Wal-Mart, You ARE Doin’ a Heckuva Job!

by Don Boudreaux on August 26, 2011

in Civil Society, Complexity & Emergence, Dinner Table Economics, Wal-Mart

This report opens with a photo of the invisible hand rarin’ to go to work.  (Perhaps it’s too much to note the symbolism of the invisible hand being detained, if only for a while, by agents of the state.)  Note that Steve Horwitz (GMU ’88 or ’89 [Steve: remind me]) is quoted to good effect in this report.  (HT Craig Kohtz, who correctly notes that “this has The Price of Everything written all over it.”)

All of which raises the question: when you and your neighbors are homeless, hungry, and thirsty following a natural disaster, would you prefer to rely upon the devotion to public service that allegedly motivates FEMA workers, or to rely upon the devotion to their own self-interests that undoubtedly motivates executives, workers, and suppliers of private companies such as Wal-Mart and Home Depot?

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{ 135 comments }

purplefox August 26, 2011 at 12:02 pm

I hope that WalMart and Home Depot keep oppressing millions by *gasp* selling things those individuals need. Most of this oppression seems to happen on Friday and Saturday.

After Katrina, wasn’t WalMart one of the groups that was providing free water? (Of course, being greedy capitalists, they were only keeping people alive long enough to take their money…)

Bret August 26, 2011 at 12:05 pm

That’s subjective preference. Whether or not Wal-Mart, etc. objectively provide more material assistance following a natural disaster, one could easily prefer relying on FEMA, etc. In other words, while I would prefer to rely on Wal-Mart, there’s nothing wrong with those who would prefer to rely on the government (which is different, by the way, than saying those government agencies and services should exist in the first place).

Mikenshmirtz August 26, 2011 at 12:35 pm

“That’s subjective preference.”

Uhh… Is there such thing of an objective preference?

GP Hanner August 26, 2011 at 3:42 pm

Excellent point!

Vikram August 26, 2011 at 5:43 pm

Is there such thing of an objective preference?

Very well said Mikenshmirtz !!!!!!!

Gil August 27, 2011 at 1:09 am

Say what? A Libertarian would say that anyone who would prefer FEMA, a organisation based on theft and coercion, over a free-market entity is a scumbag.

kyle8 August 27, 2011 at 1:09 pm

and they would be correct

vidyohs August 27, 2011 at 11:04 am

“there’s nothing wrong with those who would prefer to rely on the government (which is different, “

Is there something wrong with people who want all chance and risk eliminated from their life? I think that is a question that deserves a lot more than just a fleeting thought.

Look at it this way, those who preferred to rely on government never packed up a wagon and headed west back when our nation was young, no sir, they stayed home where government offered some small measure of safety and order.

Did Christopher Columbus sail west in a ship built in government shipyards and did he do it with a crew of government employees?

I personally do think there is something wrong with those who prefer government to private enterprise, I think their personal courage and ambitions have been reduced or eliminated by dependence on the ideas, instructions, and benevolence of others.

God bless ‘em, at best we can hope they stay the fuck out of the way of those will get up off their ass, and do.

kyle8 August 27, 2011 at 1:10 pm

technically Columbus did indeed sail in government owned ships.

vidyohs August 27, 2011 at 4:43 pm

Technically you’re close to correct. The voyage was financed by a Queen; but putting financing into an enterprise is not quite the same as owning it.

Columbus was a free private individual, the ships were privately owned, and the crews were free private individuals.

You didn’t see the word owned in my comment.

Invisible Backhand August 28, 2011 at 6:25 pm

The Best Buy in Howell NJ was selling cases of Dasani water for $40.56 until its cover was blown

http://thechive.com/2011/08/27/not-cool-best-buy-1-hq-photo/

The free market in action…

carlsoane August 28, 2011 at 6:42 pm

At $40 a case, you’re going to scare off all but the most desperate buyers. Would it have been better for Best Buy to offer the water for $5.00 a case and have it be purchased by someone who just wanted to top up? Also, as soon as word got out that you could sell a case of water for $40, you’d magically start seeing plenty of pick up trucks full of bottled water.

Pom-Pom August 28, 2011 at 8:10 pm

And then the price would be driven back down some amount.

Franklin Harris August 29, 2011 at 8:46 pm

Who buys bottled water at Best Buy, the store where they mostly sell electronics, CDs, DVDs, and computers?

The Other Tim August 28, 2011 at 7:17 pm

If that “free market in action” jab was supposed to be sarcasm, you failed epically.

The water fairy does not magically provide bottled water in infinite quantities to retailers. If a retailer does not charge a high enough price to prevent people from overconsuming a limited resource, they will sell out, and then people coming to them for water, who might actually be suffering clinical dehydration, will not be able to buy from their now non-existant stock at any price.

But hey, it’s not as if we’re supposed to care about people dying of thirst or anything. The real tragedy in this story is that somewhere, somehow, a corporation is making money. And if the price of keeping them from making money is the deaths of a few children or seniors whose bodies can’t handle dehydration very well, well, they died for the sake of the revolution. Viva la proletariat.

GhengisKhak September 3, 2011 at 11:04 pm

The “free market in action” should raise prices in order to:
1) reduce waste/hoarding
2) put heavy pressure on water suppliers to increase supplies

These are both good things, and if left to function correctly would actually serve to get water into the area. Restricting price fluctuations is just one more example of a feel-good policy that has utterly disastrous results.

There is a good econtalk with Mike Munger about precisely this subject (water prices after a storm + price “gouging”):
http://www.econtalk.org/archives/2007/01/munger_on_price_1.html

Kevin L August 26, 2011 at 12:17 pm

“Since Katrina, the Federal Emergency Management Agency has begun studying ways to work with the private sector during emergencies. And the state of Florida has actually hired Bryan Koon, Walmart’s former emergency manager, to run its Division of Emergency Management.

“What I learned at Walmart helps me here to be able to make sure that we are putting those retailers in the best possible position to be successful in a situation like this,” Koon says.”

