It has encouraged people to adopt a negligent attitude toward even such obvious risks. Private developers and owners, in contrast, demand to know every possible scenario as a way to protect their property. But public owners have no real stake in the outcome and lack the economic capacity to calibrate resource allocation to risk assessment. In other words, the government manages without responsibility or competence.
Rockwell then makes the radical case for privatization of the nation’s infrastructure. Not content at that, he goes on to say that in time of crisis, “price gouging” should not only be permitted, but encouraged.
The outrageous insistence that no one be permitted to "gouge" only creates shortages in critically important goods and services when they are needed the most. It is at times of extreme need that prices most need to be free to change so that consumers and producers can have an idea of what is needed and what is in demand. Absent those signals, people do not know what to conserve and what to produce.

Bush was on national television declaring that the feds would have zero tolerance toward gouging, which is another way of saying zero tolerance toward markets. If New Orleans stands any chance of coming back, it will only be because private enterprise does the rebuilding, one commercial venture at a time. Bush's kind of talk guarantees a future of mire and muck, the remote possibility of prosperity and peace sacrificed on the altar of interventionism.

. . . . Being a government official gives you no special insight into how to best manage a crisis. Indeed the public sector, with all its guns and mandates and arrogance, cannot and will not protect us from life's contingencies. It used to be said that infrastructure was too important to be left to the uncertainties of markets. But if it's certainty that we are after, there is a new certainty that has emerged in American life: in a crisis, the government will make matters worse and worse until it wrecks your life and all that makes it worth living.
Further interesting reading --

Jeffery Tucker of the Ludwig von Mises Institute has spotted what may be the first example of the “broken window fallacy” in a New York Times/International Herald Tribuine article on the economic impact of Katrina. The article claims that the hurricane (actually the flooding caused by bad public infrastructure) will be good for the economy.
But economists point out that although Katrina has destroyed a lot of accumulated wealth, it ultimately will probably have a positive effect on growth data over the next few months as resources are channeled into rebuilding. "Longer term, in the wake of a number of hurricanes there is actually an increase in measured output that even shows up at the national level, because there is a whole bunch of rebuilding activity," said Stephen P.A. Brown, director of energy economics at the Federal Reserve Bank of Dallas.
More on “price gouging” from the von Mises Institute --

Price Gouging Saves Lives
by David Brown.

In a Crisis, Markets More than Ever,
by Llewellyn H. Rockwell, Jr.

Oil Prices Again,
by Murray Rothbard

Creating Economic Crimes,
by William Anderson

From the Cato Institute:

Let ’Em Gouge: A Defense of Price Gouging
by Jerry Taylor & Peter VanDoren

Update: King at SCSU writes in the same vein --
Count me among the multitudes that hopes President Bush misspoke when he said this.
"I think there ought to be zero tolerance of people breaking the law during an emergency such as this, whether it be looting, or price-gouging at the gasoline pump or taking advantage or charitable giving, or insurance fraud," Bush said in an interview on ABC's "Good Morning America."