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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: microhoogle! who wrote (41330)	11/17/2005 2:08:29 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

How the Market Might Have Handled Katrina [some snips] FEMA's response to the disaster was the epitome of government behavior: the State's primary objective is always to establish its own control, and then as an afterthought it may deign to help people (albeit in a bureaucratic and counterproductive fashion). To understand how reasonably well-intentioned government employees could have made the horrible decisions outlined above, let's consider the situation they faced. They obviously didn't have a fully specified (let alone useful!) contingency plan to which they could refer; since they had no idea where, say, 500 bottles of water should be delivered, is it so surprising that they so often said, "Thanks for the offer, but hold off on shipping it here until we get back to you"? The full complexity of the problem becomes apparent when we consider that some offers should have been refused. For example, suppose a group of well-meaning college age women wanted to go door to door handing out batteries in a neighborhood that was teeming with looters, sewer water, and downed power lines. Depending on the specifics, it is entirely possible that the "right" thing (and for the moment we'll have to be vague about the criteria of goodness here) would be to politely refuse their offer. Those familiar with Austrian economics will immediately recognize the similarity between FEMA's woes and those of a central economic planner. As Ludwig von Mises famously demonstrated, socialist economy is simply impossible. Contrary to popular belief, it is in such situations where the dynamism and adaptability of the free market are needed most. There doesn't need to be anyone "in charge" of disaster relief, just as there doesn't need to be anyone in charge of computer production or tuna fish. In a truly free market, private relief agencies would still exist. They would solicit donations and use the funds to help in ways they deemed most important. The crucial difference between private organizations and FEMA, however, is that the former would have to engage in voluntary activities. In particular, they couldn't prevent others from trying rival strategies for assisting the victims. Thus, although individuals would still make mistakes (everyone is fallible), the overall relief effort would be far more effective, because competing agencies would quickly make such mistakes obvious. CONCLUSION As in all other areas, the free market is superior to monopoly governments when it comes to disaster relief. Once we recognize that it is not prices per se but rather private property (with its associated voluntary exchanges) that undergirds the commercial success of the market, it is easy to see how private relief efforts could have helped Katrina victims far more than FEMA did. mises.org