There goes another conservative state helping big business oppress the unfortunate.

Frank33328 August 26, 2011 at 12:34 pm

The skeptic in me would ask “Why are these stores willing to run the risk of holding inventory given that the upside of increased volume is capped by the restrictions of anti-gouging laws?” If the potential increase in demand is not accompanied by a price increase, why do stores move product BEFORE the emergency? Is the “potential” of increased volume the entire story here?

T Rich August 26, 2011 at 12:50 pm

Frank,
That is a good question to ask. I think that the answer is in self-interest (of the corporation). Perhaps the value to Wal-Mart lies not in the sale of water and supplies in higher volume or in higher prices and profits. However, I think that the value of articles titled along the lines of, “Wal-Mart You ARE Doin’ a Heckuva Job!” may be a major part of the equation.

I saw a ton of stories after Katrina saying how Wal-Mart, Home Depot, and the churches did a better job of mobilizing resources than did FEMA. That kind of public goodwill is the stuff of dreams for corporate public relations people.

Whenever I am skecptical, I look for the self interest. That approach hasn’t failed me yet.
T Rich

vikingvista August 26, 2011 at 8:42 pm

Look for the *mutual* self interest, and you’ve become a capitalist.

Richard Stands August 28, 2011 at 2:19 am

Cui Bono? Omnes.

kyle8 August 27, 2011 at 1:15 pm

With respect, the left believes that all corporate activity is motivated purely by greed despite much evidence to the contrary (such as companies giving out millions of dollars to non governmental charities, even those who act against their industry.)

Could the truth lie somewhere in between? Could it be that corporations are made up of individuals and those individuals might feel the necessity to act in a purely humanitarian way from time to time?

Dan J August 28, 2011 at 2:50 am

Look at any of the ‘green’ efforts. Pretty much PR stunts. Telethon checks is PR. Self interest guides the corps to do some of the ‘corporate responsibility’ that is preached about. No govt needed.

Krishnan August 26, 2011 at 2:08 pm

Re: Frank33328 – companies like WalMart want to remain in business for a long time – and they also know that how they are perceived by customers is important (never mind what politicians say). No matter what some radical may claim, the simple fact is that WalMart employs hundreds of thousands, sells almost half a TRILLION dollars worth of goods every year and in turn supports millions of businesses, people – and so I assume WalMart knows that people do remember … and will continue to shop there –

Reminds me of “Miracle on 34th Street” – the Santa Claus that was initially fired for sending customers to Gimbels – but Macy recognizing the value of public good will – Yes, WalMart is in business to make money for their shareholders – but while doing that they provide the kind of service/support/goods that a Government with TRILLIONS of dollars and the ability to print money cannot.

I’d say that even as WalMart excels, there will be a few who will be furious at WalMart for being efficient and doing what Government cannot do.

rpl August 26, 2011 at 2:33 pm

Interestingly enough, this came up on this week’s Econ Talk (in the context of snack foods and superbowl sunday). The short answer is that even at regular prices, manufacturers and retailers hate to miss out on a potential sale. Moreover, a company like WalMart can afford to carry the inventory and to shuffle their logistics around to meet the brief surge in demand. I would expect the anti-gouging laws to be more constraining for small chain and independent retailers, and, of course, they render informal distribution networks totally unfeasible.

Hmm. In light of that last observation, I wonder if there’s a bootleggers and baptists relationship between big-box chains and anti-gouging laws.

John Dewey August 26, 2011 at 2:50 pm

Frank33328: ““Why are these stores willing to run the risk of holding inventory given that the upside of increased volume is capped by the restrictions of anti-gouging laws?”

I don’t think the risk of holding inventory is very large. As the article points out, Walmart has lots of data and sophisticated predictive models. They know what items will be sold immediately after the storm. Furthermore, the shelf life of the expanded inventory is probably very long.

Frank33328: “Is the “potential” of increased volume the entire story here?”

I think that’s a minor consideration. As T Rich pointed out, the good publicity is worth millions. But I believe another factor is the morale of Walmart’s employees. Walmart employees will be proud their company is leading the effort to get the region back on its feet. Don’t ever underestimate the impact of company pride and high morale on worker productivity. I saw it firsthand for a couple of decades at FedEx.

Frank33328 August 26, 2011 at 5:24 pm

I appreciate all the answers, but the skeptic’s statement would then be “You see, the evidence is that anti-gouging laws do NOT limit supplies to consumers. Suppliers are still motivated by:
how they are perceived by customers – Krishnan
hate to miss out on a potential sale – rpl
good publicity and company pride and high morale – John Dewey

There’s some kind of mixed message in this.

John Dewey August 26, 2011 at 6:06 pm

Frank33328: ““You see, the evidence is that anti-gouging laws do NOT limit supplies to consumers.”

That’s a strong conclusion to draw from a single data point. What motivates actions by the largest retail company in the world, and the largest private employer in the U.S., tells you very little about how the local mom-and-pop gasoline station reacts to price-gouging laws.

Finding one exception to a general statement does not disprove that general statement, does it?

Frank33328 August 26, 2011 at 6:38 pm

First, I am on your side and fully against anti-gouging laws. Further I do believe that these laws DO cause shortages for consumers. Which was the point of my original question: why does it “appear” that private companies are still motivated to drive additional demand in the PRELUDE of a disaster? Because this would contradict my understanding (bias?). BTW, the original article named Home Depot and others. as well as Walmart. So as a general case it is not a single data point.

vikingvista August 26, 2011 at 8:48 pm

Anti-gauging laws are effectively price ceilings. If market prices never rise to that level, say because a supplier had the foresight to anticipate a demand spike, then the price ceiling never kicks in.

Kirby August 26, 2011 at 6:55 pm

easy, they sell like hotcakes. Selling 100 is better than selling 50 unless you’re losing money on a sale.

jjoxman August 26, 2011 at 1:07 pm

I notice the article said FEMA is looking for ways to partner with Wal-Mart, Home Depot, etc.

