Joseph E. Stiglitz, a Nobel laureate in economics, is professor of economics at Columbia University and was chairman of the Council of Economic Advisers to President Clinton and chief economist and senior vice- president at the World Bank. His most recent book is
The Roaring Nineties: A New History of the World’s Most Prosperous Decade.
The world has been horrified at America’s response to Hurricane Katrina and its aftermath in New Orleans. Four years after the terrorist attacks of September 2001, and with billions of dollars allegedly spent on “preparedness” for another emergency, America has shown the world that it was not prepared—even for an event that came with ample warning.
The difference between the tsunami in Asia 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 America’s Gulf Coast—exposed and aggravated such rifts.
The Bush administration’s response to the hurricane confirmed the suspicion among blacks that, while they might send their boys to fight America’s wars, they had not only been left behind in America’s prosperity, but that there was neither understanding nor concern when they needed it most. An evacuation was ordered, but no means to do so were provided for the poor. When help came, it was, as one New York Times columnist 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. America 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 and reserves 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 political supporters, an infamous bridge to nowhere in Alaska. Money that could have been used to save thousands of lives was spent 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 America has had to pay 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; in some places, 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.
The Nobel Prize-winning economist Amartya Sen has emphasized that most famines are associated not with a shortage of food, but the failure to get food to the people who need it, largely because they lack purchasing power. America, the richest country in the world, clearly had the resources to evacuate New Orleans. Bush simply forgot the poor—the tens, perhaps hundreds of thousands, who simply did not have the resources to pay for their own evacuation.
When you’re poor, you don’t have a credit card, and most of the stranded were especially strapped for funds because it was the end of the month. But even if they had had the money, it is not obvious that markets would have responded quickly enough to provide the needed supply; in times of crisis, they often simply don’t. That’s one of the reasons why the military does not use a price system to allocate resources.
Last January, after the tsunami, in response to widespread calls for an early warning system, I observed that the world had been given an early warning on global warming. The rest of the world has begun to take heed, but Bush, having ignored warnings about Al Qaeda’s plans prior to 9/11, and having not only ignored the warnings about New Orleans levees, but actually gutted funding to shore them, has not led America to do likewise.
Scientists increasingly believe that global warming will be accompanied by larger climatic disturbances. Recent evidence is at least consistent with that hypothesis. Perhaps Bush had hoped that the consequences of global warming would be felt long after he left office—and would be felt more by poor, low-lying, tropical countries like Bangladesh than by a rich country astride the temperate zones.
Yet there is perhaps a silver lining in the clouds over New Orleans. Perhaps America, and especially Bush, will be persuaded to join the rest of the world in the fight against poverty and to protect our planet’s environment. In facing and planning for disasters, whether natural or man-made, we must do more than hope and pray for the best.
Copyright: Project Syndicate, 2005.