Katrina and Socialist Central Planning
by Llewellyn H. Rockwell, Jr.
[Posted on Monday, October 10, 2005]
Watching the Capitol Hill hearings on what went wrong after Hurricane Katrina provided a glimpse of what it must have been like in the Politburo in the 1950s. The Soviet bureaucrats would gather with the party officials and factory managers to figure out why grain production was down or why shop shelves were empty or why the bread lines were ever longer and the quality ever worse.
They gathered under the conviction that they had a workable system that was being rendered unworkable because of the incompetence of certain key players in the chain of command. No one was permitted to say that the command system itself was the problem; this would too contrary to the prevailing political ethos. Instead, they had to place blame on someone, as if all problems could be reduced to issues of obedience. It was always a scramble. Whoever was finally said to be at fault faced certain ruin.
To be sure, there was plenty of blame to go around. With rats in a maze, there is a sense in which they are all responsible for not having found the exit. If those rats could also organize into a hierarchy of control and hold trials, it would surely produce quite a show with many victims. But at the end of the day, the rats would be no closer to getting out of the maze. And so it was in the US Congress: the hearings produced a great show with no results that will make a difference for our future.
The Soviet system had to fully unravel before it became permissible to state what it used to be a crime even to think: you can't manage an economy. You can make every demand, issue a million commands, exhaust every financial resource in the state's account, elevate some people and demote others, dress up in a military costume and make grand pronouncements from a glorified pedestal, cut off fingers, toes, and heads, but in the end, you can't make the economy perform in a way that serves the people unless you let market forces work.
Not just the Soviets had to learn this. Authoritarian regimes from the beginning of time have attempted to defy the laws of economics, step on the interests of the merchant class, control and redirect the wishes of consumers and entrepreneurs, bend and kick prices and wages this way and that, and inhibit trade in every way. But they cannot finally overpower the driving desire on the part of people to control their own fate and not be subject to the slavery that is collectivism of all colors, whether red, green, or brown.
Someday, the US managers of crises will have to realize this same point. But for now, they are like Soviet bureaucrats scrambling to make an unworkable system function, and creating a scene that is as farcical as it is tragic.
Consider first how the much-glorified Department of Homeland Security responded to the Katrina crisis. There is a mysterious missing day between the time the hurricane hit and the levees broke and flooded New Orleans. During this strange Monday, August 29 — a day in which there was a window of opportunity to prevent the meltdown of civilization — why didn't federal officials respond or even pretend to respond?
The head of the Department of Homeland Security, Michael Chertoff, said that he read in the Tuesday morning newspaper that, according to the headline, "New Orleans Dodged the Bullet." So, to his mind, there was nothing to do. This was his testimony. This is not exactly an awe-inspiring admission, but it speaks to a truth that few are willing to admit: government officials live normal lives. They do not partake of the mind of God. They get their news just like you and me. And they have far less information than the body of knowledge generated by the signaling process of the market economy and the private sector.
We might even say that they are in effect sub-normal in intelligence, because government officials stand outside of society, cut off from normal channels of information that the rest of us take for granted. They are isolated from markets and the regular pressures of life. They are not owners of what they control, and have no real stake in the value of their product. They are surrounded by some of the most peculiar people in the world, namely lifetime bureaucrats, power-mad politicians, and lobbyists on the make. This is their world and this is what they know.
Now, they enjoy the illusion of being better informed than the rest of us, so it would never occur to a high official to surf Google News to find out what is really going on. Thus was it apparently beyond the capacity of FEMA to find out that the National Weather Service had issued a flood warning soon after the hurricane hit. The National Weather Service in turn was only reporting what many private local media outlets were saying.
Certainly the municipal government of New Orleans got the message. It issued a warning to residents, and then all the officials packed up their stuff and headed to Baton Rouge. I suppose that this was the plan that the bureaucrats came up with after having received a $500,000 federal grant in 1997 to design a comprehensive plan for evacuation. Half a million dollars later, they agreed what the plan should be. Two words: let's go!
Now, we can learn from observing this. It is always the case that the government's first interest in a crisis is the protection of itself. The public interest is way down the list. Government employees have no ancient code that requires them to go down with the ship. The seafaring captain might feel disgrace if he lost his crew and passengers but returned safely to shore, but the government bureaucrat would see this as nothing but rational self-interest at work. From their point of view, public service is not a suicide pact.
If this is so, are we wise to expect government service at times of crisis? Well, here is where it gets complicated. They always promise that they will take care of us. On the day the Hurricane hit, for example, President Bush made the following announcement: "For those of you who are concerned about whether or not we're prepared to help, don't be. We are. We're in place. We've got equipment in place, supplies in place. And once the — once we're able to assess the damage, we'll be able to move in and help those good folks in the affected areas."