Here’s my advice to FEMA: Get out of the way!

Krishnan August 26, 2011 at 2:08 pm

Re: jjoxman – Close down FEMA and divert ALL of those funds to WalMart/Sams and HomeDepot – We will get a bigger bang for our own bucks

Methinks1776 August 26, 2011 at 9:07 pm

Best kind of partnership for FEMA is silent.

SaulOhio August 26, 2011 at 1:18 pm

Oh, but if they are doing it out of greedy self-interest, its just NOT RIGHT! Its not MORAL! It doesn’t matter if their efforts end up digging people out of the rubble faster, returning them to a semblance of normal life, even saving lives! Its just immoral, and they have to be STOPPED!

Krishnan August 26, 2011 at 2:10 pm

Re: SaulOhio – Watch for some congressman to call for an investigation of how WalMart for making a profit …

Manfred August 26, 2011 at 1:25 pm

I love Walmart. Right after Katrina and Rita, they were the ones open first, stocked with essentials, open for business. The only strange thing was to have a Walmart open “only” from 8 to 5, but understandable.
Walmart is great.

vikingvista August 26, 2011 at 8:52 pm

Same here. Walmart has made my life a lot richer than I’ve made theirs.

Ocaine August 26, 2011 at 1:48 pm

The only thing that would look sweeter than that picture is if all of those semi trucks transformed into giant metal robots and went down to the gulf and kicked Irene’s butt all the way back to the Cape Verde Islands.

Ken August 26, 2011 at 3:48 pm

Ha!!

W.E.Heasley August 26, 2011 at 2:05 pm

“….would you prefer to rely upon the devotion to public service that allegedly motivates FEMA workers, or to rely upon the devotion to their own self-interests that undoubtedly motivates executives, workers, and suppliers of private companies such as Wal-Mart and Home Depot?” – Don Boudreaux

Hence the question posed is the invisible hand of economics vs. the visible and invisible hand of politics [FEMA being a political creation and politically directed entity]. Stated alternatively, a spontaneous order system based on price with free people making free decisions vs. politicos through the mechanism of government system.

Is it really true that political self-interest is nobler somehow than economic self-interest? – Milton Friedman

Dick Fitzwell August 26, 2011 at 2:18 pm

After Katrina, my family and I relied on the government. I almost hate to admit that, but what else were we to do? We had no water, no electricity and no way to communicate with anyone on the outside. We survived on what we received from FEMA and other organizations like The Red Cross and other communities from near and far who helped tremendously. We were grateful for the food, water and ice that they gave us but if I never eat another MRE again it will be too soon.

It wasn’t long before Wal-Mart opened underneath a large tent in their parking lot. It was great! The store had flooded completely so they had to bring in new supplies. They mainly focused on selling food and cleaning supplies at first, but eventually they began to sell electrical supplies and cheap laminate flooring. You could almost hear a collective sigh of relief as Wal-Mart opened because it meant that we would not have to receive goods from the charities much longer. We could go to Wal-Mart and buy everything we needed–not everything we wanted–just everything we needed.

It’s hard to explain what it was like in the days after Katrina. If you were there then you know. Having Wal-Mart back was a big boost to our community and not only in a business sense.

I say thanks to government and private charities for all of the help that they provided and last but certainly not least I say thanks to Wal-Mart!

Eric Morey August 26, 2011 at 2:48 pm

Why would I want to depend solely on one?

muirgeo August 26, 2011 at 3:41 pm

Absolutely… I’ll go with FEMA. When properly funded and staffed they do an incredible job encompassing ALL the requirements needed by a community after a mass causulaty disaster.

I worked with FEMA people in Houston after Hurricaine Katrina and Rita hit the area. The agency was a decimated shell of itself after defunding and misanagement by the Bush Administration. And the people in New Orleans suffered as a result and WalMart was of little help. Under Clinton they did an incredible job building the agency after Hurricaine Andrew hit Florida.

A truck full of plastic crap from Wal Mart will do very little to help without mass causulty experts coordinating the effort.

Ken August 26, 2011 at 3:56 pm

muirgeo,

“When properly funded and staffed they do an incredible job encompassing ALL the requirements needed by a community after a mass causulaty disaster.”

When has this happened? How often does it happen? EVERY time there is a natural disaster, the private sector were the prime movers in alleviating misery. Where was the gov in NY after 9/11? Where were they in New Orleans after Katrina? Where were they in Tennessee this year during the floods? In ALL of these cases they were MIA or following the lead of the private sector.

“A truck full of plastic crap from Wal Mart will do very little to help without mass causulty experts coordinating the effort.”

When that “plastic crap” contains valuable food and water, I’m pretty sure the victims of these disasters disagree. It’s standard fare, though, for you to completely ignore what’s in front of your face. You only see the parts of Walmart that sells cheap toys, all the while ignoring that much of their stores are dedicated to selling clothing, food, pharmacy, household convenience and necessity items, and cleaning supplies. The “plastic crap” you refer to makes up less than 10% of any Walmart I’ve ever been in. When was the last time you were in a Walmart that you don’t even know this basic fact?

Regards,
Ken

Ken August 26, 2011 at 4:13 pm

Also, as to FEMA budgeting for regular non-supplemental relief funds:

2001: $1.1B Disaster Relief: $ 4.4B
2002: $1.5B Disaster Relief: $ 8.0B
2003: $3.3B Disaster Relief: $ 1.9B
2004: $3.3B Disaster Relief: $ 2.2B
2005: $3.1B Disaster Relief: $66.4B

Do you even know what you are talking about? Ever? I found this information in less than 2 minutes in the January 2007 GAO Report to Congress on FEMA budgeting issues. You certainly can win on facts, so I guess lying or just making shit up is good enough for you, amaright?

Regards,
Ken

Methinks1776 August 26, 2011 at 9:06 pm

Ken, I think you are mistaken. You’re talking about natural disasters, but Muirdiot is referring to “mass causulaty” disasters. Mass causulaty disasters are a totally different animal where FEMA really is superior.

