Hur­ri­cane Ka­t­rina taught us de­cen­tralised re­build­ing is ef­fec­tive

The National - News - - BUSINESS | IN DEPTH - OMAR AL UBAYDLI Omar Al-Ubaydli is the pro­gram di­rec­tor for in­ter­na­tional and geopo­lit­i­cal stud­ies at Derasat, Bahrain. We wel­come eco­nomics ques­tions from our read­ers via email to or tweet @omare­co­nomics

Many US com­mu­ni­ties have been dev­as­tated by Hur­ri­canes Har­vey and Irma. With nat­u­ral dis­as­ters seem­ingly in­creas­ing in fre­quency and in­ten­sity, so­ci­eties ev­ery­where need to draw de­fin­i­tive lessons on dis­as­ter re­lief from their ex­pe­ri­ences in deal­ing with them.

Last week’s ar­ti­cle looked at the Chicago fire of 1871; this week, we ex­am­ine what lessons pol­i­cy­mak­ers can learn from the re­sponse to Hur­ri­cane Ka­t­rina, which struck New Or­leans in 2005.

This was a re­search lead by Peter Boet­tke at the Mer­ca­tus Cen­tre at Ge­orge Mason Univer­sity. Boet­tke and a team of schol­ars spent con­sid­er­able amounts of time in Louisiana op­er­at­ing as hy­brid econ­o­mists/an­thro­pol­o­gists, doc­u­ment­ing what did and did not work, and syn­the­siz­ing their find­ings into valu­able schol­arly con­tri­bu­tions.

One of those find­ings was a book by Vir­gil Storr, Ste­fanie Ha­ef­fele-Balch and Laura Grube, en­ti­tled Com­mu­nity re­vival in the wake of dis­as­ter. The 19th cen­tury English philoso­pher, John Stu­art Mill, of­fers a use­ful pro­logue: “What has so of­ten ex­cited won­der, the great ra­pid­ity with which coun­tries re­cover from a state of dev­as­ta­tion; the dis­ap­pear­ance, in a short time, of all traces of the mis­chiefs done by earth­quakes, floods, hur­ri­canes and the rav­ages of war… in a few years af­ter, ev­ery­thing is much as it was be­fore.”

Mill was writ­ing at a time when there were no gov­ern­ments charged with co-or­di­nat­ing dis­as­ter re­lief, such as the Fed­eral Emer­gency Man­age­ment Agency (Fema). His ob­ser­va­tion should cast doubt on the main­stream view that cen­tral gov­ern­ments are the only ve­hi­cle ca­pa­ble of or­gan­is­ing ef­fec­tive dis­as­ter re­lief. Storr, Ha­ef­fele-Balch and Grube’s in­ves­ti­ga­tion into Ka­t­rina con­firmed the piv­otal role played by bot­tom-up re­cov­ery ef­fects, and high­lighted some of the prob­lems with cen­tral­i­sa­tion.

It is worth un­der­stand­ing the pros and cons of cen­tral­i­sa­tion in gen­eral. Broadly speak­ing, the key ad­van­tage of man­ag­ing things cen­trally is economies of scale: when ac­tiv­ity is or­gan­ised at a larger scale, there can be huge ef­fi­ciency gains. For ex­am­ple, anti-global warm­ing ef­forts are highly in­ef­fi­cient and pos­si­bly even fu­tile at the lo­cal gov­ern­men­tal level, re­quir­ing a na­tional scale for ef­fec­tive­ness.

How­ever, Cen­tral­is­ing has sev­eral down­sides. First, cen­tral man­age­ment cre­ates in­for­ma­tion bot­tle­necks, whereby im­por­tant, lo­cal in­for­ma­tion does not reach the bu­reau­crats stuck ap­ply­ing a one-size-fits-all pol­icy. Sec­ond, de-cen­tralised man­age­ment in­volves key stake­hold­ers in the de­ci­sion-mak­ing process, in­creas­ing the like­li­hood that their in­ter­ests are ac­counted for, and di­min­ish­ing the like­li­hood of cor­rup­tion. That is why is­sues such as lo­cal pol­lu­tion and cer­tain types of law en­force­ment are best or­gan­ised at the mu­nic­i­pal rather than na­tional level.

An im­por­tant theme in the Com­mu­nity Re­vival book is that while nat­u­ral dis­as­ters are as­so­ci­ated with an am­pli­fied need to ex­ploit economies of scale, they are also char­ac­terised by an even stronger need to ex­ploit lo­cal knowl­edge.

A key post-dis­as­ter chal­lenge is the “co-or­di­na­tion problem” faced by evac­u­at­ing res­i­dents: the baker wants to re­turn, but only if there are enough cus­tomers; the teach­ers want to re­turn, but only if there are enough stu­dents; and so on.

Mono­liths such as Fema are poorly placed to solve this problem, since they have no pre­ex­ist­ing re­la­tion­ships with the peo­ple in­volved; and they are poorly po­si­tioned to as­sess peo­ple’s in­ter­ests, and to co­or­di­nate the de­ci­sion to move back and re­build.

More­over, they have com­par­a­tively lit­tle back­ground knowl­edge on the area, so when things change quickly – which of­ten hap­pens in a dis­as­ter – their in­for­ma­tion deficit puts them at a mas­sive dis­ad­van­tage com­pared to lo­cals when it comes to re­spond­ing. This re­flects a deeper problem

Lo­cal com­mer­cial and so­cial en­trepreneurs were in­stru­men­tal in as­sess­ing peo­ple’s needs

with bu­reau­crats: they are pro­grammed to sys­tem­a­tise, and are in­her­ently anti-dy­namic and un­re­spon­sive to rapidly evolv­ing sce­nar­ios.

In con­trast, lo­cal com­mer­cial and so­cial en­trepreneurs were in­stru­men­tal in as­sess­ing peo­ple’s in­ter­ests ac­cu­rately, in al­lo­cat­ing re­sources to where they were most needed, and in co-or­di­nat­ing peo­ple’s ac­tions to max­imise their ef­fec­tive­ness.

School prin­ci­pals, church lead­ers and lo­cal business lead­ers in New Or­leans be­came en­trepreneurs and led the way in or­gan­is­ing the re­lief and re­build­ing ef­fort, mak­ing sure that the evac­uees could quickly come back, and find some­thing re­sem­bling a nor­mal econ­omy wait­ing for them.

In light of the re­search pro­duced by the Mer­ca­tus Cen­tre and oth­ers, Fema’s per­for­mance has im­proved post-Ka­t­rina. How­ever, there re­mains a fun­da­men­tal un­der­ap­pre­ci­a­tion among pol­i­cy­mak­ers and the gen­eral pub­lic of the role of lo­cal en­trepreneurs. That is why dur­ing every nat­u­ral dis­as­ter, we must reread Mill’s quote and re­mem­ber what the world looked like when he wrote it.

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