Well, given the calamity that followed, this statement by Bush might as well have been a Soviet propaganda poster about the glorious future of socialism.
If the only response by government were to turn and run, they could be accused of hypocrisy, but it would be better than the alternative of bad government that stayed to ruin the work that markets and private individuals do.
As the Hurricane approached, for example, Mr. Bush, along with nearly every office holder in the entire region, immediately announced that there would be no tolerance of so-called price gouging. What is and what is not gouging remain undefined by law, but there are still criminal penalties attached to doing it. If you raise your prices to the point where you attract a complaint, there is a good chance that you will be thrashed as a gouger.
And yet, we have to ask ourselves what the purpose of a price is. It is a signaling device that allows market players, including both producers and consumers, to adjust their economic behavior in light of supply and demand. If supply remains the same and demand rises, the price too will have to rise so the market can clear properly. Otherwise there will be shortages and surpluses that will prove to be a benefit to no one. William Anderson has called gouging rules a form of back-door price control, and he is right. They create victims, encourage economic dislocations, and foster black markets.
One might think that a Republican administration would understand this, but reflect on the fact that Iraq still has very strict price controls on gasoline, controls that were instituted by the US after Saddam was overthrown. Don't think for a minute that it is beyond the capacity of the Bush administration to do what the Nixon administration did, which was to believe that the laws of markets can be overridden by regulatory force.
Anti-gouging laws, to the extent they are obeyed, will create shortages. But in telling the sad tale of Katrina, I would like to begin not with a case of shortage, but with a strange case of surplus.
One week after the hurricane, FEMA ordered the Army Corps of Engineers to buy 211 million pounds of ice from IAP Worldwide Services of Florida. Trucking companies were notified of a grand opportunity since the government was paying the bills for delivery, and the dispatchers sent out the word. There is no space to explore the workings of IAP Worldwide, but I will observe that the company, which exists solely to get paid by your tax dollars as a federal contractor, has a new CEO who most recently held the position of vice president of national security programs for the notorious Kellogg Brown and Root. His name is David Swindle.
But back to the story of the ensuing chaos. One trucker picked up ice in Greenville, Pennsylvania, and was told to drive it to Carthage, Missouri. When he arrived in Carthage, he was told by a FEMA official to go to Montgomery, Alabama. After a day and a half sitting in Montgomery, he was told to go to Camp Shelby, Mississippi, after which he was sent to Selma, Alabama, after which he was sent to Emporia, Virginia, where he stayed for a week burning fuel, until he was sent to North Carolina, and finally to Fremont, Nebraska, where he dropped the ice in a government storage unit. That's 4,000 miles over two weeks.
This was hardly the only case.
The news media chronicled the stories of these truckers. A truck full of ice was sent from Dubuque, Iowa, to Meridian, Mississippi, then to Barksdale Base in Louisiana, then to Columbia, South Carolina, and finally to Cumberland, Maryland, where he waited for six days before being sent to Bettendorf, Iowa, where the ice was unloaded. Another truck was sent from Wisconsin to Missouri to Selma to Memphis, before finally dropping off the ice in a storage unit.
Lew's collected speeches: $25
Do you know how many drivers were enlisted in this incredible charade? 4,000. No one knows for sure how much ice ever got through or how much good it did, if any.
In one of the first incidents reported of what was to be two weeks of catastrophe, a group of volunteer fire fighters from Houston came to New Orleans wanting to help. They were told to wait. They waited 48 hours and were ordered to go back. A group of doctors from Maryland tried to get in but FEMA sent them on to the Red Cross, which said it could do nothing without the approval of federal health officials.
After the New Orleans mayor made a call for firefighters to come help, hundreds of volunteers were sent to Atlanta, where they were put in a conference room at the Sheraton hotel and subjected to seminars on sexual harassment and other bureaucratic matters. They were then told that their job would be to distribute flyers with a message on it: call 1-800-621-FEMA. Many or even most of these well-trained people caught on to the racket and left town. Those who stuck it out and headed for Louisiana were aghast that their first assignment was not to fight fires, which had been raging for a week, but to escort President Bush on his TV-laden tour of the area.
You can see all the photos on WhiteHouse.gov.
In fact, FEMA refused offers of help of all sorts, mainly because of issues of control. FEMA declined helped from Amtrak in evacuating people from New Orleans. The Chicago municipal government was trying to send volunteers from the fire department, police department, and hospitals. FEMA said no. The same happened to New Mexico, whose governor volunteered equipment and personnel.
FEMA prevented Wal-Mart from delivering three tank trucks of water, and the Coast Guard from delivering 1,000 gallons of diesel fuel. It even cut the communications lines for Jefferson Parish. The local sheriff ending up posting armed guards to protect the restored lines from FEMA — an interesting model that many communities around the country would do well to imitate in the future.