And truck loads of little plastic crap? Totally useless. Unless, of course, the plastic crap is filled (as it was) with drinking water.

Ken August 26, 2011 at 11:59 pm

Methinks,

muirgeo claims that the Bush administration “decimated” the agency, leaving to be only a “shell” of itself and unable to deal with disasters. I am showing him this can’t be the case, since the non-supplementary disaster relief budget for FEMA tripled from 2001 to 2004, while the supplemental disaster relief budget skyrocketed from $4.4B in 2001 to $66.4B in 2005.

You say that FEMA is better than the private sector at mass casualty disasters, but don’t 9/11, Katrina, and the Tennessee floods count as mass casualty disasters? Emergency responders were overwhelmed in these cases (which defines a mass casualty disaster). Can you provide examples of the situation you mean where FEMA demonstrates its superiority?

Regards,
Ken

Methinks1776 August 27, 2011 at 8:03 am

No, Ken. Not mass casualty disasters. Mass causulaty disasters. Have you never heard of those? :)

Like any government agency, FEMA is more interested in covering its ass by papering it over with protocol and applications. Once victims follow the protocol and fill out the paperwork, they wait for government officials to not make decisions. That’s why private organizations have to go build houses in New Orleans and provide things like drinking water and blankets right after hurricanes. I have a house on the ocean in a hurricane prone area (and one I didn’t think was in a hurricane prone area until this weekend) and FEMA factors into my emergency plans 0%. FEMA doesn’t know my city nearly as well as my neighbours, local businesses and I do. It already starts at a disadvantage and is further hampered by the CYA disease inherent in all government agencies (and, unfortunately, also a lot of large corporations).

Ken August 27, 2011 at 1:29 pm

“No, Ken. Not mass casualty disasters. Mass causulaty disasters.”

HA!!

tdp August 26, 2011 at 5:17 pm

Did he really just imply that the government goons at FEMA know better than private citizens and are actually both more altruistic and more competent when it comes to managing disasters? Just an example:

2005: When Katrina hits, private citizens and local governments manage to successfully evacuate the coasts of Mississippi and Alabama. There are minimal deaths there from a category 5 hurricane. When that same hurricane, now down to category 3, hits New Orleans, the federal handling of the disaster (at by Democrats at the local level) is so disastrous and incompetent that 2,000 people die. Not to mention the bang-up job the federally-funded and supplied levies did holding back the storm surge.

When people and areas recover from disasters it is in spite of FEMA, not because of them.

Dan J August 27, 2011 at 5:56 pm

Think of all of those wonderful mobile trailers US dollars were used to purchase and were either unused or condemned due to poisonous fumes.
That is govt. Not just a hit on Bush admin, but govt in general.

Indeed, at times, the huge monstrosity of govt stealing funds from the private sector has been able to move forth on a project not feasible in private secotr due to lack of returns or due to wish by govt to have it done sooner rather than later, such as Hoover Dam, space program….. But, these are very few and very far between along the way causing more grief and misery with it’s abuse of power than any perceived good accomplished.
Govt is wrought with corruption because it has taken liberties to legislate advantages for individuals and for businesses. It is not the private individual or business to harangue but the govt that draws in the corruption.

Dick Fitzwell August 26, 2011 at 4:45 pm

I think that FEMA did a good job in MS after Katrina but I’ll take Wal-Mart any day.

Mesa Econoguy August 26, 2011 at 6:43 pm

No trucks full of plastic crap (or anything else) failed. Central planning failed.

You failed.

muirgeo August 27, 2011 at 5:34 am

Getting your drink on early bro…. hit some happy hours did ya?

Mesa Econoguy August 27, 2011 at 1:04 pm

Ya, bra, you in?

LOL, how’s that mass causulaty disaster?

Methinks1776 August 27, 2011 at 8:05 am

Muirdiot’s right Mesa. First of all, to read his drivel, you need to be three sheets to the wind. At least. Especially on a Friday.

Secondly, Muirdiot has been successfully bludgeoning the blogosphere with his blunt instrument for years. In his world that is a major score, not a failure.

Mesa Econoguy August 27, 2011 at 1:10 pm

Failure is his only option.

In slight seriousness, can you imagine this incompetent boob in a large event like this?

I’ve participated in several mass-casualty – sorry, causulaty – disaster drills, and George seems to have the profile of a small child, most likely cowering in a corner while everyone else dealt with the situation.

Jimbino August 26, 2011 at 3:56 pm

The abuse most Amerikans suffer occurs at the hands of parents and of our locoparentis, the gummint.

A kid is most likely to be abused by a relative or a person of trust, not by a stranger. The typical Amerikan is most likely to be abused by his gummint, not by Walmart.

If you feel abused, you should call a stranger or Walmart.

tdp August 26, 2011 at 5:25 pm

+1

vidyohs August 27, 2011 at 9:46 pm

+2

Larry Sheldon August 26, 2011 at 4:12 pm

The most amazing part of this story is the assertion that NPR carried it.

ArrowSmith August 26, 2011 at 4:51 pm

I honestly have no problem with government being involved in disaster management and relief. To me that is one of the few core areas I believe government should be involved. Get it out of welfare, pensions, picking winners and losers in business, etc…

tdp August 26, 2011 at 5:11 pm

Question:

Which is a bigger menace to society:

1) The woeful ignorance of basic economics held by politicians and the general public and the treatment of failed systems like Keynesianism as “mainstream” by professional economists?

OR

2) A misunderstanding of libertarian philosophy and the dangers of concentrated political power to both liberty and prosperity that leads people to support paternalistic big governments that give self-important politicians the opportunity to run other peoples’ lives and pocket books for them?

Which problem is easier (not easy, easiER) to correct?

vikingvista August 26, 2011 at 9:08 pm

2.

