Volume 5, Number 134
10 October 2005

Introduction: Amid all the cries for government action to improve disaster relief, and to rebuild the entire city of New Orleans, the libertarian desire for less government involvement has seldom been heard. Accordingly, I have asked two friends who know libertarianism far better than I to contribute this letter. — Loren Cobb, Editor (from Lima, Perú).

Libertarian Remedies for Future Katrinas

by Jerry Van Sickle and J. D. Von Pischke

The libertarian point of view emphasizes self-reliance, voluntary cooperation, and the benefits which will follow for those who are most vulnerable. Many examples of individual initiative and official failures occurred during Hurricane Katrina's horrifying aftermath, but few discussions of that disaster have emphasized the underlying causes or the libertarian responses that will be suggested here.

In spite of these recent failures, most citizens and many libertarians may still accept the management of emergencies as a legitimate and necessary function of government. So it's time to ask an important question: What will happen if individuals, voluntary groups, neighborhoods, and businesses decide to provide solutions, before and during disasters, to supplement helpful government action?

TQE readers may agree that deep-seated weaknesses and dangers exist wherever goods and services are provided by a monopoly or under a single chain of command. Many of the causes are understandable: deference to seniority; long traditions that discourage new ideas or reforms from within; friendships and loyalties that resist outside influences. The burden of responsibity for changing directions after years of emotional and physical investments invite caution and conservatism. Maintaining consensus and teamwork are difficult — and unwinding red tape may be impossible. The most recent and glaring example has been the failure to integrate the CIA, FBI, FEMA, Homeland Defense, State Agencies and local first responders — in spite of overwhelming public and political pressures during the four years since the terrorist attacks on New York City and the Pentagon.

What is missing is the creative ferment and positive incentives of competition. New or better ideas are often initiated by unrecognized geniuses and visionaries, or by ornery upstarts and outcasts. Those who are unable to endure the constraints of  bureaucracy become the yeast that keeps conservatism and political establishments from stifling the search for improvements. The advance of science throughout history offers a profound example of the discovery process and its official opponents.

A multitude of individuals, startup firms, and corporations are needed to create, fund, and test endless new possibilities. Any successes will lead most competitors to improve their products or services, and a few will launch another round of improvements and breakthroughs. This is the story James Burke showed us on public television a few decades ago: each invention triggers many more in an endless cascade. The result has been an industrial and computer revolution that constantly gives birth to improved or less expensive products and services.

In contrast, the drawbacks of a single supplier are compounded in areas that apply especially to emergencies:

  • Preparation for war may be the closest cousin to emergency planning. Yet the history of warfare is filled with caution, obsolete Maginot Lines, failures to adapt to rapidly changing technology or events, and resistance to alternatives — including peaceful ones. Abundant examples can be found in Iraq.
  • Even democratic police and troops can bully their own citizens, rather than look for respectful ways to handle feisty individuals, public demonstrations, and emergencies. The pathology between guard and prisoner has been exposed in university experiments, and repeated in Iraq. In New Orleans, many citizens seeking help were treated like prisoners, and others offering help were treated as if they were enemies.
  • The power to tax fosters massive or blunt solutions instead of a never-ending search for better, more personal, and less expensive solutions. Remedies suggested during the past few weeks to avoid future catastrophes focus on public mandates and massive subsidies rather than private funding and incentives.

In New Orleans federally funded levees and flood insurance undermined the need for investors, lenders, and private insurers to demand reliable protection or safer locations for their buildings. By-passing powerful financial checkpoints may account for the loss of many lives and billions of dollars.

Earlier generations formed fraternal organizations whose dues created a pool of savings for their unlucky members. Their members knew each other and would help those who were deserving and unable to care for themselves. Today's large insurance firms must look for less personal ways to remove the temptation to misuse or profit from insurance. The last thing they are likely to do is insure anyone to build or live in the path of predictable flooding.

Seen from an insurance point of view, flooding differs from hurricanes and other insurable losses in which the number of actual victims is small compared to those at risk. Potential flood victims form a much smaller risk pool, and nobody on higher ground needs to share their risk. So the basic ingredients of insurance are missing.

Government has defied these basic principles by insuring buildings and lives in harms way. Congressional logrolling and pork barrel politics, backed by taxpayer sympathies, enabled their neighbors and the politician's own constituents to build in the path of predictable flooding. Given such harmful enticements, the outpouring of concern and help after Katrina may be altogether fitting and proper.