A chief medical officer for a large ambulance company says he was unable to find helicopters to pick up dying patients at the Superdome. He walked outside and discovered that two helicopters, donated by an oil services company, had been ordered to wait in the parking lot. Morticians attempted to donate their help. But FEMA said absolutely not, on grounds that they were not officially certified by FEMA to perform such services, so the bodies of the dead piled higher.
As for the National Guard, for days it would not allow reporters into the superdome where tens of thousands were trapped. People were hungry and thirsty, but the National Guard would not allow the Red Cross to deliver any food.
Here is the astounding statement from the spokesperson of the Red Cross: "The Homeland Security Department has requested and continues to request that the American Red Cross not come back into New Orleans… Right now access is controlled by the National Guard and local authorities…. We cannot get into New Orleans against their orders."
The Salvation Army attempted to rescue two of its own officers trapped in a building and on dialysis. They rented three boats for a rescue. But they were not allowed through, though to be fair the Salvation Army did not specifically name the government as at fault, but it did point out that all private efforts were running into similar kinds of obstacles, so the message was clear.
Meanwhile, the USS Bataan, a floating hospital for 600 patients, that had ridden out the storm, was still sitting empty by the third day, not permitted to do its job.
An astounding case of ineptness comes to us from the case of three Duke University students who drove to New Orleans to help but were turned away by the National Guard. They had seen the news and knew that they could help, and wondered why they should be pushed around by bureaucrats. Being college sophomores, they took a risk. They forged press credentials, with fake IDs and shirts and the works. They went back and adopted a haughty tone. The National Guard waved them through.
Then the students drove to the Convention Center. There they found thousands of sick, hungry, thirsty, and dying people in desperate need. They found a man who had welts all over his body. He was in a tree covered with fire ants as the waters rose, and there he stayed there being bitten repeatedly for up to 24 hours.
The boys picked him up along with three others and drove them to a Baton Rouge hospital. They made another trip there and back with more people before they began to become frightened of what the government might do to them. On one return trip, they observed 150 empty buses driving the other way — and they have a video to prove it.
One can only express astonishment at how the government treated the tens of thousands of people that it had herded like cattle into large public spaces. For reasons that are still unclear, the government couldn't get its act together on transporting them out even as the people themselves were forbidden to leave. Once the central planners decided to move all these people from the Superdome to the Astrodome, no means of transport arrived, even as aerial photos showed miles and miles of public buses available.
Indeed, the first bus to reach Houston was not driven or approved by the government. It was commandeered by 20-year-old named Jabbar Gibson, who drove it from the floods and picked up as many people as he could and drove all the way to Houston, a 13-hours drive! He beat the government's system by a day. Meanwhile, the tens of thousands of people who had been shoved into the Superdome on Sunday, before the floods came, were still suffering in that massive calamity by Friday and Saturday.
Perhaps the most astounding case of incompetence has received the least attention. It relates to a 500-boat flotilla stretching over 5 miles that left for New Orleans from Acadiana Mall in Lafayette. It involved 1,000 people who had hoped to rescue hospital patients and take them to safety. It consisted of private boaters, fishermen, hunters, and others who had spent their entire lives navigating the waterways of Louisiana.
Once this caravan arrived, they were turned away by the Department of Wildlife and Fisheries, now being run by FEMA. All five hundred boats were ordered out.
After pleading, some people were told that they could take the boats to a rescue operation launch site. They reported that at this site, there were 200 agents of the government standing around doing absolutely nothing even as people were dying in hospitals and thousands were desperate to get out. After three hours, even these few boats were told to go away.
Now, President Bush has been criticized for being out to lunch on all of this. Indeed, some staff members put together a DVD of the evening news coverage for him to watch on Air Force One, which was the only way they could get him to understand the depth of the crisis. The purpose of the action was not so much to help people, of course, but rather to stop the meltdown of the president's reputation.
In fact, by the time he actually arrived in Louisiana, food and medicine deliveries, such as they were, had to be halted on order of the White House, to make room for the presidential caravan.
Then there was the matter of the government's proposed cash gifts to the victims of Katrina. Most FEMA employees knew nothing about it when their phones and offices were mauled by people demanding their cash. FEMA's website registration for victims required Internet Explorer 6.0 and could not work with any other browser. Of course this is somewhat academic, since most of the victims had no computer access at all. But those who called the number were often told to go online to register. Most of the time, people couldn't get through on the phone or online.
In one particularly interesting detail, Katrina triggered the first use of the Department of Homeland Security's great accomplishment since it was created after 9-11: the National Response Plan, a 426-page central plan for dealing with a crisis on the level of the post-Katrina floods. Here is how the government describes it:
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