As long as people are committed to treating others decently, rather than aggressively, there is little trouble people can cause one another due to economic ignorance. Economic ignorance is only a disaster in the hands of the violent–central planners, economic interventionists, empire builders, and all manner of busy body government do-gooders.

tdp August 27, 2011 at 12:27 am

Economic ignorance might cause people to vote for those ignorant central planners, though.

vikingvista August 27, 2011 at 8:33 am

Again, it’s only because of what they want those politicians to do to their neighbors.

Respect for others is easily within the grasp of everyone. Economic understanding is not. If a free and prosperous society depends on the latter, then overlordship by an elite capable of that undrrstanding is required. But we know that overlordship is neither consistent with nor conducive to such a society.

Economic understanding is most important to teach restraint to those few which might find themselves in a position to coerce others.

vikingvista August 27, 2011 at 9:52 am

…who might find themselves in a position to coerce others, and are unrestrained by human decency.

tdp August 26, 2011 at 5:25 pm

I will make an observation based on W.E. Heasley’s Milton Friedman quote:

Every law that applies to economics, especially to the so called “evils” of capitalism and the individual pursuit of wealth on the free market, applies tenfold to politics. Political decisions have seen and unseen effects, politicians suffer from imperfect information and imperfect competition far more than markets do, politicians are motivated by their own interests instead of what is right far more than producers in a market, and politician sure as hell have more monopolies than any sellers on the free market.

Every time someone points out market “inefficiency” or “failure” and advocates government intervention to correct the problem, they completely fail to recognize that top-down government management of the economy suffers from far more “inefficiency” and “failure” than decentralization and deregulation. In fact, rather than simply having the inherent problems of markets to a greater degree than the markets themselves, government interventionism CAUSES these problems in the marketplace. Therefore, in most cases, rather than markets having flaws, government has flaws that are blamed on markets.

Kirby August 26, 2011 at 7:02 pm

Katrina is a wonderful way to demonstrate the good effects of federal regulation. The majority of houses that were damaged and people that were hit were those being supplied by housing cheaply supplied by the free market- on a flood plain. If any of these people followed federal building codes, Katrina would have done as much damage in NO as it did elsewhere: next to none.
Jus’ sayin.

Austin August 26, 2011 at 9:48 pm

Your solution to people losing their houses after a rare event is to deny them their houses at all times?

Kirby August 27, 2011 at 9:17 am

Building on a flood plain is like building on a cliff that is being eroded a foot a year- the inevitability of it all is just sad.

Austin August 27, 2011 at 4:57 pm

An equivalent statement:
“[Living your life] is like building on a cliff that is being eroded a food a year – the inevitability of it all is just sad.” Is *Not Living* your solution, as *Build Elsewhere* is for New Orleans?

Besides, the two are hardly comparable: It’s not as if Ward 9 floods as often as the banks of the Nile used to. These folks built on a cliff that *might* erode, but probably won’t. This time around they got a bad roll of the dice, but it doesn’t mean they were foolish to live there.

Everyone who has lived there has been able to reap the rewards of having a home at a lower price, leaving funds available for other goods; do you deny that they gained any benefit at all from having that home? Again – your solution to them losing their home is to have denied them their home in the first place?

Kirby August 27, 2011 at 5:52 pm

After Hurricane Betsy proved that the area would be wiped out with every major hurricane, I think we can move past a ‘poor roll of the dice’

Austin August 27, 2011 at 9:01 pm

Because twice a century is often?

“A cat who sits on a hot stove will never again sit on a hot stove… but neither will he sit on a cold one.” It is possible to learn the wrong lesson.

Dan J August 27, 2011 at 10:09 pm

And, with twice a century, meaning living people of the first storm should easily be able to warn their kin, if not live thru both. Therefore, the choice of living there is not with knowledge of the danger and should not have govt paying to replace what is lost every 50yrs. Now, if a private insurance company will take the risk and cover you for a fee, that’s between insurance and you.
Muck like the big expensive homes on beach front that are replaced, usually by govt, since insurance backs out claiming the costs are too extensive and that they can’t cover it all.
Just ask John Stossel, as he owned one of those homes.

Kirby August 28, 2011 at 5:20 pm

look, either it is illegal or the government spends billions every time a preventable, natural, consistent occurence happens.

Methinks1776 August 28, 2011 at 7:40 pm

look, either it is illegal or the government spends billions every time a preventable, natural, consistent occurence happens.

Or people build wherever they want at their own risk.

And it is not government that spends billions bailing people out of the consequences of their personal choices. It is taxpayers. Let’s strip the sugarcoating off the reality.

There is no reason to limit people’s choices and there is no reason to compel other people for the choice of some people to live in a bowl in a hurricane prone area.

Kirby August 28, 2011 at 8:37 pm

that’s my point. The taxpayers shouldn’t have to foot the bill for ‘emergencies’ because people choose to build in the path of a river.

Methinks1776 August 28, 2011 at 10:10 pm

Your point is that politicians should decide who can build what and where.

My point (and the point, as far as I can tell, of all the other responses) is that no matter where people build, taxpayers shouldn’t be forced to ensure them against risk and that politicians also shouldn’t be further empowered to dictate to adults where they can live.

Dan J August 28, 2011 at 10:26 pm

If you want to swim with crocodiles, go ahead. Just don’t ask to have everyone cover your medical bills and life expenses should it eat your arms. You chose, your problem.

MNPilot August 26, 2011 at 10:49 pm

Very convenient to omit subsidized flood insurance from your less-than cogent argument. FEMA’s National Flood Insurance Program (NFIP) original purpose to temporarily provide insurance to property owners that were unaware they lived in flood-prone regions. 37 years later, this bloated program continues to lower insurance rates for residents in these disaster-prone areas. Do you think subsidized rates create an incentive to continue to build there? Absolutely.

And by the way, the houses weren’t damaged until after the government-built levies broke.

“Jus’ sayin.”

Kirby August 27, 2011 at 9:19 am

Right. So the government should ban people from building in flood plains altogether. The government-built levies shouldn’t be depended on, people should simply build on stable ground.