Tragedies caused by human kindness are hard to acknowledge. We understand the concepts of tough love and of enabling self-destructive behavior, yet our government invited people to live where their lives are at risk, and may soon enable them to build there again! Will all these lessons, and all the lives lost, be in vain?

Libertarian Remedies for these Tragic Mistakes

  1. Honor  promises to pay for losses, but only once and not to rebuild in harms way. Let remaining federal insurance be contingent on minimizing potential damage, and on realistic plans, supplies and equipment to survive before, during, and after evacuation. Rafts, food, water, rain gear, and tents might allow residents to find nearby refuge on higher ground or in taller buildings, and avoid crowded escape routes and public shelters.
  2. Encourage neighborhoods to create emergency plans, stockpile supplies and equipment, designate or build safe havens, and coordinate their efforts with each other and organizations such as the Red Cross. Welcome individuals and private firms who offer these and other emergency services and supplies.
  3. Direct public officials and agencies to support all such efforts, and make clear that residents must not count on public utilities or help.
  4. Allow private firms to bid on the extensions of sewer, water, electricity and gas lines in order to stimulate new and safer technologies — and on the maintenance and management of new and existing facilities. Charge or calculate the full value of existing public utilities so their costs and practices can be compared with these private alternatives.
  5. Allow private firms to bid on the construction of levees or floodwalls. Sheltered landowners and their private insurers will insist on proven engineering. Floodwalls might become the foundation walls of new buildings. Parking garages and other less vulnerable uses may be built below flood levels. Scenic and recreational uses along rivers and the ocean, along with invulnerable buildings, will probably create more valuable frontage land than the rebuilding of single-family homes. With appropriate re-zoning owners can be generously compensated and housing for displaced and needy tenants can be built without public expense  Any of these and many better solutions should be encouraged to fund the rebuilding of devastated areas by building and land owners instead of taxpayers.
  6. Higher insurance premiums will warn investors of the need for protective measures and the relative value of each. Lower rates will repay the best investments to reduce potential damage and loss of life during emergencies. The same criteria for insurance should be required of public facilities and existing utilities.

Can the same approach apply to terrorist emergencies? The owners of tall buildings, stadiums, airlines, and the shipping industry will probably be the first to search for self-funded ways to reduce risks and facilitate escape. To offer a single example: many upper story connections between tall buildings could provide multiple escape routes, and strengthen buildings from unplanned stresses. Added rents could fund the project and repay taxpayers for the use of their space above public streets. Endless brainstorming of this sort wll appear in trade journals, and actual investments will then create an ever-increasing portfolio of ever-improving remedies for disasters caused by man or Mother Nature.

Jerry Van Sickle

Issues raised by Hurricane Katrina reveal a widespread hope that government itself can be our shared insurance agency. But political pressures, incentives, and monopolies produce the opposite results. Politicians are bound to favor more visible projects and powerful interests over adequate safeguards. Legislators and public officials are not liable for the results of their decisions.

Libertarian remedies will reverse today's perverse incentives. Multiple investors, suppliers, insurers — and taxpayers — will then be led to seek optimum safety for human beings coupled with the optimum protection of buildings and cities where they live and work.

We welcome reactions, along with more and better proposals.

Jerry van Sickle and J. D. von Pischke


The Quaker Economist announces with pride and pleasure the online publication of A History of Wealth and Poverty: Why Some Nations are Rich and Many Poor, by Jack Powelson.

Originally published in 1994 by the University of Michigan Press as Centuries of Economic Endeavor, this new electronic edition is now available to the public at no cost. Click here to see the Table of Contents.

Traducimos esta obra en español, abajo del titulo Historia de Riqueza y Probreza. Esperamos la finalización en enero de 2006.

Readers' Comments:

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In the absence of strong government, who will do the honoring, encouraging, directing, and allowing the libertarian principles outlined in numbers 1 to 6?

I too believe a libertarian society is best. But I believe a libertarian society must exist before a libertarian government. That will take a long time, maybe a century or more. Culture change is not quick.

— Jack Powelson, Boulder (CO) Friends Meeting.

Your first tenet, to "Honor promises to pay for losses, but only once and only on properties that are fully protected or are on higher ground," would result in the poorest of the poor losing everything they have while the wealthier would get reimbursed for their losses. The people who have built houses in the worst flood zones of New Orleans, e.g. the Ninth Ward, have done so because they have little and that is what they can afford. Not paying for their losses would be unjust, in my opinion.

— Ann Dixon, native of New Orleans.

