Mon, Sep 19, 2005 - Page 9 News List

Lessons to be learned from the black Tsunami

By Joseph Stiglitz

The world has been horrified at the US' response to Hurricane Katrina and its aftermath in New Orleans. Four years after the terrorist attacks of Sept. 11, and with billions of dollars allegedly spent on "preparedness" for emergencies, the US has shown the world that it was not prepared -- even for an event that came with ample warning.

The difference between the Asian tsunami last December and what is coming to be called the Black Tsunami in America -- because it brought so much devastation to the poor, mostly black, people of Louisiana -- is striking. The Asian disaster showed the ability of those affected to overcome long-standing rifts, as Aceh rebels put down their arms in common cause with the rest of Indonesia. By contrast, the disaster in New Orleans -- and elsewhere along the US' Gulf Coast -- exposed and aggravated such rifts.

The response of US President George W. Bush's administration to the hurricane confirmed the suspicion among blacks that, while they might send their boys to fight the US' wars, they had not only been left behind in the US' prosperity, but that there was neither understanding nor concern when they needed it. An evacuation was ordered, but no help was provided for the poor. When help came, it was, as the New York Times noted, like the Titanic: the rich and powerful got out first.

I was in Thailand right after the tsunami, and I saw that country's impressive response. The Thais flew consular and embassy officials to the affected areas, aware of the sense of helplessness among those stranded far from home. The US kept foreign officials from coming to the aid of their nationals in New Orleans -- embarrassed, perhaps, at what they would see.

Even the richest country in the world has limited resources. If it gives tax cuts to the rich, it will have less to spend on repairing levees; if it deploys the National Guard to fight a hopeless war in Iraq, there will be fewer resources at home to cope with a domestic crisis.

Choices must be made, and choices matter. Shortsighted politicians like Bush often skimp on long-term investments in favor of short-term advantage. He recently signed a lavish infrastructure bill that included, among other payoffs to supporters, a bridge to nowhere in Alaska. Money that could have saved thousands of lives was used to win votes.

Seldom do the "chickens come home to roost" as quickly as they have in recent years -- an ill-conceived war, attempted on the cheap, has not brought peace to the Middle East. Now the US has paid the price for ignoring loud warnings about the weakened levees of New Orleans. Clearly, nothing could have spared New Orleans completely from Katrina's impact, but the devastation could certainly have been lessened.

Markets, for all their virtues, often do not work well in a crisis. Indeed, the market mechanism is often revolting to behold in emergencies. The market did not respond to the need for evacuation by sending in huge convoys of buses to get people out; it did respond by tripling hotel prices in neighboring areas, which, while reflecting the marked change in supply and demand, is reviled as price gouging.

Such behavior is so odious because it brings little allocative benefit -- no significant increase in supply in the short run -- and carries a huge distributive cost, as those with resources take advantage of those without.

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