MNPilot August 27, 2011 at 11:12 am

@Kirby
The gov’t doesn’t need to ban anybody form building in the flood plains. The free market indirectly will through the price system.

If gov’t did not subsidize flood insurance in these areas, rates would rise to a level set by the free market reflecting the true risk of living there. These higher rates would create an incentive to look elsewhere to build/live.

Kirby August 27, 2011 at 11:49 am

But the housing price and property tax would be lower than anywhere else, causing people to prefer the cheaper area regardless of insurance.

The Other Tim August 27, 2011 at 12:18 pm

No, it wouldn’t.

If the cost of housing plus flood insurance is greater than the cost of housing in an area that doesn’t need flood insurance, the area that doesn’t need flood insurance is the cheaper area, and people will prefer to live there, not the flood plain.

You may object that some will choose the area which floods but forgo flood insurance to have an even cheaper still cost of living, but such people are either 1) idiots, and it’s emphatically *not* the government’s job to protect idiots from their own stupidity, or 2) too poor to afford flood insurance, in which case they’re also too poor to afford better housing. In this case, banning their low-income housing isn’t going to magically make them richer enough to afford a more expensive home.

Kirby August 27, 2011 at 5:54 pm

But banning it would be 1,000,000x better than subsidizing it.

The Other Tim August 27, 2011 at 8:51 pm

Both are forms of government aggression and both are wrong. I don’t generally find value in trying to determine which wrong is more wrong. But I do find it unsettling that someone suggesting government intervention is still suggesting government intervention after admitting it actually screws the poor over. Traditionally the argument has gone “sacrifice your inalienable liberties for the sake of the poor.” Now it’s just “sacrifice your inalienable liberties just, y’know, because.”

Methinks1776 August 28, 2011 at 7:48 pm

The other Tim,

Those people may not be idiots or poor. They may be very rich – rich enough to be self-insured.
In fact, FEMA does a really poor job of assessing risk. It’s quite hilarious. So, the insurance is way more expensive than it’s worth in some areas and very much below where the market would provide it in others. For the areas where FEMA assesses too much risk, people often self-insure.

Obviously, I’m talking about desirable ocean front property rather than ward 9 in New Orleans. Neither location should be subsidized by taxpayers.

The Other Tim August 28, 2011 at 8:11 pm

Yes, there are such people, but in the specific example I raised I was speaking about people who do not insure at all.

Kirby August 28, 2011 at 9:51 pm

but if it were banned, Katrina wouldn’t have been a disaster

Methinks1776 August 28, 2011 at 10:16 pm

Kirby,

If people were banned from building on earth, then earthquakes, tidal waves, volcanos, wildfires, mudslides, tornadoes, thunderstorms, hurricanes and floods would not be disasters.

Your laser focus on Katrina shows that you have not thought the issue through. What about the big earthquake in San Fransisco? How about Hurricane Andrew in Florida? What about the tornadoes in Joplin? All predictable disasters – in so far as each part of the country is known for hurricanes, earthquakes and tornadoes. Should we empower politicians to ban building in those places? What about on lakes and rivers – all of which are prone to flooding. Perhaps no building within 15 miles of the Mississippi River?

Or is it perhaps just better to let people build where they want and pay for the consequences themselves?

The Other Tim August 28, 2011 at 10:49 pm

Kirby, you overlook the fact that you cannot outlaw poverty and expect it to go away. Building in less than ideal locations is necessary for the poor to be housed, given the ideal locations have what they find to be an unaffordable price. Like all urban-renewal schemes, banning building in cheap-because-dangerous locales screws over the poor, whose choices are 1) live where you don’t want them to, or 2) crawl under a rock and die. ’3) magically find a ton of money and live in structures you approve of” is not on the list of options.

Methinks1776 August 29, 2011 at 7:56 am

Unfortunately, Tim, you overlook the fact that government can build “affordable housing” on expensive land. Greenwich, CT has and “affordable housing” project smack in the middle of town where property values are very high.

Those areas become “less desirable” only after the government builds section 8 housing on them. You left off your list of options government simply confiscating land to do with as it pleases. There’s nothing politicians aren’t willing to do at the expense of taxpayers. Actually, at the expense of anyone. Vampires.

John Dewey August 27, 2011 at 4:56 am

Kirby: “Katrina is a wonderful way to demonstrate the good effects of federal regulation.”

Not sure if you are aware of the history of the Lower 9th Ward in New Orleans.

In 1965, Hurricane Betsy flooded the Lower 9th, and ruined the housing for thousands. That section of town was de-populating, and local black leaders were losing economic and political power as a result. President Johnson heard their concerns and provided funding through the federal Model Cities program to revitalize the Lower 9th. The federally funded local programs included:

Lower Ninth Ward Housing Development Corporation
Lower Ninth Ward Health Clinic
Lower Ninth Ward Neighborhood Council
Total Community Action

The federal funding obtained by these and other New Orleans elements of the “War on Poverty” were controlled by minority political groups such as the 9th Ward’s Southern Organization for Unified Leadership (SOUL) and Central City’s Black Organization for Leadership Development (BOLD),

Federal programs put low income people in harm’s way in the Lower Ninth Ward of New Orleans in the first place. Those programs were controlled by politicians motivated by increasing the size of the electorate rather than ensuring that only appropriate housing was constructed in high risk sections of New Orleans.

Kirby August 27, 2011 at 9:20 am

So instead, the government should’ve simply banned people from building there and nothing would have happened.

Dan J August 29, 2011 at 12:20 am

Or, not a dime should have been provided and the damns holding back the sea left for individuals to put up.
If people stated building on side of Mt Rainier and it erupts, should govt help them rebuild there? Construct lava flow redirecting damns? Maybe large roofing barriers to protect homes from falling rock? Spend trillions to make the side or inside of a volcano habitable?
If your dumb enuf to live there and the inevitable occurs……….