It is clear that government (at least in the US) does not have the capacity to do it right. Whether there are realistic alternatives is not so clear. We are now learning that the Red Cross is also bogged down — it is a large organization too. Jack is right that the poor always suffer. I think the best we can do is a mixed economy solution, where we encourage the kind of private initiative you discuss, while seeking appropriate oversight from society (yes, regulation).

Jack's ideal future, in which society gurantees that no one is truly poor and leaves much of the rest up to individuals, seems to me attractive. That needs a lot of government regulation to share the wealth, but then leave people alone. Of course some of them will then choose to be poor anyhow, perhaps as a result of menatl illness.

— Bruce Hawkins, Northampton Friends Meeting (NEYM).

I'm sorry, but for sound mathematical and ecological reasons the proposals for more private insurance and participation in natural disaster prevention or mitigation just won't work in the real world. Insurances depend on data collection and an assessment of likelihood and probabilities. These make possible mathematical conjectures as to margins so that premia can be matched to a range of outcomes. This is the necessary premise for all viable insurance, and where the scale, range, target and magnitude of unknowns is even unconjectural — as is the case in a world of climate change — the bases of private insurances collapse. It is simply impossible to prepare insurance, investment, or stand-by, in situations which, by their defining nature, elude all such categorisations.

The recent earthquakes in Pakistan (presumably occurring after your piece was written) demonstrate that magnitudes and effects are simply not assessable in advance to any intelligent degree. The only rational structures to prepare for these eventualities stem from a willingness to abandon the cliches of disapproval for taxpayer involvement, or federal responsibility, and see the problem in its reality: we are all, world-wide, essential supporters and aid-workers of each other when it comes to catastrophes of this sort. Belated private contributions, whether of cash or aid, are precisely that — belated, i.e. too late.

It requires a very different mindset which can assume a collective responsibility for the well-being of all humanity. The public involvement needs to be enlarged and extended not diminished. In particular, as climate changes will almost certainly make migrations essential for the safety of people on all continents, including the north American continent, we would be better advised, as of now, to undertake socialist and community reciprocities for the imminent upheavals which are not only likely (though unpredictable) but virtually certain.

— Ian Flintoff, the Quaker Socialist Society, and Westminster Monthly Meeting, London UK.

Reply: If people are wise enough to tax themselves in advance to prepare for disasters, then they are wise enough to donate in advance. If, on the other hand, people aren't wise enough to do this, the only other possibility is for a wise person to use violence to force them. And yet, a wise person will not do this because they are aware of the nature of violence. Thus, you end up with fools in control of violence and war in Iraq and genocide in Darfur.

You need to abandon the magic wand of violence. Any government strong enough to manage a socialist society is strong enough to wage wars on its own citizens and neighbors. The only option for world peace is weak governments; governments unable to help in disasters. If I can give up war (which is after all the biggest disaster), I'll accept voluntary peaceful disaster aid.

— Russ Nelson, St. Lawrence Valley (NY) Friends Meeting.

Weak governments can be even worse if Germany of the 1930s or Russia of 1910s are any example. Or the weak northern alliance government that allowed an even worse Taliban to come to power. The problem is the citizens lack of transparency about their government, when that happens World Peace will have a real chance.

The national guard claims to have saved 11,000 lives during Katrina. I see no private organization willing to spend millions of dollars on that many helicopters, just to have them sit around in case of a emergency. Pakistan also shows that even with millions coming in you need a military to deliver the supplies, because if the transportation infrastructure is destroyed only the military has the capacity to deliver the aid in time.

— Doug Anthony, La Jolla (CA) monthly meeting (attender).


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Publisher: Russ Nelson, St. Lawrence Valley (NY) Friends Meeting.

Editorial Board

  • Loren Cobb, Boulder (CO) Friends Meeting, Editor.
  • Chuck Fager, Director, Quaker House, Fayetteville, NC.
  • Virginia Flagg, San Diego (CA) Friends Meeting.
  • Valerie Ireland, Boulder (CO) Friends Meeting.
  • Jack Powelson, Boulder (CO) Meeting of Friends.
  • Norval Reece, Newtown (PA) Friends Meeting.
  • J.D. von Pischke, a Friend from Reston, VA.
  • John Spears, Princeton (NJ) Friends Meeting.
  • Geoffrey Williams, Attender at New York Fifteenth Street Meeting.

Members of the Editorial Board receive Letters several days in advance for their criticisms, but they do not necessarily endorse the contents of any of them.

Copyright © 2005 by Jerry Van Sickle and J. D. Von Pischke. All rights reserved. Permission is hereby granted for non-commercial reproduction.

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