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Friday, February 24, 2006

The Case for Dissolving FEMA

In response to my post titled "Federalizing Everything," a commenter asked, "You are saying you don't mind federal involvement [in disaster management] but you don't want them to be the ones coordinating it?"

That is not quite correct, so I'll explain further. First, I believe that the federal government should take the lead role in protecting the nation against attacks by foreign forces and any homegrown forces that venture across state borders. That is a given. It is when we get into the area of natural disasters that the problems arise.

I definitely don't want the federal government implementing responses to natural disasters. There is absolutely no need for it. Coordination is the farthest I should like them to go, and even that much involvement is in fact unnecessary. There is nothing on earth stopping states from cooperating in relief efforts and in preparing for disasters before they happen. Numerous states sent help to the Gulf Coast in the wake of Katrina, and countless private relief efforts contributed as well. States can work out agreements with each other to handle cross-border environmental problems and disaster-relief scenarios. Certainly there will be disagreements at times among states regarding which should take responsibilty for what (meaning whose taxpayers will pay how much for it), but federal "coordination" only moves the argument further up the line and results in greater stasis and failure of coordination and implementation.

In fact, the very existence of a federal agency devoted to disaster management (FEMA), and the existence (and meddling) of other agencies such as the Army Corps of Engineers, has helped take the pressure off of state and local governments to make the investments necessary to ensure that they can handle natural disasters. Any failures will ultimately be blamed on the federal government, which is exactly what happened after Katrina.

That is an excellent example of the concept economists call moral hazard.

If the state of Louisiana and city of New Orleans, in particular, have elected governments so inept and negligent that they failed to prepare for a catastrophe that everyone has known for countless years would eventually arrive, that is a matter for the voters of Louisiana and New Orleans to deal with. It is not a matter that requires a huge stratum of federal mandates to be laid on people in Seattle, Iowa City, and Charlotte.

The state of Louisiana could have prepared for this. The city of New Orleans could have been ready to deal with the problem. But they weren't. So now, because of the stupidity and cupidity of two state and local goverments, we will all have to climb under an even greater yoke of federal-government management of our lives. That is not sound policy; it is idiocy.

States would undoubtedly prepare for potential problems more effectively without federal "guidance," and especially without a huge new federal bureaucracy and a crushing new layer of laws, regulations, commissions, and greatly increased taxes to finance it all.

All of this is entirely unnecessary, including any federal role in planning and coordination. The creation of a large federal bureaucracy to coordinate and implement disaster management is an unnecessary and counterproductive boondoggle.

The best course at this time would be to dissolve FEMA and other such agencies and send the authority and responsibility back to the states, where it belongs.

9 comments:

Hunter Baker said...

Amen, baby. The genius of federalism continues to go essentially ignored. Gulf states should invest and prepare for hurricanes. It makes no sense whatsoever for the rest of the country to subsidize them in that respect. If it then becomes economically unfeasible to build or develop certain coastal areas because they cannot be adequately insured against loss or architecturally protected, then let the circumstances dictate the correct actions to take.

S. T. Karnick said...

Exactly, Hunter. Your last sentence encapsulates the moral hazard of these bailouts.

Barry Vanhoff said...

While I agree in principle, I think the real issue was hit on in Hunter's post.

The Federal government has some responsibility (I said *some*) if and when they are responsible for irresponsible development (ie, subsidizing housing built below sea level, on a cliff, etc...).

Before fed intervention can be dissolved, the fed needs to stop encouraging (subsidizing) development that would not occur without their "help."

On another note...

To distill what Team Bush wants: if the disaster is really bad we'll send the army.

This ought to be the extent of fed involvement (ideally), because if it ain't bad enough to have to send in the troops, the local governments ought to be able to handle it.

S. T. Karnick said...

CLA, re your point one, the feds should stop both simultaneously. Anybody who built in anticipation of being bailed out by the federal government if a disaster hit deserves whatever comes.

Re your point two, yes, and very well put! If that's what the Bush admin really wants, I'm for it--as long as they dissolve all the other stuff. Which of course is not going to happen.

James F. Elliott said...

Thank you for this clear and concise argument. You make your case quite forcefully. The only flaw I can find is only a flaw (to me) because it approaches the matter from a basic premise that is rooted, at heart, in governmental ideology: You presuppose that federal-level action is, by default, ponderous and inefficient. I did find your post largely persuasive once I reminded myself of some interesting political science research: The most effective democracies are those that disburse resources at a regional level.

Barry Vanhoff said...

Or are we going to see some of that vaunted charity your faith calls for?

C'mon Tlaloc...how do you expect to have a reasonable discussion when you write stuff like that? Or this...

capitalism is the most blind system for risk avoidance.

Matt Huisman said...

It might not be as bad if developers made the buildings here more earthquake proof. But they have no incentive to since it costs more. The only way you could possibly get it to happen would be with, you guessed it, strict governmental regulation of the construction industry.

Or if insurance companies charged accordingly.

You want to build what kind of building? OK, fine. You gotta pay the premium premium.

Which brings us back to the original topic of FEMA. Since the whole thing is basically one giant insurance policy, I suggest we put Warren Buffet in charge of the whole thing.

If he screws it up, we all get free Dairy Queen Blizzards for a year.

Matt Huisman said...

Never happen. The insurance company that did that would simply be undercut by their competitors who would offer the same indurance for less.

It happens all the time. Insurance companies are exiting all kinds of markets now that they have to make earnings from underwriting (as opposed to investments).

You're assuming that every insurance company is one giant bankruptcy waiting to happen. But that's not really the case. The two things that everyone in business is freaking out about right now are both insurance related (health & property/casualty).

Where do you think Warren gets the money to buy all those Dilly Bars?

Matt Huisman said...

There is simply no system consistently worse for avoiding risks than capitalism.

If that's true, it's only because there is no other system that comes close to providing the rewards/incentives that are available in capitalism.

[Growth is the key to risk management. You're either growing or you're dying - and systems that don't provide for growth are far less secure (and generally worse off) in the long run than ours.]