John Dewey August 29, 2011 at 11:34 am

That’s not how I see it, Kirby,

As I noted, the effects of Huirricane Betsy was already causing the depopulation of the Lower 9th Ward. It was government subsidized housing and government development programs which caused low income residents to either stay or move to the Lower 9th Ward. It was government-subsidized flood insurance which enabled some to get the financing required to buildd there. Government actions caused the tragedies in the Lower 9th Ward.

Why do you believe government should have banned anyone fromn living in the Lower 9th Ward? If someone possessed the funds to build flood-proof housing, why would it beany business of the government whether or not they constructed buildings there?

Kirby August 27, 2011 at 9:22 am

Look, the government DID mishandle the lower 9th ward and Katrina. However, the crisis could have been prevented if the government simply illegalized building in a floodplain.

Austin August 27, 2011 at 5:08 pm

Should the government ban mobile homes in areas prone to tornadoes?

Or ban houses in Arizona that will be destroyed by wildfires? (You could legislate fire-proof asbestos-based brick homes…)

Or ban living in Alaska due to the inevitability of glaciers?

Would you like to ban ocean front property from Florida to North Carolina?

Is there a rubric you or the government should use to determine where is appropriate and where isn’t? Or is it arbitrary?

Kirby August 27, 2011 at 5:58 pm

Anywhere that lies in the path of a major river should a levee break is unbuildable.

Austin August 27, 2011 at 9:02 pm

That rubric hardly applies to eroding cliffs. Please be more thorough.

The Other Tim August 27, 2011 at 9:18 pm

“Anywhere that lies in the path of a major river should a levee break is unbuildable.”

That’s for builders and would-be homeowners to decide, and you to not care about. By rights you simply don’t have any interest in the private decisions of other people. What makes good economic sense to you is contingent upon your particular economic position, and does not apply universally to all other people.

Methinks1776 August 28, 2011 at 7:51 pm

Can’t build in the midwest either, Austin. Tornadoes.

Can’t build in Connecticut. Trees fall down at the drop of a hat here in the Northeast.

Can’t build in California. Mudslides and fires.

In fact, pretty much all of the planet should be off limits.

Too much risk.

SaulOhio August 28, 2011 at 5:40 am

Even assuming your solution is the right one, and I’m not saying it is, where is the incentive for politicians to do it? The incentive is for them to do what brings in votes, and that is “saving” the 9th ward.

Even if you could find the right thing for government to do, where are you going to find the politician who is politically suicidal enough to do it?

Russell Nelson August 29, 2011 at 12:18 am

Kirby, another solution would be to let people build less valuable houses. Unfortunately, building codes force them to build houses which have a minimum quality level. So the houses are more expensive, and more is lost when they get flooded.

Craig August 26, 2011 at 8:07 pm

““What I learned at Walmart helps me here to be able to make sure that we are putting those retailers in the best possible position to be successful in a situation like this,” Koon says.””

Well, I’m glad they’re trying but the dead hand of government cannot be fixed by any bright-eyed entrepreneurs. There is no remedy for the inefficiency of public management.

Kirby August 27, 2011 at 9:23 am

You misspelled ‘mismanagement’, Craig.

Jim August 26, 2011 at 10:43 pm

The picture in the article of the trucks is priceless.

During Katrina, I still remember Walmart was prevented from busing in employees from other states to clean up the mess because it would supposedly deprive work from Louisana. I was skeptical when I heard the story until I met a couple of Walmart folks who planned to go but were prevented from doing so. Later, it happened to my company as well.

Tim August 26, 2011 at 11:03 pm

Well…at least give them credit for actually following the logical extension of anti-free trade arguments. As Don has pointed out many times, if trading with China harms “American jobs” then surly Louisiana trading with Texas deprives Louisianians of “their” jobs. Oh the road to serfdom….

Tim August 26, 2011 at 10:52 pm

I think that photo was more of an PR opportunity than anything else. My local Walmart here in Connecticut was out of water (and their Culligan water machine was broke), bread, had very little in the way of vegetables, soups, and other non-perishables. Now, before anyone jumps all over me….yes, I fully admit that the government would likely not have been able to manage what the store did have…..but, in all honestly, they were not able to keep pace with demand and given the lead-out time for an event like this, it leaves a bit to be desired. My two cents.

Tim August 26, 2011 at 11:05 pm

My mistake….I did not realize that was a line of trucks waiting post Katrina…….I thought those were trucks aiming to resupply stores ahead of Irene (about which my comments were directed).

Dan J August 28, 2011 at 2:29 pm

Now, in defense of FEMA, the Bush crew also had trucks waiting and were not given permission to enter LA, as Feds must be given permission rather than just go and do as they please.

lamp3 August 28, 2011 at 8:04 pm

Does your state feature antigouging laws that prevent retailers from raising their prices at will?

Dan J August 27, 2011 at 12:06 am

Hope for good will of strangers…. But I can count on businesses to supply the goods I need.

I will take what I can count on over hope.

leftist August 27, 2011 at 12:18 am

Wal-Mart can’t solve everything. Take college textbooks:

Textbooks are a market failure. There’s no competition. If a professor likes X book, you better get X book. The only competition is for quality, not price. So yes, maybe capitalism causes higher quality scholarship in textbooks, but it certainly doesn’t decrease the price of textbooks.

It’s like pharmaceuticals.

Greg Webb August 27, 2011 at 12:27 am

The federal government is heavily involved in both education and medicine, which creates crony capitalist industries for both textbooks and pharmaceuticals. The cure is not more government. The cure is to get government out of both education and medicine.

Kirby August 27, 2011 at 9:25 am

the problem is professors with tenure, or public schools.

Ken August 27, 2011 at 7:06 pm

“Textbooks are a market failure. There’s no competition. If a professor likes X book, you better get X book. The only competition is for quality, not price. So yes, maybe capitalism causes higher quality scholarship in textbooks, but it certainly doesn’t decrease the price of textbooks.”

It is true that many textbooks are expensive, but you completely ignore that many schools are required to use certain texts, hence there is no competition.

Also, much of what you are saying is false. Many professors are appalled at the way textbook sellers abuse students. Many professors switch to cheaper books or even use classroom notes that are available in pdf form. Many professors have written their own textbooks and supply digital copies for free to their students.

Regards,
Ken

Greg Webb August 27, 2011 at 12:24 am

The question could be revised to ask, “Is it better to listen to what people say or to watch what they do?” Politicians say a lot, but actually do little to help people. But, private individuals and companies do a lot to help people, but say little about it. I trust the latter and not the former.

tdp August 27, 2011 at 12:44 am

Can I put a plug in for Tom G. Palmer’s essay “Twenty Myths About Markets”? Absolutely the best comprehensive demolition of criticisms of the free market on both economic and moral grounds that I have ever read.

Steve Horwitz August 27, 2011 at 10:36 am

Thanks Don. Technically ’90, but I left GMU for SLU in 1989.

muirgeo August 27, 2011 at 6:06 pm

Thanks National Weather Service for tracking this storm and informing us of it’s nature helping us prepare coordinated evacuations as needed as well as preparing our property from harm. Thanks FEMA for coordinating any relief efforts as the become needed. Thanks local utilities for clear storm drains, protecting our sewer and water systems.

Thanks Coast Guard and local emergency responders for saving the dumbasses who didn’t heed the warnings.

Thanks NASA, GISS and Department of Atmospheric Research at Colorado State University for helping us better understand , track and prepare for these storms.

Thanks National Gaurdsmen and American Red Cross Workers for standing ready.

And thanks Walmart for your plastic stuff advertisement related campaign in case we need that too.

Ken August 27, 2011 at 6:57 pm

Thanks National Weather Service for eating through hundreds of millions of dollars doing a job that is all ready done by the private sector.

Thanks FEMA for following the lead of Walmart and Home Depot and for making an effort to not suck quite as bad, since we are force to pay you billions of dollars a year.

Thanks local utilities for using antiquate technologies that fail multiple times a year despite having decades of experience with these failures. Thanks for sucking so bad that you can’t figure out a way to prevent these failures, but assure us that you are standing by to restore power within days should the power go out.

Thanks dumb business man for using your political clout to force resonsible citizens for subsidizing your stupidity.

Thanks NASA, GISS, and Department of Atmospheric Research for delivering a single product that works so so after spending tens of billions of dollars. I’m sure no one anywhere would have used any of those billions of dollars you siphoned from the economy to find a more cost effective and efficient manner to track these storms.

Thanks National Guardsmen and American Red Cross for being the incredibly corrupt and ineffective organizations you are.

Thanks Walmart for delivering food, water, and products that, you know, people actually need despite FEMA’s and politicians’ insistence that people don’t know what the actually need and try to hamper your life saving efforts at every turn.

Regards,
Ken

Ken August 29, 2011 at 4:12 pm

Thanks BGE for sucking so bad that I was forced to take an unpaid day off. Because you failed in the simple task of supplying power, entire businesses remain unproductive. Thanks for sucking so bad that after an over-hyped Irene, which turned out to be simply a heavy rain storm in the Baltimore/DC area, millions were left without power, limiting or eliminating the productive power of businesses and people for days at a time.

Thank god BGE is a heavily regulated, partially government owned entity, otherwise, Marylanders might have a completely privately run power generator and supplier that would have, after decades of experience, learned how to prevent widespread blackouts due to heavy, though not extreme, rains and wind. Thanks to the monopoly power given BGE by the government, BGE has no incentive to provide power in a more reliable manner.

Ryan Vann August 30, 2011 at 12:16 am

It’s good that people were without power. Practice for the days of rolling blackouts caused by government policy is essential.

Ken August 30, 2011 at 2:00 am

This made me laugh. But only for a second. I’m sure what you’re saying will happen and we will need the practice. How sad how miserable governments make our lives. And how sad the likes of muirgeo cheers on that misery.

Regards,
Ken

steve August 27, 2011 at 6:51 pm

And if you dont have the money on hand to buy stuff from WalMart to fix your house? What if you need someplace to live while your house is fixed? How do you get there? What if a city’s sewers or water supply is damaged? What do you buy from WalMart?

Steve

Ken August 27, 2011 at 7:02 pm

FEMA’s record at supplying houses is abysmal if you ever bothered to check out their record. Walmart has a proven track record for actually knowing the local supply chains and providing services and products people need, including temporary shelter.

If you the city’s sewers are damaged, you can buy buckets from Walmart, or if you stand around depending on the government to fix the problem you can clog the streets with urine and feces.

If the city’s waters supply is damaged, you can buy water from Walmart, or you can stand around depending on the government to fix the problem and dehydrate.

Regards,
Ken

Fred August 27, 2011 at 7:46 pm

Take two people with the exact same income.
One of them spends his entire paycheck every pay period.
The other does not.
One of them will be angry and jealous at the other when there is an emergency.
Care to guess which one?
Care to guess how much pity I have for the jealous one?

kyle8 August 28, 2011 at 11:07 am

You obviously lack compassion, however, you can buy some compassion by voting for a left winger.

Dan J August 28, 2011 at 2:53 am

The picture shows how irrelevant govt is……….

Russell Nelson August 29, 2011 at 12:12 am

The problem is that FEMA has good intentions. They *intend* to help people. The corporations, on the other hand, do NOT intend to help people. They intend to *profit* from people’s misery. In the eyes of the left wing, it matters NOT AT ALL that the second group is more helpful than the first group.

Intentions matter; results don’t.

Dan J August 29, 2011 at 12:22 am

Intentions…. I understand what you say, too bad the good intentions don’t amount to much but intentions.

Ryan Vann August 30, 2011 at 12:14 am

If FEMA and the Walton Gang are my only options in a catastrophe, I’m entrusting my fate to the natural disaster to be quite honest.

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